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Thursday, 20 April 1972
Page: 1928


Mr MacKELLAR (Warringah) - The House has been treated to another set piece from the honourable member for Riverina (Mr Grassby). The only thing I can say about his speech is that the figures he quoted bear no relation to the official figures. I can only adjure him to check his figures before he makes such a speech. He might not like to do this because accuracy might spoil his case. I was interested to hear the remarks of the honourable member for Dawson (Dr Patterson), who said there has been an urgent need for rural reconstruction for some years. If there has been such a need for some years, obviously the honourable member for Dawson, as the Opposition spokesman on primary industry, would have been calling for some rural reconstruction scheme. To my knowledge the first major party to call for rural reconstruction was the Liberal Party when it published its rural guidelines early in 1970.

I congratulate the Government, and particularly the Minister for Primary Industry (Mr Sinclair), upon taking on board the aims of these rural guidelines and bringing into the House last year solutions for the long term problems of the rural industries. This - and again I congratulate the Government - was a realisation of the necessity for a broad approach to the problems of the rural industries. The aim was, as we have heard expressed many times from the

Government side, to establish viable rural industries and also viable individuals within rural industry. For this reason I think that the advent of this rural reconstruction scheme last year was an occasion for offering some congratulation to the Government. The second reading and third reading stages were concluded on 5th May last year.

We have heard that the provisions include the supply of $100m over 4 years. Of this sum, 50 per cent was for debt reconstruction and 50 per cent was for farm buildup. The third section of the scheme embraces the field of rehabilitation. Under the original provisions of the scheme the rehabilitation segment provided for a maximum of $1,000, but it provided also that the property of a person seeking the rehabilitation payment must be purchased under the conditions of farm buildup. There were a couple of aspects of the scheme which I found at that time particularly attractive. One of them was the builtin flexibility. This has been attacked by the honourable member for Riverina, but I do not think that the attack can be given much credence for obviously it is a most responsible action on the part of the Government to review a scheme of this nature, to see how it is working and, if there are certain problems or actions that should be taken, not to wait too long to correct them, or reorganise or re-aim - if I may use that word - the objects of the scheme. It is a good thing that the review has taken place.

Although the honourable member for Riverina would have it that the meetings between the State Ministers and the Federal Minister were acrimonious affairs, I am afraid that my information is completely at variance with his. The result of the scheme so far has been that the States approved, up to the beginning of April, the expenditure of $59.6m, $49. 8m of which has been approved for debt reconstruction, $9.8m for farm buildup and $29,500 for rehabilitation. There were 3 meetings of some of the Ministers involved in March, and again I must say that I believe it is a good thing that this example of cooperative federalism is before the House. The Federal Government is not taking a dictatorial attitude, imposing its will on the State governments. This is, as I say, co operative federalism, with the States and the Commonwealth working together to achieve a mutually satisfactory result.

The alterations have already been canvassed in this debate. The amount of SI 00m, instead of being paid over 4 years, will now be paid over 2 years. There is an added flexibility built in with the debt reconstruction and farm buildup provisions. There are extended terms of repayment: they are from 20 years to 30 years at the discretion of the State authorities. This is a significant advance in the provisions of the rural reconstruction scheme, lt has quite a significant effect on the interest payments which the recipients of money have to face, and I think that this is one point that will be welcomed by those people who have access to the scheme and come within its provisions. The rehabilitation aspects of the scheme have been changed also, and the maximum amount payable for rehabilitation has gone from $1,000 to $3,000. I will have a little bit more to say about that later. Additionally, an extra $15m has been committed for carryover into the financial year 1973-74. This again is a realistic approach to the problems which the States would have in the administration of the scheme.

Although I have been fairly congratulatory in my remarks so far, I do have some criticisms of the way the scheme has been drawn up and the way it is being implemented. First, it must be remembered that the original concept of the scheme put equal emphasis on farm buildup and debt reconstruction. I agree that this is an excellent thing. I would hope that the States in administering the scheme over the next year or so will not take too much advantage of the added flexibility which they have been allowed. I think it would be a bad thing if too much emphasis were placed on debt reconstruction to the detriment of farm buildup.

