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Wednesday, 31 August 1960

Mr FAILES (Lawson) .- Mr. Temporary Chairman,the honorable member for Newcastle (Mr. Jones) established - whether or not he wished to do so - that this country is in a state of great prosperity, as has been said for some time by honorable members on the Government side of the chamber. I can only think that the honorable member is envious of the companies to which he has referred and that Labour would, if it could, take the short-cut to control of some of these profits which the honorable member has mentioned, and that it would try something that it tried once before - nationalization. But this Government is determined at all costs to stop any such attack on the liberty of the people.

We in this country have a problem which is said to be associated with expansion, and Labour supporters suggest that the way to deal with it is to slow down the rate of expansion. Those who sit on the Opposition side of the chamber, and who speak on this subject on behalf of the socialists, remind me rather of a leader of the United Kingdom Labour Party who, after that party had lost the general election last year, remarked that the Labour Party in the United Kingdom represented a section of the people that no longer existed. That is very much the case with the Australian Labour Party.

I hope to show, as I go along, that there is a section of the people which needs strong representation in this Parliament. That section has never had proper representation from the Labour Party. The people who comprise that section have been described as peasants, hill-billies and the like. They are people whom I am proud to represent in this place. For years and years, they have been termed the backbone of Australia, and they still carry the great burden of providing overseas credits for this country. The Australian Country Party is proud of its representation of people who live in country districts. We who belong to that party do not represent only primary producers. We represent, also, businessmen in country districts and the true men of Labour - the workers. They are associated with us in our work on our own farms and in daily activities in the towns, and our party receives a lot of support from them because they know that we give them a fair go. They know that their interests and ours are closely linked. They know that the country towns are dependent on the broad acres about them for their very existence. The people in the cities are becoming aware of the truth of what we have been saying for many years. So I make no apology for placing before honorable members conditions thai exist in the country to-day.

We are concerned about an apparent imbalance at present between the various sections of the people in Australia. We think that there is a very great measure of co-operation between both the primary and the secondary industries. If there is not. there should be. Both must realize that the Australian people are the best consumers of their products - that the Australian people provide the best market for both the primary and secondary products of this country.

Mr Curtin - The trade unionists provide the best market.

Mr FAILES - They are great consumers of our goods, and the trade unions should realize how foolish they would be to take any action that would cause farmers to lose faith in their industry and think of going out of it. The trade unions must realize, also, that the farmers are very good buyers of the products of the manufacturing industries in which so many of our trade unionists are employed. I suggested a moment ago that there is an imbalance in the community which may have very disastrous effects on Australia's economy unless it is checked. It may cause very grave harm not only to the people that we who belong to the Australian Country Party claim to represent but also to Australians generally in the cities 'and country towns and on the farms.

We realize that, in the presentation of this Budget, the Government has been conscious of an inflationary trend that has steadily persisted for some time. We realize that before a government presents its financial statement to the Parliament and the people, it seeks all the information it can get on the problems of finance and of the economy generally. The Treasurer (Mr. Harold Holt), in the preamble to the financial statement which he presented in Budget speech, said -

More than ever these days, the Commonwealth Budget has to be regarded as a means to guide the broad trend of the economy in the direction of certain well-established goals.

He then referred to stability, continuous growth of population, rising standards of living and so on, and said that the Government has a responsibility to safeguard the share in the gains of progress to which every one is entitled.

I now put it to the committee very shortly that some sections of the community - they are the ones for which I speak this evening - are not sharing in the gains of progress in which, as the Treasurer has suggested every one is entitled to share. Certain measures are being taken by the Government. Some will be taken as a result of this Budget and some were taken before it was presented. As the Treasurer has said -

The Budget is not the only instrument of policy - monetary policy and trade policy have highly important roles to play - and there must be consistency between all three.

I shall deal first with the problems with which the primary producers are confronted. Again, I say that these are not the problems only of the primary producers.

