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Thursday, 29 October 1970

Dr PATTERSON (Dawson) - Mr Speaker, the Opposition supports the Bill. In his second reading speech the Attorney-General (Mr Hughes) referred to the need to make certain that compositions or schemes of arrangement entered into under State or Territory legislation will not be ruled invalid becauseof the present laws. The Attorney-General said his inquiries had indicated that under present laws it is unlikely that arrangements made between farmers and their creditors under State legislation would be in accordance with Part X of the Bankruptcy Act. I would assume that the principal reason for introducing this measure is because of the serious and deteriorating economic conditions in the rural areas of Australia. It would seem that if the States or Territories are going to implement legislation in respect of debt adjustment, there are some problems regarding the validity of assistance given to a farmer by a State or Territory. Because of that it would appear that the States themselves are reluctant to go ahead with their own schemes until the Federal laws have been changed. As I see it, that is the principal reason why the Government has decided to introduce this Bill. Something has to be done in the field of debt adjustment in the States. The staggering increase in rural debts in Australia has reached such a serious level that it is very clear that urgent Federal action, in addition to this Bill, will have to be taken to stop the collapse of rural areas and country towns throughout Australia. This is particularly so in the wheat and sheep areas which have been subjected to devastating drought over the last 3 or 4 years.

The debt figures in Australia are rather staggering. In fact, they are almost unbelievable. When I first had a look at them I could not believe them; I thought there must have been a misprint in them. In the last 5 years the indebtedness of the rural sector has increased by more than 500 per cent. It is necessary, of course, to give the figures because 500 per cent may not mean much when one looks at the absolute figures. Net rural debts have risen from a relatively low figure of$1 20m 5 years ago to more than $ 1,250m today. If anybody doubts the seriousness of the debt structure in the rural areas, I think those figures speak for themselves. They are net figures. As the Attorney-General said in his second reading speech, the effects of the drought are particularly severe in some States, and it is those conditions, associated with the indebtedness, that has prompted the Slates to introduce as quickly as possible accelerated rates of debt adjustment.

Among the primary industries, only the sugar and beef industries are not in serious trouble at this time. With deteriorating world prices and shrinking market outlets, the financial position of even those 2 industries is in some doubt. The major export industries of wool, wheat and dairy products are in very serious financial trouble, and another 2 major industries - beef and sugar - which today look reasonably sound, have ahead of them futures that could be somewhat bleak in relation to the European Common Market and the high powered political tactics on the American scene with respect to meat.

It is obvious, therefore, that in association with this Bill progressive and dynamic farm reconstruction and debt adjustment policies have to be adopted. They should be translated into immediate action. In many areas it is probably too late to help many of the farmers. I refer particularly to the wheat and sheep areas which have been affected by drought, because there the debt liability has reached saturation point or, we might say, bankruptcy point. The granting of further loans, irrespective of the interest rate, will only place these people further into debt. They have passed the point of no return in many areas in Australia today. Some private banks have emphasised this point in their reports from time to time.

I think that the Federal Government should take urgent action in this field. It could perhaps set up, in conjunction with the rural construction boards of the States, a Federal rural commission. Such a commission could work in co-operation with the State reconstruction boards. There would be 2 objectives of such a commission. They would be complementary and supplementary. The first objective would be reconstruction or rehabilitation and the second, debt adjustment. Both these things would work together. To me it is obvious that some sort of Federal commission will have to be set up in conjunction with the State authorities if the financial position of the farmers deteriorates any further, as we think it will. 1 have already referred to the increase in the net debt structure. In the last 5 years it has increased from $120m to $1 .250m. In gross terms the figure is over $2.000m. This level of debt illustrates the very serious position which faces the rural industries today. Progressive rehabilitation of farms with the emphasis on increased productivity as distinct from increased production, the amalgamation of farm enterprise and the streamlining of marketing techniques are all matters which should be given urgent consideration by this Government. As the debt position in the rural sector is growing so fast, the most urgent priority is to introduce a financial measure for debt alleviation. This action is more urgent than any reconstruction or rehabilitation schemes. I believe that the priorities in the field of reconstruction or debt adjustment should be ranked accordingly. That is, the top priority must be given to the objectives of this Bill or the provisions contained in it for debt adjustment. This would have to be followed by long term rehabilitation measures. It is clear to me that there should be Federal or State complementary action.

In addition to providing loans to farmers or wiping out their debts there will have to be some provision for the immediate freezing of the principal and interest repayments on loans. This would mean that the farmers who are in very serious trouble would at least have enough cash in their hands with which to continue paying their immediate debts. They would at least have some amount of money in hands without having to worry about the repayment of the principal and interest until the reconstruction scheme became more positive. It also appears clear to me that in any Federa] commission set up in conjunction with State reconstruction boards the whole basis of financing primary industry will have to be gone into again. lt must be obvious to the Government that the primary producers cannot afford to pay high interest rates on loans obtained under short-term conditions. Although some arrangements are made through the Commonwealth Development Bank and the Rural Credits Department of the Reserve Bank, in the main the great majority of the debts in the rural sector are with pastoral houses or trading banks. As far as agricultural areas are concerned a considerable amount of all the debts are with hire purchase companies. One has only to look at the rate of increase - and this is an important thing - in debt structure to see the seriousness of the situation. It is not just some gentle trend. The increase is staggering. One can only wonder just how much longer this debt structure can continue, lt is estimated that less than 10 per cent of farmers in Australia are free from debt. All evidence suggests that the small traditional farmer today is falling deeper into debt. It is imperative that this Bill be passed without delay so that the States may go ahead and bring in whatever legislation is necessary to ensure that the operation of compositions or schemes of arrangement entered into by the States or a Territory will be valid under the Bankruptcy Act. The Opposition supports the Bill.

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