The other thing about farm buildup and debt reconstruction is that a lot of very good farmers are ruled out by the provisions of the scheme because they have access to other credit facilities. They are some of the best farmers within the agricultural industry and it does seem a little bit unfair to me that the good farmers, those people who presumably would have most hope of coping with severe troubles and severe financial stresses within their industries, should be ruled out of access to the scheme. These people, because of their viability, because they are good farmers, because they have built up sound credit ratings, are forced to pay higher interest charges for overdrafts or short term loans. It seems to me to be a little bit unfair that the best farmers, those people who have developed this enviable reputation and who have access, because of the soundness of their farming methods, to other credit are not eligible to take part in this scheme. There are others in a much worse financial situation without equal hope of survival who do get these concessions.

I have referred already to the Liberal Party's rural policy booklet, but in addition we have a policy within the Liberal Party for the provision of long term finance to fanners to enable those farmers restricted by an excessive short term debt, but whose record of operations indicated viability in the longer term, to restructure that debt and service it without suffering the crippling effects of the combination of high interest and capital repayments. We believe that the loans should be for long term duration, such as the ones under the rural reconstruction scheme, and we believe also that the amount of the loans should be substantial, preferably without limit. So while congratulating the Government upon implementing this rural reconstruction scheme, we think that the Government should look at the provision of long term finance for, if I may use this phrase, the more viable farmers, and should look quite seriously at the establishment of a rural loans insurance corporation.

One of the aspects of the rural situation at the moment, which I believe should be looked at also by the Government, relates to the payment of death duties. I think this has relevance to the situation farmers find themselves in at this time. I do not know that people really understand that the farming sector consistently paid between 30 per cent and 40 per cent of all estate duty collected by the Commonwealth during the 1960s. Yet this farming group made up only 6 per cent of the income taxed population and paid only 6 per cent of the income tax.


Mr Killen - Will the Government take notice of it?


Mr MacKELLAR - I hope the Government does take notice because it is quite a burden for those people who are involved in farming activities. To further strengthen this argument I point out that only 1.7 per cent of Commonwealth taxation revenue is raised from death duties. So this is another point to take into account when considering the abolition of estate duties. It has relevance in terms of farm reconstruction because the threat or certainty of the imposition of these death duties causes those people who are faced with this problem to fragment their property either to avoid estate duty or to sell off or diminish their properties to pay the death duties. la either case the result is the same, the properties are diminished in size and in many instances become or go perilously close to becoming non-viable units which come under the reconstruction scheme.

I would like to say a few more words about the rehabilitation aspects of the reconstruction scheme. Whilst I welcome the increase to $3,000 of the maximum amount payable this should be reviewed with the object of increasing it still further, because in many cases there is often not very much or nothing left at all after a farmer pays his debts following the selling up of his property. Once he has reached this stage of economic decline he often finds following the selling up of his property that he does not have very much equity left at all and this applies particularly to farmers with families. It strikes particularly hard at those people who may be a little older than one would like to be when starting off to search for a new career and also at those with families. So we should look at 2 aspects of this, firstly, with a view to increasing the maximum amount and, secondly, with a view to widening the provisions for eligibility for rehabilitation by taking into account that section of the farm build up provisions which says:

None of the foregoing would prevent the Authority from purchasing an uneconomic property in advance of arrangements having been made for the property to be added to an adjoining property or properties, where the programme of farm adjustment could not otherwise be achieved.

I would like the Minister to look closely at this aspect of rehabilitation payments to see whether eligibility perhaps could be widened to include those people who at present are excluded from receiving these benefits. While I welcome the provisions, and I have congratulated the Minister on making this statement, I hope that nobody in this House, or within the country, will become too euphoric about the future of agricultural industries. We are all tremendously pleased with the rise which has taken place in the price of wool and the very real injection of confidence which this has put into the rural industries. But this is by no means to say that this rise will be permanent and we should not base too much euphoria on the present state of affairs. Certainly we should be pleased but we should not lose sight of the need for an ongoing reconstruction programme.

The other aspects of primary industry which concern me arise from the problems which will be engendered by Britain's entry into the European Economic Community. This will have a marked effect on several Australian agricultural industries involving a large number of people. So again let us not be too euphoric about the present state of affairs but keep in mind the need for reconstruction. The Government has started to tackle the problems and this constant review and flexibility is a very good thing which should provide an example for many other aspects of government activity. The tackling of long term problems is very encouraging but in tackling them let us not forget the necessity to keep up the fight to restructure our rural industries and to make them viable and worth while in the context of an increasingly sophisticated economy such as Australia has.