The primary industries produce the goods which earn some 80 per cent, of our export credits, and I point out that the manufacturing industries require the funds which are earned by these exports in order to pay for about 80 per cent, of their imports of raw materials for manufacturing processes. This shows how the two sections of industry dovetail together. There is a close interdependence. There was a time when Australia did not have a great deal of secondary industry, but depended almost entirely on primary industry for export earnings. To-day, we hope that some of the secondary industries will take a part of the load off the primary industries and will help to earn export credits. But the primary industries must be given the heart to carry on their job. We must not allow them to fall by the wayside. If they do, the whole community will suffer.

One of the big problems of the primary industries which we should investigate is the problem of the failure of income to improve with greater production. Primary production in this country has increased tremendously in the post-war years, and particularly during this Government's term of office. Unfortunately, this has not been reflected in financial returns to the producers. This discrepancy is often overlooked. Another problem is that costs are rapidly outstripping returns. When I speak of costs, I do not mean only production costs. I mean also the cost of living, which affects every one in his daily life. Increases in costs have a double impact on the primary producer. He is hit by the increases that he has to meet in the course of his business, and which he cannot pass on because the greater part of his market is overseas. He also feels the daytoday effects of increases in living costs.

Then there is an instability in our markets which is not something that we in Australia can entirely correct. We have in our own hands the right to regulate our production to some extent, but we have no control over outside markets. We have no control over the great improvements in productivity that have been achieved in other countries. The advances that we are making here by more scientific use of our land are also being made in other countries. We face also the great problem, particularly in the wheat industry, of price support in countries which have accumulated tremendous stocks, which are a constant embarrassment to us. Not only do we experience instability in some of our markets; there is also a great degree of instability in our sales, despite the fact that we have stabilization organizations in operation.

Dealing with the matter of production and problems associated with it, I would like to read a brief section of an article which was published in a Sydney metropolitan newspaper in February of this year. It is quite a lengthy article, dealing very carefully and fully with problems of inflation. The author started off by asking, " Who's worried about inflation anyway? " and he pointed out that some people say, " I do not mind if my wages go up a bit every year. What if the cost of living does rise? These things balance out." He then went on to point out that two sections of the people are definitely hit and cannot escape. There are others also, but the two sections are the people on fixed incomes and the people who sell in markets overseas. Dealing with the latter he said -

Since the end of 1952 retail prices in Australia have been going up year in and year out at about 2-3 per cent, per annum. Should we care? Farmers care. While retail prices rose by some 30 per cent, between 1951-52 and 1958-59, export prices actually fell by nearly 30 per cent.

He continued by saying that farmers do not get cost of living adjustments. I trust that Labour supporters who are trying to interject will take note of the fact that farmers do not get cost of living adjustments.

Mr Holten - They have no 40-hour week, either.

Mr FAILES - Nor do they have a 40- hour week, as my colleague from Indi reminds me. The author of the article went on to say -

Only the expansion of productivity on Australian farms in the last decade has saved our rural producers, as a group, from very damaging inroads into their living standards.

Let me point out here that our productivity has increased and we have been able to stave off disaster which would otherwise have overtaken us a long time ago largely as a result of the efforts of this Government and the members of it. It has been largely as a result of the tremendous amount of work that has been put into the establishment and administration of the Department of Trade by our leader, the right honorable member for Murray (Mr. McEwen). It has also been largely as a result of the acceptance by primary producers of the fact that they were in an unsatisfactory position, and their efforts to improve that position.

I direct the attention of Opposition members to the fact that we have been assisted very largely in our selling by such things as the Japanese Trade Agreement, which was decried by the Opposition.

Mr Peters - Hear, head

Mr FAILES - It is evidently still decried by the honorable member for Scullin. That agreement was one of the factors responsible for our sales of wool continuing to represent such a large proportion, about 40 per cent., of our export income. That agreement also enabled us to sell wheat and barley to a country which had very seldom bought wheat and barley from us before. Japan had previously bought practically no f.a.q. wheat from us, but she is now taking a very large quantityof it.

This Government was instrumental in re-negotiating the International Wheat Agreement. It has made us a party to the International Sugar Agreement and the General Agreement on Tariffs and Trade. The Minister for Trade attended the British Trade and Economic Conference in Montreal, as a result of which we are assured of overseas sales of a tremendous amount of our products. The Government has managed to improve our sales of wheat to India and Ceylon, where wheat selling was becoming a problem of the first magnitude. It has been responsible for sales of our flour to Malaya and to West Germany. It has negotiated the meat agreement with the United Kingdom. All these actions on the part of the Government have helped to retain some sort of stabilized market for the primary producer, and some kind of reasonable price for his products.

