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Wednesday, 8 November 1967


Order! There is too much audible conversation in the chamber.

Mr Robinson - The honourable member is whispering. We cannot hear him.

Dr PATTERSON - It is becoming increasingly obvious why the people in the cane growing areas are becoming fed up with the Government, and particularly the Australian Country Party section of it. Can the honourable member from the Country Parly hear that? Government members have consistently refused to help the cane growers in their fight to improve their critical financial position but, at the same time, they lavish praise on the Government's action in providing interest bearing loans and refusing to provide non-repayable grants or interest free loans. If Government supporters sincerely wished to help the cane growers, they would ensure that the growers received at least - I emphasise the words 'at least' - as favourable financial treatment as is being given by this Government to those engaged in other primary industries. It has amazed me over the last 18 months to see supporters of the Government patting the Government leaders on the back for this interest bearing loan. They know full well that other industries with which perhaps they are more concerned are receiving nonrepayable grants, in terms of stabilisation, of great magnitude. I refer to such industries as the dairying industry and the wheat industry.

The Labor Party has always supported in full the principle of stabilisation and financial assistance to primary industries when those industries are in need of assistance. But unlike the Government the Labor Party does not differentiate or discriminate between industries. In fact, it believes that the same basic policy of financial assistance should apply to all primary industries. For this reason the Opposition will not condone this discriminatory attitude that the Government is displaying towards the cane farmers. To the sugar industry the Government makes interest bearing loans as opposed to the provision of non-repayable grants or interest-free loans to other primary industries. If it is good enough for the dairying, wheat, wool, meat and cotton industries to receive non-repayable grants for price support, research and promotion then it is good enough for the sugar industry to receive at least the same method of financial assistance by way of non-repayable grants.

Let me now deal with the facts in order to establish my contention that the sugar industry is receiving a raw deal from this Government with respect to the payment of interest-bearing loans. On Tuesday, 31st October, the Treasurer (Mr McMahon) supplied me with information relating to the payment of Federal funds in the form of non-repayable grants to primary industries for price support, research and promotion.

These figures are most interesting. I shall deal with the major industries of dairying, wheat, wool, meats, sugar and cotton. Since 1946 a total of $700m has been provided in the form of non-repayable grants to the above industries. This amount has been made up as follows: Wheat, for stabilisation and research, $101.4m; wool, for promotion and research, $53.2m; dairying, $529.5m; meats, for research, $3.4m; cotton, because of the bounty, $12. 7m; and sugar, nothing. So $700m was made available in this period for non-repayable grants of which the sugar industry has received nothing. In the same period the petroleum research subsidy has amounted to a non-repayable grant of $59.6m. It can be argued, of course, that the nitrogenous fertilisers subsidy introduced last year helps the sugar industry. There is no question about this because the cane growers are the main users of nitrogen. In the last two years a total of $ 14.4m has been provided for nitrogenous fertilisers. However, to counter this argument the phosphate fertilisers bounty paid on phosphate used amounts to $120.5m. The sugar industry uses relatively small amounts of phosphate fertiliser compared with the wheat and other industries.

Most of the non-repayable grants to primary industries have taken place in the last 10 years. According to figures the Treasurer has supplied to me a total of S433m has been paid over the last 10 years in the form of non-repayable grants. This amount is made up of wheat $101.4m; wool $44.4m; dairying $272.2m; meat $3. 4m; and cotton $12m. These grants are made, with no strings attached, to producers or to the industry in general. The sugar industry in the last 10 years has received not one cent in the form of nonrepayable grants. To those who may argue that the sugar industry has had the benefit of a stable domestic price under the Commonwealth and State agreement let it be said quite categorically that any financial assistance to the sugar industry that has come its way has in fact been financed principally by the low income earning sector of the community. This is because finance has been collected in the form of a consumer tax. This tax has been paid by people who consume food, soft drinks, beer and other major outlets for the use of sugar. This in fact only strengthens the argument that discrimination is being displayed against the sugar industry. As I have stated, other industries are in fact receiving their funds direct from the Consolidated Revenue Fund. The incidence on the low income group is not as harsh when the funds come from Consolidated Revenue as it is when a consumer tax is levied as is the case when the domestic price of sugar is above the export parity price of sugar.

Of course, the dairying industry is in the unique position where it receives both the non-repayable grant which I have mentioned - since 1946 it has received over $500m from this source - and the benefit of a stabilised domestic price. So the dairying industry is in the unique position of receiving both major benefits; one in the form of a consumer subsidy and the other in the form of a straight-out subsidy from the Consolidated Revenue Fund. It must be clear to everyone that the correct financial measure te support the average price paid to the cane farmer for No. 1 pool sugar would be a non-repayable grant and that for the 1967 season a non-repayable grant of $15m should be made. But in spite of the established policy of making nonrepayable grants to assist primary industry in the past and in the future, as in the case of the dairying industry, the Government has provided to the sugar industry an interest bearing loan not of $15m but of up to $15m. In other words, there is no guarantee that the amount will be $15m. There is no guarantee that it will be $10m, as has been, provided for in the Budget. The loan could even be less than that if the export price rises.

