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Wednesday, 1 October 1958

Mr SPEAKER - There being no objection, that procedure will be followed.

Mr POLLARD - The measure before the House is a comparatively small one. However, the Minister for Primary Industry (Mr. McMahon) delivered a very long explanatory second-reading speech. I concede that the industry to which this bill applies is an important one and justifies a lengthy explanation of what is intended by legislation that is presented to the House. However, shortly, the purpose of the bill is to give effect to a desire of the dairyfarmers to pay a levy into a fund, which will be under the administration of an authority and which will be expended on research work relating to the dairying industry and on promoting the sale of butter and cheese in Australia. No one can quarrel with those objectives. Indeed, the situation to-day is such that research work in any industry is always justified. One could say that possibly all governments, if they could manage it, would like to see more money spent on research work.

In this instance, the Government is not committed to very much. It will make no contribution to the money that will be spent on research, but, in regard to that portion of the total levy receipts, estimated at £250,000, which on a recommendation of the Australian Dairy Produce Board is to be devoted to sales promotion, the Government has made a verbal commitment that it will contribute on a £l-for-£l basis. No one can take exception to those proposals. However, in a situation in which the dairymen in every part of the Commonwealth are working under serious economic disabilities and are clamouring for additional assistance, this mere contribution from the Government of an amount not to exceed £1 for every £1 spent on sales promotion is exceedingly meagre and inadequate. In fact, it is paltry. If we are to take the Government at its word from time to time over the years, its objective has been to ensure that dairymen would not receive a total income less than that related to the general standard of living and approved by the people generally in Australia. But no steps are taken to ensure that happy state of affairs.

I have a particular interest in this industry. For years, I worked in it. For years, I was the victim of the lack of such consideration by governments as would enable dairymen to obtain an income related to the contribution that they made to the food requirements of the community and to the earning of export income in order to assist Australia to pay for essential imports. I well recollect the depressed state of the industry in the years preceding World War II. Conditions were deplorable, especially for a seven-days-a-week industry. They were deplorable for a variety of reasons. Not the least was the fact that at that period of our history there were still in Australia about 240,000 persons officially recorded as unemployed. Their purchasing power was quite inadequate to provide everything needed for themselves and their families.

Mr Duthie - And that was in 1939!

Mr POLLARD - That was 1938-39. If any one doubts the figures that I cite, let me say that I- took them from a report of a statement made by the Prime Minister in the Melbourne Town Hall shortly after war broke out. In war-time, of course, governments were compelled to realize that the dairying industry was essential to Australia's war effort. As the war progressed, the industry became more important than ever, and it was able to make a magnificent contribution to the United Kingdom food supplies. It was because of this fact, and a realization that those who make a contribution to the economic welfare of the country should be adequately rewarded, that during the period when the Labour government held the reins of office steps were taken to ensure that the producing elements in the community were more adequately rewarded

But with peace in sight, it was determined that in the post-war period this industry should be established on a stabilized basis, and that an adequate return for their labours should be guaranteed to workers in it. With that end in view, 1 announced in this Parliament on about 22nd November, 1946, that the Labour government had appointed a committee empowered to inquire into and ascertain the cost of production of butter in Australia. It was a most representative committee. Its chairman, was no less distinguished an individual than the chairman of the Bureau of Agricultural Economics, Mr. Crawford, who is now, of course, the Secretary of the Department of Trade. The committee included representatives of the dairying industry. In addition, there were representatives of the Treasury, the then Prices Branch and the Department of Commerce and Agriculture. By July of 1947 the committee was able to supply to the Bureau of Agricultural Economics figures collected from dairy farms all over Australia, and on those figures the bureau was able to work out a cost of production on the average, reasonably efficient dairy farm.

Mr ANTHONY (RICHMOND, NEW SOUTH WALES) - How much did you allow for management?

