Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Full Day's HansardDownload Full Day's Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Thursday, 9 May 1968

Mr STREET (Corangamite) - First I should like to deal with a couple of points which were brought up by the honourable member for Bendigo (Mr Beaton). I refer particularly to his concern that grants of financial assistance already provided for drought relief should be continued. My understanding of this Bill is that provision is made to continue wherever measures are necessary after June 1968. I agree with the honourable member's remarks regarding the critical position of the meat industry, particularly in Victoria. Unfortunately it appears that a very large co-operative meat works which was founded in Victoria with farmers' money may have to close down. This is one of the largest meat works in Victoria and if this first major co-operative venture in this field is forced to close it will be a tragedy. In talking about the drought the first thing we must realise is its unprecedented severity. Nothing like it has ever been experienced before. Losses, especially of stock, undoubtedly would have been much greater but for assistance from the Commonwealth Government. Again, the assistance given to deal with this unprecedented situation has no precedent in this country. I think it is fair to say that the drought would have been quite disastrous without such assistance. Not only would it have been responsible for many farmers leaving their properties but we would have lost much of our skilled labour which has been greatly encouraged to stay in the country by the provision of unemployment grants through local councils.

The honourable member for Bendigo was somewhat disturbed that such a large proportion of funds provided for drought relief works had to be spent on a labour content. My understanding was that the Minister had been allowed some flexibility to deal with this problem when granting drought relief in Victoria. Honourable members have heard many comments to the effect that farmers should have been prepared for the drought, that they should have been ready for one or two bad years after a succession of good years. Unless one is on the land one cannot- see clearly the economic problems which confront farmers in such conditions. For some years agricultural economists have been working out with some degree of accuracy the size of fodder reserves which are appropriate to each individual farm. In this respect it must be remembered that for every $1 that a farmer spends on fodder he is up for an opportunity cost, that is, the cost of what he might have received had he spent that money on something else. On the other hand, if he does not have the fodder when it is needed in time of drought there is a shortage of fodder and he has to pay the penalty of a cost over and above the normal price for feed. The optimum size of fodder reserves for any particular farm can be worked out when account is taken of the rainfall record for that region. I believe that some very basic rethinking has to be done in relation to droughts because all past calculations were done on the basis of the worst previous known Australian conditions which covered roughly 80 years. There is no doubt whatever that conditions and experiences this time have been a great deal worse than anything before. I do not suppose that the agricultural economists can go back to their drawing boards. Perhaps they will have to go back to their computers instead.

In Victoria a very large proportion of the State's sheep population was in the affected area - about 24 million out of a total of 31 million. The heaviest stocking area in Victoria is in the western half of the State. I would like to point out that this area has very special problems in times of drought because then the area carries no feed at all and therefore a reduction in stock numbers is of no use whatever. A reduction in stock numbers greatly reduces the value of the farms and the national asset, without any corresponding advantage in lessening the pressure on the pastures because there are no pastures on which to lessen the pressure.

As the drought progressed in these areas it became clearer and clearer that cheaper fodder was the first requirement of the majority of farmers. The stock owners are extremely grateful to both State and Federal Governments for making fodder subsidies possible. The honourable member for Bendigo mentioned that some work had gone on behind the scenes. I can assure you, Mr Speaker, that a great many State and Federal members in country areas did a great deal of work. Stock owners in Victoria have a great deal for which to thank the honourable member for Wannon, the Minister for Education and Science (Mr Malcolm Fraser), in this respect. 1 was delighted to see the Treasurer (Mr McMahon) spell out so clearly that practically all the drought assistance which has been made available to farmers, although disbursed by the States, has been made possible through Commonwealth assistance.

I believe that the most critical aspect facing all primary producers is the one which was mentioned by the honourable member for Bendigo and that is the cost price squeeze. This problem has been greatly accentuated by the drought, but was not caused by it. Compared with the position some years ago when prices for primary products were higher and costs were lower, the position has deteriorated to a great degree. With the concurrence of honourable members I incorporate in Hansard a table from the Bureau of Agricultural Economics and a table from various official sources.