The sugar industry has been staggered to learn that the $19m loan granted last year will demand a total refund of $25m which includes $6m interest. These figures have been provided to me by the Treasurer. This proposed interest-bearing loan is just another millstone around the necks of producers and will drag them deeper and deeper into debt. I am also very concerned about the way the Treasurer is skirting around the truth in this matter. In fact, the mildest comment I can make about his prepared speech is that it is inaccurate and misleading. The Treasurer stated that the industry requested this loan in respect of the 1967 season No. 1 sugar pool. That is untrue. I now quote from page 317 of the official journal of the Australian Sugar Producers Association Ltd, September 1967. Discussing the results of industry submissions, the official journal stated;

Hie industry submissions sought assistance for a sugar tonnage not exceeding aggregate mill peaks, which total 2,300,300 tons, including NSW, whereas loan assistance has been prepared for only No. 1 Pool sugar, which is likely to amount to roughly 2.2 million tons, including NSW.

Although the Treasurer stated that the industry asked for financial assistance for No. 1 pool sugar, the industry did not; it asked for financial assistance for aggregate mill peaks, which is different from No. 1 pool sugar only. The Treasurer and the Government again attempted, in our opinion, to misrepresent the facts with respect to the loan itself by implying that the industry had asked for the loan under the terms and conditions approved by the Government. That statement is not true. I again quote from the sugar journal of the same date, at the same page:

The industry had requested that the loan be interest-free, with repayment due only in certain agreed price situations, whereas in fact the loan will be repayable, with interest, over a fixed period.

The industry asked for an interest free loan; it did not, as the Treasurer implies, ask for an interest bearing loan. At the Committee stage the Opposition will move two amendments to give effect to what the industry has asked of the Government. The. Opposition challenges those honourable members who are so vocal in supporting primary industries, including sugar, and who say that the Government gives those industries what they ask for, to vote for the amendment which envisages precisely the type of finance asked for by the sugar industry. The amendment will be moved to allow the Agreement to be redrafted to provide for a nonrepayable grant, a matching grant or an interest free loan. An interest free loan is what the industry asked for. The Government claimed that last year the sugar industry had requested a $19ni loan under the conditions granted by the Government. My inquiries have shown that that statement is not true. The industry did not ask for the rate of interest which is being charged by the Government. Honourable members should know how very severe the interest charges are on those who have to repay the loan. The total interest charges are directly related to the rate of interest, the amount of principal and the time of repayment.

Mr Erwin - In what year is the interest to be repaid first?

Dr PATTERSON - In 3 years time.

Mr Erwin - Why not mention that also?

Dr PATTERSON - I am trying to give a completely unbiased picture. I am stating that interest charges are severe. Let me illustrate, for example, how much the interest charges amount to. Some honourable members who are not familiar with developmental projects will be astonished. The $19m loan for the sugar industry entails a total repayment of $25m. So, an amount of $6m interest is charged. The loan of $34m for the Mount Isa railway has an interest bill of $23m. The total repayments by the State Government will be $57m. The beef roads scheme loan of $8.Sm has an interest bill of $4.1m. The brigalow scheme loan of $9m has an interest bill of $4.8m. Those three projects, plus the loan for the sugar industry, have entailed the borrowing of $70.5m, on which the interest bill is $37.9m. That amount has to be repaid by the Queensland taxpayers. The figures are very high when one takes into account the non-repayable grants - no strings attached, no repayment of interest - to other primary industries. The repayment of the interest bearing loans, as I have said, falls severely on the Queensland taxpayer who, in the main, under the State system of taxation, is in the low income group - this is not so with income tax.

The average price of $86 per ton, on which the present loan is based, is not regarded by major sectors of the industry as satisfactory. It may be satisfactory for well established farms with big peaks in areas not affected by the drought. The farmer with a small peak, under 1,200 or 1,300 tons, and the new farmer - more than 1,000 new farmers came into the industry with the expansion - are the men who are in serious trouble. The people in areas such as Ingham, Tully, Burdekin and Cairns where per acre costs are higher than in the Mackay or Bundaberg areas - not much higher, perhaps, nevertheless higher - are in trouble also. The $86 per ton is not a substantial return for those farmers.

That the present financial crisis in the sugar industry is due entirely to a combination of two things, the expansion of the industry and the low price of sugar on (he world market, cannot be emphasised enough. The present position is that the industry has to sell 50% of total production or 70% of total exports on the world market - that is the residua] free market. The industry is in a highly unsatisfactory and precarious position. To argue that the sugar expansion will be of great benefit at some future date is irrelevant. .1 am one of those who believe that the expansion will be of great benefit because it has taken place on one of the few occasions when an industry has been able to expand without being told not to do so or having to rely on the Commonwealth Government's approval. Nevertheless the future position is irrelevant; the present time is what we are concerned with because this is the time when cane farmers need financial assistance to stabilise not only production but also their incomes, through price. The stark economic facts today demand immediate action to guarantee a satisfactory stabilised price and to put an end to the discriminatory interest bearing loans.