Mr FitzPATRICK(Darling) (8.45)- I can recall some of the words of the Minister for Primary Industry (Mr Sinclair) when he made the statement to the House on this matter last week. I will agree with the Minister that wool prices have improved and that seasonal conditions in general are good, but there can be no doubt that the long term problems of the rural industries remain, particularly in my electorate. It could be said also that some farms are too small to be economically viable under the present conditions and circumstances. The honourable member for Riverina (Mr Grassby) said that what the country needs is confidence and credit. It seems to me that it is a tragedy that so many more farms would be economically viable if the burden of debts which cannot be serviced over a short period of time could be serviced over a longer period at low interest rates. The rural reconstruction scheme is not giving enough consideration to people in this position.

The most shocking thing that came out of the Minister's statement was that only 829,500 was to be paid towards rehabilitation of displaced rural workers. If any useful effect is to be achieved in the many and far-reaching problems of our rural industries, certainly the balance of the original SI 00m must be allocated in the year 1972-73. The $10Om allocation spread over a period of 4 years was, of course, ridiculous. When compared with the national farm income of $l,051m in 1969- 70, a year when prices were depressed and seasons generally were not too favourable, as an endeavour to provide a viable base for a continuing contribution to our export earning capacity the investment of 2.5 per cent of the farm income over a 4- year period could be classed as really hopeless. It must be considered unjust when it is remembered that a large proportion of the loans will be repayable. Now we are told that we are to get over 2 years what we were to receive over 4 years. The Australian Labor Party has been saying for a long time that not enough money was put into the scheme. But it is marvellous what the States and the gallup polls can do. They can really move this Government. It must be considered unjust also when it is remembered that many of the farm adjustments and farm amalgamations that have occurred so far have taken place in the private sector without any Government intervention at all. It is quite obvious by the Minister's statements mat he expects this state of affairs to continue in the future.

It is for this reason that the Minister has placed so much emphasis on the need for traditional lenders to continue to play their role in facilitating adjustment. What the Government members neglect to say is that only those farmers who can prove that they do not really need a loan will get finance from this channel. The greatest problem of farmers in my electorate is that they are already in trouble because they have received previous financing from the sources which are now putting pressure on them. Where the effect of declining prices and income is widespread the institutions and towns which serve rural communities are also affected. Inability to service debts leads to trouble with the banks and other lenders. Many business people in my electorate have asked for some assistance in this regard because lenders have an incentive to foreclose mortgages, although I must admit that to my knowledge not too many have done this. Nevertheless, they have applied severe pressure and restrictions on business houses. In many cases farmers are allowed only a living allowance. The lenders do not foreclose because the so-called owner is the cheapest manager that the lender can get. If the farmer were put off the farm it would cost the lender twice as much to run the property. Local government authorities suffer a reduction in income and this brings about a decline in existing services and facilities. Schools and other establishments which are financed by local communities to some degree are severely affected. Retailers and service agencies in the country towns are subjected to a sharp decline in trade.

I am prepared to admit that some of these things are only side effects. I mention them only because the Minister said that before dealing with the outcome of his meeting with the States on this matter it was appropriate to see the rural reconstruction scheme in the context of the Government's overall policy towards assistance for rural industries. If this were so, would it not also be appropriate to see the rural reconstruction scheme in the context of the Government's overall neglect to carry out a policy that would have done much more to relieve the hardship and suffering of these people? With all due respect to the capable Minister, the people in my electorate must regard with some misgivings, to say the least, his remarks to the effect that the review has shown that much has been achieved in the relatively short period since the scheme was introduced. An examination of the correspondence that I have with me will show how they regard his remarks. I will read part of a letter which I received only a couple of days ago. It states:

The problem of finding this money has been brought about through the years of drought this country has experienced and then the severe recession in the wool industry. Due to the drought it was necessary that our stock numbers bs reduced to very few. Due to a rain in April 1970 shortly after our stock were sold off we have had feed which would have carried more than we had on the property but have been unable to obtain sufficient finance to restock other than 600 old ewes which the seller allowed me to have on the basis of payment after shearing several months after the date of delivery of the sheep. When the sheep were sold in February 1970, a mob of about 1,000 maiden ewes were sold against my instructions and the selling of these will have cost me an estimated conservative loss of income of $23,000 from those ewes and their offspring, however, as my instructions were issued verbally prior to the sale it appears that one must grin and bear this loss even though one realises why the sale was pushed. During 1971 I applied to the Commonwealth Development Bank for assistance but the application was refused without explanation. I then applied for the Drought Relief Restocking Loan for the purchase of 1,000 ewes but again was refused. I then applied to the Rural Assistance Board for a debt reconstruction loan and also to restock - their reply was to the effect that they could not assist unless I could obtain more country. Since June of last year we have been trying to live and nin the property on a drought relief loan'.