The Government has negotiated dollar loans, which were howled down by the Opposition but which have been responsible for bringing to this country machinery to enable the farmer to keep pace with mechanization movements overseas, as he must do because he is competing in the same markets. The Government has also granted tax concessions to primary pro ducers, in the form of depreciation allowances, to enable them to effect improvements on their properties designed to increase production. They can now build on their properties homes for their employees of a standard which even the honorable member for Kingsford-Smith (Mr. Curtin) would agree should be provided. Unfortunately, however, I must say that there is one unsatisfactory aspect of this form of depreciation allowance. If a farmer is not making sufficient money to allow him to undertake this kind of capital improvement, he cannot get the benefit of the tax concession. Again, as my friend the honorable member for Mallee (Mr. Turnbull) reminded me earlier to-day, those who receive small incomes do not get the benefit of this depreciation allowance as the men with large incomes do. As a consequence, this concession is not proving as successful as it might be.

I deal next with the matter of farming efficiency. Is the primary producer efficient? If he is not efficient, of course, we should not waste time on him. The measure of his efficiency can be gauged from the fact that while wool production prewar was about 7.7 lb. per head, it is now 8.8 lb. per head. Average production of wheat in pre-war years was about 12 bushels an acre, and it is now in the neighbourhood of 17 bushels an acre. Similarly, sugar productivity has increased by about 12 per cent, over pre-war levels. It can be accepted that the volume of rural production has increased and that the farmer is efficient. In any case, no one in this chamber has suggested that he is not efficient. The volume of rural production is about 50 per cent, greater than it was pre-war, so it cannot be said that the farmer is not worthy of encouragement. He is definitely an efficient unit of the community and pulling his weight.

I come now to the question whether the primary producer is getting the benefits arising from this increased productivity to which he is justly entitled, and which he must be granted if he is to continue to carry the great load that he has borne for so many years. I have before me the White Paper on National Income and Expenditure for 1959-60, which was placed before the

Government by the Treasurer for the information of members of the Government, and which they consulted, no doubt, when considering the Budget Estimates. In the introduction to this paper we find the following remarks: -

The estimates for 1959-60 in particular provide some of the statistical information needed for an appraisal of the economic conditions in which the Budget for 1960-61 has been prepared.

On page 4 the paper says -

The main components of gross national product, with the exception df farm income, also increased rapidly in 1959-60.

It is little wonder that that exception was made, because no doubt you, Mr. Temporary Chairman, have seen a copy of this paper which contains a graph relating to wages and salaries, lt indicates that wages and salaries increased by 9 per cent, from 1958-59 to 1959-60 but that farm income showed such a small increase as to be almost unnoticed on the graph. That is the position which confronts the farmer.

The honorable member for Newcastle, who preceded me in this debate, stated that the Government, by its appearance before the wage-fixing tribunal, was trying to keep wages down. We do not advocate a reduction in wages. The farmer does" not ask and has never asked for that. All he asks is that he be placed in a position to share in our prosperity with the remainder of the community. When one realizes that farm incomes barely increased from 1958- 59 to J 959-60 while wages increased in that period by 9 per cent., the importance of the position becomes apparent.

The Thirty-eighth Report of the Commissioner of Taxation, dated 1st June, 1959, contains some very interesting figures. No doubt this report was available to the Government when it was preparing the Budget. Table 35 shows the number of persons in various occupations who were liable for tax. T shall quote only the broad figures but they will serve my purpose. In 1954-55 taxpayers engaged in primary production numbered 291,000. In 1955-56 the number was practically the same. In 1956-57 there were 295.000 taxpayers, while in 1957-58 the number fell to 287,000. These figures do not represent the number of persons engaged in primary production. They represent only those who earned a taxable income. That accounts for the fall in 1957-58. The actual income of those people in 1954-55 was £391,000,000. In 1955-56 it dropped to £379,000,000 but in 1956-57 it rose to £459,000,000. However, in 1957-58 it dropped again to £347,000,000. This illustrates the instability to which I referred previously. The taxable income of persons engaged in primary production fell by approximately £44,000,000 between 1954- 55 and 1957-58 - this at a time when the incomes of other sections of the community showed considerable increases. In 1954-55 approximately 3,600,000 taxpayers earned an income of £3,200,000,000. The total income rose to £3,400,000,000 in 1955-56; to £3,700,000,000 in 1956-57 and to £3,800,000,000 in 1957-58- a steady increase.

