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Address to the Cattlemen's Union Annual Convention, Rockhampton, Qld



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ADDRESS BY THE HON JOHN ANDERSON MP

MINISTER FOR PRIMARY INDUSTRIES AND ENERGY

TO

THE CATTLEMEN’S UNION

ANNUAL CONVENTION

ROCKHAMPTON

WEDNESDAY 26 AUGUST 1998

Chairman, distinguished guests, ladies and gentlemen.

Thank you for your welcome and for the invitation to speak to you today.

Its always a challenge for a speaker on the third day of a comprehensive

Convention program such as the one you have here in Rockhampton - not to

mention one with some excellent hospitality as well - to keep the audience

spellbound or to tell you something you don’t already know about your

industry.

You might reasonably expect me today to talk about the meat industry

restructure and taxation reform - and I will touch on both those issues.

But what I want to predominantly focus on today is the future for

agriculture and the roles and responsibilities we both have in delivering that

future.

' Perhaps the most over-used words currently promoted by government are

“adjustment” and “change”. So much have these concepts been lectured

about that we are seeing an enormous groundswell of resentment and

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opposition and an attitude developing that somehow change is threatening

and that adjustment is to be avoided at all costs.

And yet there is a recognition that for Australian agriculture to survive and

prosper we must plan for the future. Intense and growing pressure in the

market place from overseas competitors means Australia cannot afford to

stand still.

To maintain and improve our position, industry and government must

tackle current and emerging issues - issues such as international agricultural

policy reform and the benefits that flow from it, the use of biotechnology

and conserving the natural resource base to ensure a sustainable agricultural

sector.

On coming to government the Coalition recognised that if Australia was to

be in a position to realise our potential, structural change was needed, and

so we set about tackling such issues as government spending, reducing debt,

minimising dependence on welfare and reducing or eliminating government

intervention in such industries as wheat, sugar and meat.

Two and a half years later, I think there is much to be proud of. We have a

budget in surplus; we have reduced inflation to a trickle, we have provided

economic stability that has delivered lower interest rates; we have cracked

down on welfare fraud. And because of those changes, despite an Asian

economic crisis hitting us full on at a time of drought and commodity

downturn, our economy is still fundamentally strong.

I won’t pretend that for us in government or for you in industry, that the

changes have been painless; they clearly have not.

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Neither can I stand here today and say it will all be smooth sailing from here

on; that returns are on an upturn and will stay there.

I won’t claim that for all our trade reform efforts and market access

negotiations that the playing field is level - it isn’t and never will be.

However, I firmly believe we do have a strong framework in which our

rural industries can move forward. In wheat we now have a restructured

Australian Wheat Board based on grower ownership; in sugar we have an

integrated package of reforms developed in consultation with industry.

And of course for the red meat sector we have undertaken equally

embracing reforms that provide a structure that allows you as producers to

have a clear and direct say in where you want your industry to move.

And it is important that you do that.

But you need to recognise and appreciate the environment in which you are

now operating. Times have changed and your competitors have changed.

Australian cattle producers are now global traders - not in meat but in

protein.

Your competitor is not the cattleman next door; it is not the processor down

the road; it is not even the cattle producer in the US or Argentina.

Your competitor is the poultry and pork producer, because you are now all

competing for the consumer dollar to provide protein.

And it is not just a competition based on price, although efficiencies in

production will always be important. Price alone is not the deciding factor -

increasingly convenience is.

Poultry - both chicken and turkey - are now sold in easy-to-cook packages;

they come semi-prepared and can turn the average cook into a gourmet chef.

Beef has to be embrace similar innovative marketing to stay in the race.

And it must become as reliably consistent in its eating quality as poultry.

It must be affordable for the producer and the consumer alike.

But I am confident that the industry, working with MLA, will be able to

meet these challenges.

MLA is an industry designed, industry controlled, lean and efficient

company providing industry services.

Richard Brooks and some of his staff have already spoken to you to-day on

some of the things they are doing and have planned for the future.

I believe the right type of organisation is now in place to deliver the sort of

services industry wants. I want you to genuinely feel that MLA is your

company, responsible to you.

Taxation reform

Let me now tell you about the Government’s proposals for reforming the

taxation system.

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Rather than trying to tinker with or patch-up the present inequitable taxation

arrangements, the Government is proposing major reform of the Australian

tax system at both Commonwealth and State Government levels. It would

have positive effects across the board for all agricultural industries.

The tax package proposals are about recognising that a modem tax system

is one of the keys to Australia’s future economic growth and dynamism.

They are about helping to gear-up the Australian economy to meet the

challenges of the twenty-first century.

Some of the key elements of the package include:

. the introduction of a 10 per cent Goods and Service Tax

(GST) to replace not only the Wholesale Sales Tax but also

nine indirect State taxes,

. exports of goods and services to be GST-free,

. substantially reduced fuel costs lowering both business and

living costs in rural and regional Australia,

. significant income tax cuts through lower tax rates and higher

income thresholds,

. more accessible Family Allowances through abolition of the

assets test and an eased income - the family farm no longer an

impediment to receiving family assistance; and

. essential family services , such as health care, education and child

care are to be GST free.