Another letter I received states:

We certainly agree with what was written. It seems that despite all the noise the Government is making that this scheme will 'save rural industries' - in actual fact it is extremely difficult to find anyone who has been assisted. There is a current local saying '. . . that you almost have to be in credit to be considered eligible for the Scheme to take you on . . .'

In our own case we put in an application, together with a detailed statement of assets and liabilities, at the end of January this year, and a detailed inspection was carried out by Mr Valuer Pike- who is the valuer attached to the Rural Bank at Dareton - in May. On 27th May we received our first 'knock back' to which we replied on 21st June only to receive a letter which only confirmed the Board's original decision.

We realise that everyone can't be assisted, but after having worked damned hard for 8 years to make a reasonably improved property out of what was a very poor set up and then be virtually written off by the Board, as what they no doubt consider to be an eventual bankrupt, is a bit bard to take.

It is quite obvious that the scheme was not designed to assist the small farmer, no matter how efficient he is. The 2 letters that I have quoted will indicate this. It will benefit mainly the large commercial farmer. At a time when the low income farmer can do little other than leave the industry with a significant capital loss and illequipped to earn other income to house and provide for his family, this is an injustice. This raises doubts about the Minister's statement that the loan for rehabilitation of those obliged to leave the industry amounted to only 529,500. If only $29,500 has been allocated to all those who have already been forced to move from the rural areas up to this time, they must have got $1 or less each.

The Minister has stated that they may now get a loan of $3,000. On the last occasion that the States Grants (Rural Reconstruction) Bill was debated I pointed out that an issue of the maritime workers journal had indicated that 120 reduntant wharf labourers were to receive $400,000 redundancy payment - not a loan; a straight out payment. The Silverton Tramway employees received 12 months full pay when the east-west rail service took over the line. Many of them did not lose a days work, nor did they have to shift out of the houses in which they lived. The Broken Hill mine workers have a redundancy scheme which provides $100 a year up to a maximum of $2,500, plus compensation for loss of equity in the home and also an early retirement on a pension if they are 57 years of age.


Mr Grassby - That is a bit of a contrast, is it not?


Mr FitzPATRICK - I will say it is. The older segment of the rural population is not well provided for either. This is an area in which Government action is urgently needed. Not only is the older farmer who is forced to leave his farm a real social problem, but in many cases his financial situation is hopeless. To provide for his old age the typical farmer has previously been able to rely on a capita] appreciation of his farm, either as a result of investment in farm development or as a result of rising land values generally. To some extent, this was a rural substitute for the superannuation schemes in other industries. But the erosion of values as a result of falling commodity prices has meant that farmers have lost nearly all that they hoped for. Many have tried to get the age pension. Some have been successful, but unfortunately many have failed in this area. In my opinion, they should be given some kind of annuity in exchange for their farm properties or they should be encouraged and assisted to live in their present dwellings and rent the farm to neighbouring farmers. It does not appear that the Government has taken all these things into consideration. In spite of the denial, it is a case of get big or get out. I think the article in the 'Lachlander* of 5th April 1972 gives some indication of how the New South Wales Minister for Lands considers these things. The article is headed '300 Western Leases May Have To Go'. The article states:

A forecast that 300 of the.], 900 lessees in the western division may have to be purchased out and move from the area was made at Hil:tor recently by the Minister for Lands, Mr Lewis, at a luncheon attended by himself and a group of Liberal parliamentarians who toured the west in a flying week end.

It seems to me pretty tragic if this is the outlook of the Government's rural reconstruction scheme. All that is needed in the outback areas, as the honourable member for Riverina has already pointed out to the House, is confident credit. I think it is about time this Government started to build a bit of confident credit back into the rural industries.







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