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Wednesday, 1 October 1958

Mr FREETH (Forrest) .- I rise to support the bill because it is a small part of a long-range effort to assist the dairying industry which, at the present time, is in urgent need of some short-term assistance. It is also in urgent need of a long-range plan designed to reconstruct the whole of the industry. 1 cannot let pass this opportunity without mentioning the somewhat strange flights of fancy in which the honorable member for Eden-Monaro (Mr. Allan Fraser) indulged. He suggested that this Government had taken no practical steps, since it has been in office, to assist the dairying industry. Of course, that suggestion is entirely fantastic. In 1948-49. the whole of the dairying industry was so incensed at the persistent refusal of the Labour government to improve the conditions of the people engaged in it that, almost to a man, dairy-farmers turned to the support of the parties now in office.

In those days, the economic return to the dairy-farmer - the guaranteed price - was calculated at a low rate of interest, which the dairy-farmer himself could not accept as being fair. The land of the farmers was pegged at its pre-war value. The return to an owner-manager was only a small fraction of the return under the stabilization plan introduced by this Government. Whilst it is true that the then Labour government did give a guarantee in relation to the whole of the dairy-farmer's production of butter, the plain fact is that it paid the subsidy only in order to keep the homeconsumption price down. During the whole of the period of its guarantee the homeconsumption price was lower than the export price.

The ability of the Labour government to give the price guarantee to the farmers was due entirely to the fact that the government knew in advance how much butter would be consumed locally, because butter was then rationed, and also knew in advance what the minimum export price would be, because Australia could have exported at that time all the butter it produced. The export price, as I have said, was higher than the home-consumption price and the guaranteed price.

The home-consumption price was deliberately kept low, not for the purpose of increasing the consumption of butter in Australia, but for the purpose of keeping wages down. In those days, there were automatic wage adjustments, and the subsidy paid was not a subsidy to assist the dairy-farmer but a subsidy to help the consumer.

To-day we face a very different state of affairs. The Government has no control over the quantity of butter that is available for export, lt has no control over the price that can be obtained for our butter overseas. In those circumstances we find that, when export prices are low, the more butter that is produced in Australia the greater is the loss to the dairy-farmer. So we must not only give some immediate aid to the dairy-farmer, but also take some long-term steps to place the dairying industry on a sound basis.

Dairy farms in Western Australia, the State from which I come, are high-cost dairy farms. If the dairy-farmers in Victoria and New South Wales have cause to complain about their difficulties, I can assure the House that the dairy-farmers in Western Australia have even more cause to complain, because they are in a far more desperate position. In fact, the position in the dairying areas in Western Australia is reminiscent of the position in the days of the depression. Storekeepers in those areas are in difficulties because their customers cannot pay their accounts. Garage proprietors are in difficulties because they have large book debts which cannot be collected, and they have had to refuse further credit. We have not seen such conditions in any primary industry in Western Australia since the 1930's.

I can assure the House that the position is indeed desperate in some areas in Western Australia. That is not to suggest, however, that things are hopeless, because the dairying industry in Western Australia is still a developing industry. Compared with its counterparts in other States, the Western Australian dairying industry has been in existence for only a short time. When it is realized that about half of the Western Australian dairy farms which produce butter fat are carrying only nineteen cows or less, it is easy to understand that the dairy-farmers there are really up against it.

During the last few years, although the efficiency of the industry has increased, the total production of butter in Western Australia has remained static because the number of dairy farms has decreased. That fact does not bode well for a State which has literally millions of acres of fertile land with high rainfall on which a high carrying capacity for stock can be achieved if the land is developed. One of the long-range problems we have to face is to get the industry in Western Australia up to a higher state of efficiency by developmental processes.

Mr Duthie - Why have the farmers left the farms?

