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Wednesday, 12 February 1986
Page: 210

Senator WATSON(6.15) —I wish to commend to the Senate the Public Accounts Committee Report on Government Aircraft Factories. At the same time I remind the Senate of the lack of interest by successive governments in providing adequate background and information and of the lack of consultation by government generally on the closer economic relations question. Let me place the current report in its historical perspective. Prior to 1983 a great deal of agricultural trade was regulated by various forms of voluntary joint agreements. Australians generally believed that not much would change. Not only were they ill-informed; they were also complacent about the effects of the change because CER seemed to provide the catalyst for a new awareness of opportunities in Australia for New Zealand agriculture. Certainly the debate at the commencement of CER was much more sophisticated and much more advanced in New Zealand than it was in Australia. But CER provided this catalyst for a new awareness of opportunities for the New Zealanders to enter Australian trade. Indeed, it was spoken of as the mechanism by which standards of living and exports to Australia could be lifted. Undoubtedly Australian manufacturers have benefited. It is also true that the volume of trade both ways across the Tasman has increased since CER.

Frequently people from the other side of the Tasman, especially the Ministers, make statements to the effect that New Zealand has the better deal. But the point I wish to make tonight is that in all these arrangements and the subsequent spin-offs Tasmanian agriculture has been the loser. Unfortunately there has not been enough debate about the way in which trade under CER is developing and, for that reason, I commend this report to the Senate. Unfortunately, limited monitoring is involved and I think the Government has to be condemned on this issue. The anti-dumping provisions are almost useless. I think it is somewhat unfortunate that the ministerial meeting held in August 1985-just last year-was held in an environment of a strengthening New Zealand dollar against the Australian dollar. There tended to be this complacency unfortunately in the Tasmanian community and amongst the farmers who were going to be subsequently affected because of the high value of the New Zealand dollar against the Australian dollar. Therefore, I believe that not enough emphasis was given at that ministerial meeting in August 1985 to the detrimental effects on agriculture, particularly Tasmanian agriculture.

Tasmania is the horticultural State of Australia and provides the bulk of Australia's frozen vegetables. Tasmania is vulnerable to imports from New Zealand and the level of imports, particularly of frozen peas and other vegetables, is directly related to the value of the New Zealand dollar against the Australian dollar. When the New Zealand dollar was weak, Tasmanian pea growers were adversely affected. As the dollar continued to rise, increased acreages were given to Tasmanian producers. The situation has now changed because since November the value of the New Zealand dollar has fallen, so we will tend to find greater pressure from the big buyers in Australia to switch their orders to New Zealand rather than to processors in Tasmania. I believe that some recognition has to be given in the CER agreement to the changing value of the New Zealand dollar as against the Australian dollar. I do not think it is good for trade on either side of the Tasman. Therefore, all mechanisms that will increase government awareness and the level of debate, I think, are welcome. Because of the problems of Tasmanian agriculture and its susceptibility to imports from New Zealand I think Tasmanian farmers, particularly those on the north west coast, will have to continue to voice their concerns about the ramifications of CER, especially in the lead-up to the joint 1988 review.

The other concern is that, as a result of CER, we are becoming more dependent on a few crops. We are seeing the disappearance of certain types of horticulture from the Tasmanian scene, which has tended to result in a higher degree of specialisation. I do not believe that is in the best interests of Tasmanian agriculture in the long run, particularly when we have major problems as a result of movements in the Australian dollar. Of course, Tasmania must also help itself. I believe that one way of doing that is the establishment of a major plant breeding centre along the north west coast of Tasmania. I do not believe that the Commonwealth Scientific and Industrial Research Organisation has devoted enough of its resources to horticultural research. The emphasis seems to be on the big cereal crops such as wheat and so on.

I think there are other problems that New Zealand has to face, so it is not all gloom and doom. New Zealand had a 16.3 per cent inflation rate over the year to September, which undoubtedly will tend to push up its costs. It has also dismantled certain subsidies to make its industries more competitive. Also the New Zealand export performance tax was reduced by 50 per cent from 1 April 1985. These are all desirable features but I must point out that the New Zealand Government is pursuing what I would term a high risk economic policy. While it maintained very high interest rates, its exchange rate remained at a high level.

However, New Zealand has problems. Not only does it have a high inflation rate but also it will introduce a goods and services tax of 10 per cent and this will tend to add further to inflation. The dismantling of the subsidies and the economic policy of the New Zealand Government have certainly been very detrimental to New Zealand agriculture, and this is reflected in the catastrophic drop in certain farm property costs. However, unless we recognise that and introduce some mechanism which adjusts for the varying values of the exchange rate, as a number of previous speakers have acknowledged, Australian agriculture will be unfairly treated. I do not think enough emphasis has been put on the problems of closer economic relations in regional areas, particular the north west coast. I hope further work will be done on this matter, particularly before 1988, so that we can make sure that when the joint review takes place we will have a better anti-dumping mechanism, a faster track mechanism. We were misled earlier. We were told there was supposed to be a fast track anti-dumping mechanism; in effect, it has not eventuated. We must have better monitoring and proper procedures to recognise movements in exchange rates to ensure that regional areas, such as Tasmania, are not adversely affected.

Question resolved in the affirmative.