Mr POLLARD - The honorable member for Richmond asks how much we allowed for management. That is quite a fair question. Let me say, first, that before this investigation took place nothing at. all was allowed for management. Awards in the industry were completely unknown, either for management, for the workers or for anybody else concerned. The committee's report with respect to the allowance for management was unanimous, and, as I said, the personnel of the committee included representatives of the industry itself. The basis that the committee recommended for the computation of management allowance was the dairying industry award, an. award fixed by a competent authority. Let it not be forgotten that costs of production and award rates of pay in any industry were then substantially lower than they are now. The recommendation was that the management allowance should be equivalent to the rate fixed in the award for a leading hand. Whatever criticism may be offered as to the inadequacy of that allowance - and I think it would be widely agreed that it was not as generous as it should have been - at least it was a marked improvement on anything hitherto known in this industry..

If honorable members would like to know the circumstances of this industry prior to World War II., let me quote, first, from an article which appeared in the Melbourne "Argus" on 12th July, 1944 -

The dairying industry began the war with a. bad reputation, for low and unstable prices, which made it the agricultural "Cinderella" and were the cause of bad wages, and long hours.

The late Mr. Anthony made a statement in this Parliament in 1938 which was one of the most damning indictments of pre-war governments, or any governments, with regard to neglect and lack of consideration for this most essential industry. He said -

Out of 12,275 dairy-farmers in Queensland, only 99 had taxable incomes last year in excess of £250.

The late Mr. Anthony said that he had received his information from the Queensland taxation commissioner.

So, in answering the question by the honorable member for Richmond as to how much the farmers were allowed for management, let me say that this was the first time in history that any step of this kind was taken - to make some allowance for the management of a dairy farm. It is quite true that when this measure was re-enacted in 1952, or, in fact, before that, the government which succeeded the Labour government made some increases in the managerial allowance used in computing the cost of production of butter - and rightly so. Those changes had the ardent support of honorable members on this side of the House.

When honorable members are inclined to criticize the fixing of an award wage as a basis for managerial allowance, let it never be forgotten that the dairying industry had accepted that award. Probably those engaged in the industry had given evidence before the authority which fixed the award, and no doubt they considered it adequate and said that it was good enough. Probably, therefore, what was sauce for the goose was sauce for the gander, so I do not think there is much to be. gained by arguing about the amount allowed for management, expenses. Costs in the industry have skyrocketed in the last ten years,, and the £1,035 allowed at present for management allowance when computing the cost of production of butter is not so very much more generous than the allowance in those early years. I agree that it is no more than enough.

Mr ANTHONY (RICHMOND, NEW SOUTH WALES) - How much was it in those days?

Mr POLLARD - It was based on the leading hand's rate under the dairying industry award. I think it was about £300- odd. It is now about three times what it was when the recommendation was made by the dairying industry costing authority. I do not think even the honorable member for. Richmond will deny that costs to-day are at least three times as much as they were in the industry in 1947. At least it was a basis on which to commence. I know that honorable gentlemen sitting in the corner, after exercising power for more than a quarter of a century and, in many cases, participating in coalition governments, are green with envy because a Labour government was the first to introduce a plan guaranteeing the dairying industry of Australia a price for its products. It did so not only on the product produced, sold and consumed in Australia but on the whole of our dairy products that were exported.

Mr Turnbull - We feel quite normal.

Mr POLLARD - Well, you do not sound it. But I do not know that that is a very sound argument. I am simply stating a fact. Time went on. Pledges had been made by representatives of the Australian Country party and the coalition government that when the Labour government's plan expired, they would renew it. They did so. A bill was introduced into this House in 1952. The Government drafted a measure guaranteeing to the farmers a return based on cost of production, but there was one vital difference. Those who had been critical, as they still are-, about the allowance made in computing' the cost of producing a pound of butter, and those who had something to say about other factors in the computation were confronted with the fact that the Government had made a vital alteration in the 1952 legislation which was supposed to be based on most of the principles introduced by the Labour government. The Menzies- Government proposed to guarantee to the industry the found cost of production price on all butter and cheese consumed in Australia, and on one-fifth of that quantity that might be exported.