A similar state of affairs exists in relation to companies. In 1954-55 company income amounted to £617,000,000. In 1955- 56 it rose to £647,000,000; in 1956- 57 to £702.000,000 and in 1957-58 to £735,000,000.

These two sets of figures indicate that while the incomes of primary producers rose for a while and then fell in 1957-58, the incomes of individual taxpayers and companies have been rising constantly. The amount of tax paid followed the same pattern. Primary producers in 1954-55 paid £63,000,000. In 1955-56 the amount dropped to £56,000,000. In 1956-57 it took a leap to £80,000,000 - that was a good year - but in 1957-58 it fell again to £43,000,000.

The most worrying feature is that if you divide the total actual income of the primary producers by the number of individuals following that occupation, you will find that in 1954-55 their average income was £1,340 but in 1957-58 it was only £1,200. Can you expect any man to carry on with confidence an industry which reeks with variations in income such as I have mentioned; an industry which is a continual gamble against weather, pests, diseases and so on? Can you expect a man with a big capital investment to carry on, not only with a falling income but also with an income which does not allow him to acquire sufficient capital to improve his property and so get the benefit of depreciation allowances and so on?

I should like to refer now to costs. I do not propose to enter into the whole of this problem as it affects industry generally and primary industry in particular, but some examination must be made with a view to finding a solution. The primary producer cannot pass on the rising costs. We suggest, in the first place, that possibly our secondary industries are not as efficient as they could be. I do not blame either management or labour, but it is time that we considered whether the efficiency of our secondary industries is comparable with the efficiency of factories overseas. In America, everything is about three times as dear as it is in Australia. For instance, a haircut costs about 17s. 6d.; but the people receive wages which are about three times greater than the wages in Australia. If we, with our comparatively low wages, are pricing ourselves out of overseas markets, how does America compete on those markets? The answer is that America must be much more efficient than we are. We should examine the position in our secondary industries. They must continue to function because they are an integral part of our organization and our economy.

Let me deal now with tariffs. Is it not time that an investigation was made to ascertain whether industries which are to-day working behind a tariff are not unnecessarily getting the benefit of protection which was granted to them years ago? No doubt, those industries are indifferent about increasing their efficiency because they have the tariff protection. This is a problem for both management and labour. I do not lay the blame on either side, but without doubt the matter requires investigation.

According to the Treasurer, the banks are conscious of their traditional role as the major source of finance for rural industry. I think that the Treasurer replied in those terms to a question which was asked of him a short time ago by a Government supporter. Unfortunately, our experience is that if we go to a bank to borrow money we are referred from the main counter to the hirepurchase department. If a farmer asks for an overdraft to-day he is probably referred to a wool firm which obtains its money from a bank. The role of banks as the traditional source of finance for rural industries seems to have disappeared.

We believe that inflation will be checked by the steps which the Government proposes to take. Farmers, graziers and primary producers generally ask for stability in rural industry. They ask for a reduction in their costs and for assistance with their credit problems so that they may continue the expansion they have started. I am not suggesting, nor do I agree with any suggestion, that there should be a reduction of the expansion of this country. I have faith in the Government. I believe it has tremendous problems to face, and I believe that there is no simple solution to those problems. However, it is the solution of problems that make life worthwhile. I believe that the primary producer will stick it out if he has only an inkling of a promise cif those things which he feels are his just due. I feel competent to say for the people of the country districts that they appreciate the burdens they can carry, and the responsibilities they have to shoulder. They have been going through drought and fire with all their hazards, and still have the courage to carry on despite the disabilities from which they are suffering at the present time.

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