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Wednesday, 19 April 1972
Page: 1799

Mr SINCLAIR (New England) (Minister for Primary Industry) - I move:

That the Bill be now read a second time. The current 5-year dairying industry stabilisation plan, which is the fifth successive plan, is due to expire on 30th June next.

Representatives of the industry have submitted proposals for a new 5-year plan which include provision for a 2-price quota scheme. The proposals have taken into account the uncertainties facing the industry, particularly in view of Britain's decision to enter the Common Market. They are based on the recognition that it would be in the long term interests of dairy farmers for future production to be kept at a level which can be sold at satisfactory prices. The industry representatives consider that their proposals for a 2-price quota scheme will achieve this objective while maintaining a sound industry in each State.

In its simplest terms the scheme provides for the establishment of a national butterfat quota, based on home and overseas market requirements, the allocation of that quota amongst the States being on production over a recent base period. State dairy authorities would be responsible for the allocation of quotas among farmers. A premium price would be payable on quota production whilst over-quota production would receive only the basic export price. Each farmer would thus be free to determine his optimum level of production in the light of the level of his quota and the price he receives for quota and over-quota butterfat.

The industry organisations considered a number of alternative measures to control production but came to the conclusion that a two-price quota scheme afforded the best means of meeting the needs and circumstances of the industry. The proposals for a two-price quota scheme were endorsed unanimously on 1st November by an Australiawide meeting of dairy industry organisations representing farmers, factories, distributors and exporters. They were subsequently considered by State Ministers at the meeting of the Australian Agricultural Council on 15th February 1972. While there was general agreement that the immediate implementation of the quota proposals was not warranted until market circumstances changed, the Australian Agricultural Council accepted in principle the necessity to plan for a flexible scheme of production control which could be applied when necessary. The Victorian Government stressed the need for any scheme to have temporary application if it became necessary to meet reduced export markets. All governments however agreed to proceed with the planning of a mutually acceptable control mechanism so that it can be available for implementation if necessary.

In accordance with the decision of the Australian Agricultural Council a conference of State and Federal officials has since been held to consider the industry proposals and how they could be modified to suit the differing requirements of each State. A report has been prepared for the consideration of the Council and further developments will depend on the reaction of State Ministers to the report. In the circumstances there is no possibility of legislation being enacted to provide for a scheme of production control by 1st July. However, the acceptance by the industry of such complex and far-reaching proposals and the indication of a preparedness to act by State governments on a mutually acceptable control mechanism has been a significant achievement. The Government considers that a vital factor in the next stabilisation plan for the dairy industry is the preparedness of the States to introduce whatever State legislative measures may be necessary to establish an effective production control mechanism for use at such stage as may be necessary.

In addition to the proposals for a twoprice quota scheme the main industry recommendation in relation to dairy stabilisation for the next 5 years is that Commonwealth financial assistance be provided at a minimum of $40.8m each year which was the amount of Commonwealth bounty granted to the dairy industry for 1971-72. Because of the uncertainties associated with the longer term outlook for dairy products, particularly with Britain's entry into the European Economic Community, the Government recognises the need for an assurance of continuing Government support to the dairy industry. Accordingly the Government has decided to allocate for each of the next 5 years a minimum of $27m as bounty on butter and cheese and related butterfat products produced in Australia. Honourable members will recall that this is the basic amount provided each year since 1957 under the last 3 stabilisation plans. For each year of the current plan the basic amount has been supplemented by special payments following sterling devaluation in November 1967.

The actual amount of Commonwealth assistance for the next 5 years will be determined each year in the light of the needs of the industry and taking into account the action taken by the States in the adoption of an effective scheme to control production but it will not be less than $27m. The amount of bounty for butter and cheese production in 1972-73 will be considered by the Government later this year and included in the Budget in accordance with the usual practice.

Under the existing legislation, which authorises the payment of bounty and specifies the procedure to be followed in disbursing the bounty to dairy farmers, bounty is payable only until 30th June 1972. The purpose of this Bill is to extend the existing provisions of the legislation to provide for the payment of bounty on me production of butter, cheese and other related products containing butterfat for a further 5 years ending on 30th June 1977.

The Government also has decided that the bounty payable on the export of processed milk products will be continued for each of the 5 years of the new plan. The Government's decision in this regard is reflected in a Processed Milk Products Bounty Bill which I am introducing in conjunction with this Bill and would wish to be considered concurrently with this Bill.

The Australian dairy industry has taken advantage of the present strong market situation to diversify and develop alternative outlets away from the United Kingdom as an insurance against the loss of access to the United Kingdom market when Britain joins the European Economic Community early next year. However we would be deluding ourselves if we were to act on the premise that the present supply situation for dairy products is going to remain indefinitely or that there will be assured markets for unlimited quantities of dairy produce. Already there are factors starting to show which could lead to a weakening of the present strong market situation, particularly for butter.

As far as the Commonwealth Government is concerned it is essential that there be some mechanism which is recognised by the States so that, if there is to be a necessity for the adoption of production controls, the amount of Commonwealth assistance available can be directed immediately in a manner designed to enable a sound industry to be maintained in each State. In dairying, as in all our primary industries, it is essential that there be a relationship between what is produced and what can be sold at satisfactory prices. When the effective production control mechanism is settled those points of the plan that arc additional to the bounties provided for in this Bill and its complementary Processed Milk Products Bounty Bill and that will require arrangements between the Commonwealth Government, State governments and industry bodies, will be spelt out as necessary in legislation. I commend the Bill to honourable members.

Debate (on motion by Dr Patterson) adjourned.

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