The end result of that is to be found in the situation which confronted Australia last year and will confront it again: The availability for export to London of a very great tonnage of butter and cheese which is absolutely unguaranteed as to price. I have made a rough calculation, and T' believe that, in the last butter year, about 3.i;,00.0 tons of butter was exported overseas without, guarantee, and we: had to take whatever the overseas price happened to be. In the forthcoming year - if the season turns out as we anticipate and Australia produces 220,000 tons of butter - it is likely that 76,000 tons of butter could be landed on the London market absolutely without guarantee. That is after allowing for the 20 per cent, as a guaranteed export portion of our production. Those 76,000 tons might be sold at a price around 2s. per lb. when the cost of production in Australia, according to accepted figures, is about 4s. 3d. per lb. ls it any wonder that, for the first time, the comer party which has supported this present Government - a government that has been, so niggardly in renewing the plan and quibbled over the computation for managerial allowance and similar calculations: - is embarrassed. Members of the Australian Country party now know that, because of the inability of the Government to guarantee the found cost of production price for all butter and cheese produced in Australia, the dairymen are now landed with a. fall in the London butter price and are in an. uneconomic position.

Mr Brand - Is the Labour party prepared to subsidize butter exports?

Mr POLLARD - You will hear all about that in the proper time. You members of the Australian Country party are supporters of this Government. You are the people who twice - in 1952 and 1957 - tolerated a situation in which the people you allegedly represent, including great numbers of dairy-farmers, were faced with the sale of tons of butter on the London market at any price they could get and at a return far below the cost of production in Australia.

Mr Bowden - It would be the same under a Labour government.

Mr POLLARD - No! The Labour government guaranteed whatever the returns were in London, India or China, for the whole of the butter and cheese produced in Australia. It guaranteed that the found cost of production would be paid. 1 am not here to be cross-examined by the honorable member for Gippsland (Mr. Bowden)-. I am giving information.

Mr Bowden - Will you admit that, al that time, exports did not represent 20 per cent, of local consumption?

Mr POLLARD - In some cases they did. The honorable member for Gippsland is not going to bulldoze me into acceptance of a statement of that sort. They have exceeded 20 per cent, of the portion consumed locally at various periods. Anyhow, there is no justification for this Government not providing against that eventuality. It arose before the introduction of the 1957 re-enactment of the plan. Now, the Government is confronted with people who are very angry indeed and realize that they have been deceived.

What do we find now? The members of the Australian Country party have been embarrassed and have recently brought pressure on their colleagues in the Menzies Government. The Minister for Primary Industry (Mr. McMahon) has been upset. Honorable gentlemen in the Australian Country party corner have been upset. It was announced in the press to-day that they had obtained what is allegedly a concession. If it can be so described, it is a miserable concession, but those who do not understand the situation could very well be deceived.

The plain fact is that the final returns to the dairy-farmers under the guaranteed price stabilization plan are computed in this manner: First, in making the computation, those responsible take into consideration that all butter and cheese consumed in Australia will be sold at guaranteed prices. Secondly, the Government of Australia will make a contribution this year of £13,500,000 subsidy. Third, a lower price will go into the computation in connexion with sale returns of the unguaranteed portion of production which goes abroad.

A calculation of the average of the three could be made finally only at the end of the season because you do not know what the total sales realization will be until the season is ended. In order to give the dairymen an interim payment on delivery to the factory, the likely final returns in London have been computed. As the equalization committee, which makes these computations and manages this business, has a financial responsibility, it calculates its contribution on a reasonably conservative basis. I do not know what figures they took, but they may have made it on a basis believing that the price in London would not rise above the present level.

Mr Jeff Bate - But it rose after they made it.

Mr POLLARD - Yes, a little bit; from 205s. to 234s. per cwt. I know about that. But that committee must be conservative in its computations. After considering the situation, it decided that it would be safe to pay the farmers 3s. Id. per lb. on delivery to the factory. All right! One can be sure that when they made that computation they said to themselves, " It can hardly get worse than it is now in London. Nevertheless, we must play safe ". And they took into consideration, possibly, the fact that in the final wash-up, at the end of the season, instead of 37d., the dairyfarmers of Australia might get a return of 40d. per lb.

Mr Brimblecombe - They might.

Mr Jeff Bate - They will.

Mr POLLARD - I am glad to see that there is a difference of opinion between the honorable member for Macarthur (Mr. Jeff Bate) and the honorable member for Maranoa (Mr. Brimblecombe), both of whom belong to the Australian Country party. One says that the dairy-farmers might get 40d. in the final wash-up and the other says that they will. I shall deal first with the gentleman who says that they will, because that statement suits my picture. But I will also reply later to the gentleman who will admit that they will get 37d.