What are the alternatives? The first is a non-repayable grant of $15m. This terminology 'non-repayable grant' seems to have come in only in recent months. Previously only two terms were used - 'grant' and 'interest bearing loan'. But nonrepayable grant is the terminology used in this and other legislation. The next best alternative, one could argue, is a half grant to the State Government and a half interest free loan. Then comes an interest free loan of $15m, which is what the sugar industry asked. The worst alternative is what the Government has given the industry - an interest bearing loan of up to $15m. I repeat that no guarantee of receiving $15m has been given. In fact there is no guarantee of receiving $10m, which has been provided in the Budget. The loan could be even less than $10m.

Why is the industry in trouble? We need not go deeply into this. As 1 have stated before, a combination of two factors - of increasing the peaks from 1.6 million tons to 2.3 million tons and of a drop in the residual price on the free world market - has resulted in a substantial decline in the income of the sugar industry. As the Queensland Government took it upon itself to adopt the recommendation Of the Gibbs Committee of Inquiry into the Sugar Industry to go ahead and expand, and as the Commonwealth Government completely endorsed this expansion, both governments must share responsibility for assisting the producer today. I think this is fair because, after all, both governments actually endorsed the expansion and advised the industry to go ahead. The expansion has involved about $200m in fixed capital - in bulk handling facilities, which are completely financed by the industry, in research, in promotion, in expenditure on new farms and in expansion of old farms. When prices were high the industry contributed greatly by way of increased taxation and at the same time increased the circulation of money in the sugar towns. All these factors are on the credit side of the industry, so one would expect the Government to adopt a more humane attitude to the industry, particularly as it has done so with other industries.

If it had been the practice to provide interest bearing loans to other primary industries then I would not have much of an argument, but as it has been the practice to provide non-repayable grants - and I have given full details of such grants to other primary Industries over the years - surely the sugar industry is entitled to the same treatment. At the very least it should receive an interest free loan. The position is precarious. It has been argued that an internal sugar agreement is just around the corner, but we hear this claim almost every month in the Parliament. I have been hearing it ever since I have been a member of this chamber. At the annual conference of the Queensland Cane Growers Council early this year the Deputy Leader of the Country Party (Mr Anthony) said that we could have an agreement almost for certain early in the new year and possibly by October - and he was referring to last month. We are still no closer to such an agreement and according to well informed sources we will be no closer to one until Cuba and the United States of America patch up their differences. Until that happens there may be little chance of getting an international sugar agreement.

While this uncertainty persists there is instability and unemployment in the sugar towns. I can speak only of the Queensland areas but in Mackay, which is the biggest cane growing area in Australia, unemployment benefits have increased from $78,000 2 years ago to $250,000 during the last 6 months. It is expected that when the crushing finishes and when the slack starts in January even greater unemployment benefits will be payable, and a significant portion of those benefits will be paid to cane farmers. The situation has been clarified to my satisfaction by the Minister for Social Services (Mr Sinclair) who has stated that cane farmers are entitled to unemployment benefits under certain conditions. There is no question about that. Many cane farmers in the Bundaberg, Gin Gin, Mackay, Burdekin and other northern areas will be applying for the unemployment benefit this year and will be entitled to it under the provisions of the Social Services Act. '

The next point that I wish to make is that stability of income is required. It is dependent not only on price but also on stability of production. One multiplied by the other gives gross income. The principal concern in the Burnett area is, I think, not price, although price is very important to new farmers and to farms with small peaks. The big question in the Burnett district, particularly in areas which supply the Fairymead, Wallaville and Bingera mills, is stability of production because of the hazardous nature, proven over the years, of growing sugarcane under dry land conditions. It is imperative in the interests of the industry in that area that production be stabilised by the damming as soon as possible of the Kolan and Burnett rivers, because this will provide sufficient water to stabilise and increase production in those areas. These three mill areas are the ones which are really suffering from the effects of drought and which really need stability of production. They certainly require some alleviation of their conditions and the only way, or the best way, in which this can be done is by water conservation in the Kolan and Burnett rivers. -

In conclusion, I reiterate that the Opposition supports the principle of the financial assistance being given in this Bill to the cane farmer, because the principle is consistent with support given to the dairy industry, the wheat industry, the cotton industry, the wool industry in terms of promotion and research, and the meat industry in terms of research. The principle is consistent but the Opposition does not support the particular way in which this money is to be provided to the Queensland Government to be passed on to the sugar growers as a crushing interest bearing loan. In the Committee stage we shall move that the Schedule be redrafted so that a nonrepayable grant of $15m may be given to the State Government, which will be consistent with the treatment given to all other primary industries. If this is not accepted, we shall ask that at least the industry have the benefit of what it asked for, namely, an interest free loan.

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