I believe that these tables disclose the real cause of the long terra problems of primary industry in Australia. If one thing is certain it is this: Australia is subject to recurrent droughts, and droughts - perhaps in not quite as severe a form - will happen again. Droughts are a national problem and can be disastrous to farmers and to our export earnings. Therefore I believe that we have to ask ourselves: What are the lessons to be learned from the drought? I believe that the first lesson is that widely different circumstances exist in different States. For instance, one has only to compare the economics of feeding stock in western Queensland with feeding stock in the higher stocking rate areas of western Victoria. Different localities have various orders of priority for drought assistance. I believe that should be remembered when considering future plans. I do not believe that an overall national disaster governmental authority is the answer. I do not think anything is more likely to create local opposition than a central authority's telling people what to do. I agree that a central authority could undertake valuable research work, but it is probable that it would not do anything that could not be done already by the Department of National Development with its present facilities. But I do not agree the disbursement of drought assistance could best be made by such an authority. I think the present system under which money has been made available on local council advice has been successful. The real aim should be to remove the need for such assistance. The answer is to be found in policies which will make it attractive for individual formers to drought proof their properties.

This can be done by providing incentive for the vital requirements of feed and water. In respect of water, at least, the double deduction scheme for taxation purposes makes sound common sense. I have previously supported strongly the idea of drought bonds. However, three main drawbacks in the scheme proposed have been brought to my attention. The first draw back is that the scheme would help the farmers with the biggest properties. Drought bonds would apply only in respect of surplus income. The bigger a property is, the more surplus income its owner is likely to have. The second drawback would be that the scheme would not encourage the provision of the resources required in time of drought or in periods following drought. I refer to water, feed and stock for restocking purposes. When the bonds were cashed they would increase competition and inflate the values of the resources. The third drawback would be that the bonds would become taxable at the very time that a primary producer had least money. However, I still believe that the proposed scheme is worth further investigation to determine whether the drawbacks can be overcome. At present, they seem to me to be rather substantial objections.

Another proposal that seems to be worthy of investigation is that for national crop insurance. Such a scheme operates in the United States of America and Canada. In those countries a farmer is able to insure, at a premium rate of about 6%, for a cover equivalent to about 80% of the long term average yield of the crop concerned. It is obvious that a great deal of detailed work would have to be done to relate the

United States and Canadian figures to Australian conditions. We have in Australia people capable of undertaking that task and I hope that in due course that investigation will be conducted.

The concessions I have outlined, or any other measures which encourage individual conservation of water and feed, will cost the Commonwealth money, but I believe the cost will be small in relation to the huge cost to the Treasury caused by drought. For instance, in the present drought a total of about S84m has been made available so far as aid to the States. Immeasurably greater amounts have been lost in revenue and national assets. Surely it is good business from the Commonwealth's point of view to encourage the preservation of our national assets and to keep our farmers in income earning situations so that they may contribute to the national revenue.

As the honourable member for Bendigo said, it seems that the drought in the southern States may be ending. The need now will be for finance to enable production to be resumed. Loans for restocking, seed, superphosphate, and perhaps machinery, as well as carry on finance will be necessary. T was delighted to learn not long ago that an extra amount of $37m was made available for the Farm Development Loan Fund. Without doubt, a major factor in keeping Victorian stock alive has been the ready availability of wheat. Had it not been available the results would have been absolutely disastrous. Whatever other measures are adopted, it should be part of our national policy always to have sufficient wheat on hand for emergency use.

Finally, I wish to pay a tribute to the Australian Wheat Board. It has done an extremely good job of distributing wheat. It has proved efficient and prompt at all times in attending to requests. The demands put on this organisation must have been great, but in my experience it never failed to meet its commitments. I sincerely hope that the Australian Wheat Board will never be faced with a similar situation in the future. It is up to this Parliament to try to devise ways and means to ensure that never again will Australia be so vulnerable to the effects of drought.

Suggest corrections