In order to deceive the dairy-farmers, the Government announced that they would get 3d. per lb. more for butter. That .was announced in headlines in the newspapers. But all that has happened is that the Government has underwritten a figure of 3s. 4d. per lb. so that the equalization committee can arrange for the butter factory to pay an interim payment of 3s. 4d. instead of 3s. Id. per lb.

The Minister for Primary Industry exhibited a sense of responsibility by going to the Cabinet and arguing. He said, " You take no risk, Bob, because it is quite certain that, in the final wash-up, the price will be 40d. per lb." The honorable member for Macarthur will admit that. So, in reality, the dairy-farmers are getting 3d. per lb. more now, as an advance payment, some months ahead. They are getting a figure. which, ultimately, they would have got in any case. There is nothing wrong with the plan, but if the dairy-farmers imagine that they will get any more for their butter than they would have got without the Government's action they have another think coming.

Very few people know how this price is assessed. I know that Australian Country party members who are interjecting are uncomfortable about this matter because the dairy-farmers are not going to get any more. The Australian Dairy Produce Board has said that they will get 40d. per lb. anyhow. All that will happen is that they will get 3d. per lb. a few months before they would have got it in any case. The only risk that the Government takes is of a catastrophe happening and the London market deteriorating further from what is probably an alltime low. It is a mighty poor government that would not be prepared to take that risk.

Mr Jeff Bate - I agree with that.

Mr POLLARD - I am not against the payment of that 3d. per lb. in advance of the time at which the farmers would get it, anyhow. But I want to dispel the idea that is prevalent in the minds of some people that it will be an extra payment in the final wash-up.

The position of the industry remains as critical and as chronic as it was prior to this action being taken. The industry has been disgracefully treated. It has not been treated in line with the promises that have been made to it. The present Minister for Trade (Mr. McEwen)- then Minister for Trade and Commerce - when introducing a measure to put the 1952 plan into operation, said -

There have been talks of dear food policy and cheap food policy. This Government embraces neither objective. Its policy is to ensure, for an industry which comes within its jurisdiction, a return for the producers designed to give them the same standards of living as are enjoyed by the rest of the community, believing that in this way only will expanded production be assured.

I am sure that those workers who expect to have their wages automatically adjusted in accordance with movements of cost of living and the genera] national trends and those merchants who expect to be able to adjust the selling price of their products in accordance with their costs of production, will in neither case wish to deny to dairy farmers an adjustment of their return related to a realistic calculation of the cost of efficient production. That is what this measure is designed to assure.

In the same speech, the Minister announced that the guarantee would only cover a proportion of the production of butter and cheese in Australia and that the situation would be left as it remains to-day. Last year about 30,000 tons of butter were left to the hazards of the world market. This year it could be 60,000 tons. It is no use Country party members talking to me about it. They supported the Government which, in 1952, was responsible for the departure from Labour's policy. That policy, if still in operation, would have ensured that the dairy-farmers had the living standards to which the then Minister for Trade and Commerce said, in 1952, that they were entitled.

Mr Brimblecombe - What was the found cost in 1947?

Mr POLLARD - I can provide that information for the honorable member, although he knows it as well as I do. He will quibble about halfpennies when today's problem is one of millions. Let us have the facts, clean and straight. The chairman of the Joint Dairy Industry Advisory Committee in 1947 was Mr. J. G. Crawford, and nobody could ever accuse Mr. Crawford of being other than impartial. He represented the Bureau of Agricultural Economics. The committee also included Mr. C. Sheehy, Controller of Dairy Products; Mr. W. S. Kelly, Commonwealth Prices Branch; Mr. P. W. Nette Department of the Treasury; Mr. A. Spencer, Department of Commerce and Agriculture; Mr. G. C. Howey, Victoria, a familiar figure in the dairy industry and a fighter for its rights; Mr. T. Flood Plunkett, Queensland; Mr. R. D. Gibson, New South Wales; and Mr. J. P. Norton, representing Western Australia, South Australia and Tasmania.

In the final wash-up, the committee divided. The majority of the committee comprising Mr. Crawford and the representatives of the Treasury, the Department of Commerce and Agriculture, and the Prices Branch, supported a cost recommendation of 2s. lid. per lb.

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