Mr FREETH - As I said before, because they are short of capital for development. The best land in Western Australia for dairying is quite equal to Victorian land provided that it is developed and put under pasture and modern methods are applied. But, as I have pointed out, 50 per cent, of the dairy farms there are carrying nineteen cows or fewer, the dairy-farmers cannot get further capital, and consequently they cannot obtain sufficient returns from the industry. The average dairy-farmer is too fully occupied looking after his small herd of cattle to do much developmental work for himself.

Although I agree with the right honorable member who preceded me that something must be done and that a royal commission might be one way of inquiring into the industry, it is not necessary to have that sort of investigation in Western Australia. The position there is known. A most exhaustive cost-of-production survey was carried out by this Government in 1953 which established, quite conclusively, that the only hindrance to the dairying industry in Western Australia was the lack of development. It found that all the highcost farms were the under-developed farms and that the efficient farms were those which carried larger numbers of cattle and had been in existence for some years. The Western Australian Government has proved that proposition, because it has carried out a programme of farm reconstruction and development by making available, from its own financial resources, low-interest loans to the farmers. This has been done purely to enable the owners of existing dairy farms to extend their pastures, to clean up their old pastures and to clear new land. The results have been entirely satisfactory.

But it is a long-term process in view of the small amount of money that the State Government has seen fit to make available to the industry. I believe that the Commonwealth Government could very well make available to Western Australia, as has been requested, a sum of money to complete that developmental programme. There is a very excellent precedent for that, as we were reminded by the right honorable member for Cowper, in the Wheat Industry Assistance Act 1938 under which marginal wheat farms in Western Australia Were made productive. They were brought back to a state of efficiency largely through the help provided under that legislation.

One of the difficulties in the dairying industry is that if cash payments to dairyfarmers are increased, production is increased. Victoria is, admittedly, the lowest production cost State in Australia. I do not want to decry the efficiency of the Victorian dairying industry, nor do I envy the Victorians their good fortune; but quite frankly, the low prices being received by the farmers to-day are due to the high degree of production in Victoria. This is proving an embarrassment to such States as Western Australia and Queensland. We have the problem of opening up new areas of land which can best be brought into production through dairying. But the prospects of success are not very bright owing to the fact that there seems to be an excessive surplus of butter for export.

I am somewhat doubtful whether the proposals to open up further dairy farms in the Heytesbury or Yanakie areas in Victoria will be of great value to Australia as a whole, because, as I have said, the more butter produced there, the greater will be the loss to all the dairy-farmers all over Australia. Although the Victorians may say, " We have to develop our land ", the plain truth is that Western Australia cannot yet produce enough butter to supply its own consumption needs. I am quite satisfied that it could do so at an economical price if the industry were given a chance to develop there.

In the long term, I believe that most dairy farms in Western Australia and, possibly, all over Australia, as settlement becomes closer, will develop a new technique in handling their products. They will go on to a whole milk basis, and any necessary fats to be extracted from the milk will be extracted at the factory. That seems to me to be the kind of mechanization which will eventually come to the industry. Plants may be used to produce powdered milk or powdered butter so that these commodities may be reconstituted separately at a later stage. If we are to have in Western Australia that degree of closer settlement which will allow that kind of development to be achieved in the industry then we must be allowed to produce more butter and place our dairy farms on a paying basis in the near future.

The Government is faced with an immediate proposition of giving some assistance to the dairying industry, and I am particularly pleased that to-day the Minister was able to announce that the Government is underwriting the risk which the Commonwealth Dairy Produce Equalization Committee Limited was apparently not willing to underwrite and to restore the recent cut which it made. The farmers, as a result, are assured, at least for this year and future years in which the present scheme operates, that they will be given, right from the beginning of the season, a practical and realistic assessment of what their product is worth for that year, instead of waiting with some trepidation until the end of the year and relying on some further distribution, when the equalization committee discovers that it has been too conservative in its estimate.

This scheme will give some heart to the industry, but I do plead with the Government to give some special consideration to the particular problems which exist in Western Australia. I have made this plea for a good many years, and I suppose that if we go on long enough we may eventually get some special consideration for what is, after all, a very important national development problem.

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