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• provisional tax, which farmers have always hated, is to go.

As business people I am sure you want to know how much the tax package

will improve your competitiveness.

Treasury estimates that the benefits to our agricultural industries from

reduced input costs will amount to $1.1 billion per annum. The largest cost

savings are expected to occur in the beef cattle and cropping industries.

The NFF have calculated the average cost saving per farm at $7500 pa.

This tax package also sets out to alleviate the biggest headache of all for

farmers - the high cost of fuel. This is especially so in Queensland due to

heavy reliance on long distance transport.

It will costs less to transport cattle with the cost of diesel for heavy transport

declining by 25 cents a litre .

Lower road and rail transport costs will reduce both business and living

expenses in rural Queensland. The costs of transporting groceries, clothing,

furniture will also go down. The tax package will not only bring down

farm business costs but increase equity between rural and regional Australia

and the cities.

Many farm families will also benefit greatly from the tax package.

Cuts in personal income tax and improved family assistance alone will

deliver an extra $3,373 in the hand to a farm family with three children

operating as a partnership and with a net annual farm income of $35,000.

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. This takes account of the higher costs associated with the GST but

does not include higher incentives for private health insurance or

removal of the assets test on family allowances, which currently stops

many farm families from receiving assistance.

Everyone in this audience should be looking forward to the introduction of

the government’s tax package - it reduces income taxes, it brings down

business costs, it gives more to families and through lower transport costs

(this can not be over emphasised in the rural and remote Australia) it will

bring the city and country closer together.

The Government has set down a clear vision for Australia with this tax

package.

We have a clear vision for agriculture too - including through our

Agriculture - Advancing Australia (AAA) package and the other programs

and policies we have put in place.

We have recently released The Action Plan fo r Australian Agriculture and

you will all soon be receiving a copy of this itL the mail,, if you haven’t

already done so.

It is a shared framework for securing the future of Australian agriculture as

profitable, sustainable and competitive.

It requires action, input and commitment from industry, from government

and from community organisations.

Government’s role is to give industry and individuals the tools and

infrastructure required to achieve self sufficiency, so that farm businesses

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are better placed to take control of their own business risks and

opportunities.

Government has a responsibility to improve social and economic

opportunities for everyone, acting as a catalyst for new developments and

innovations and upgrading skills so that people can manage change and

respond positively to new circumstances.

It is a partnership with rural industries to deliver

• increased profitability

• skills development and leadership

• closer relationships with customers

• increased quality and value

• enhanced ongoing planning

• sustainable natural resource management

• high levels of innovation and

• robust rural communities

They are set out in more detail in the Action Plan and I would commend its

reading to you because true sustainability in agriculture can be achieved if

we work together.

Experience has taught us that as beef producers and suppliers to world

markets we must be ready to face unexpected changes in our expectations -

often at very short notice. The collapse in the Indonesian live cattle trade is

testimony to that.

We know we must be flexible and adaptable to consumers requirements, the

vagaries of the weather, unexpected changes in the purchasing power of our

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customers and sometimes in their purchasing policies. We continue to

prove we can do it. The Action Plan provides a blueprint to help us get

there.

Even so, from time to time I hear complaints that the Government is not

doing enough to help the industry, or that industry is suffering because of

the extent of foreign investment here, or that our trade policies favour other

countries more than they do us.

Let me make it quite plain. This Government does all it can to support the

development of an efficient, sustainable, profitable beef and live cattle

industry. We would not wish to do anything that is not in the best long­

term interests of the industry.

On foreign investment - there is no doubt we would not be exporting as

much beef as we do if we had prevented the investments which have been

made here by foreign interests. Less export dollars would in mm reduce

our ability to buy equipment, products and technologies that we need.

In regard to our trade policies, we are part of the World Trade Organisation

with 132 countries which have made a commitment to reducing barriers to

world trade.

If we left the WTO, we would be a small country without the protection of a

rules based world trade system, giving us no recourse against new

protectionist actions taken by other countries.

If we try to block imports to Australia - for example by imposing a high

tariff on imports from certain countries - we would be breaking the rules

and, most importantly face retaliatory action by our trading partners and

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lose markets for our exports; and we would be forced to offer some other

form of compensation in other areas of trade; and we would face high costs

in administering a complex scheme which would be nearly impossible to

enforce.

The end result of blocking imports would be a reduction in farmer incomes

and loss of income and jobs in many rural communities.

I ask you not to be taken in by the glib ‘one-line - one-idea’ popular policies

that some politicians fairly recentiy come to prominence are peddling

around the country.

We would not be better-off as a country by adopting old-fashioned inward­

looking policies that restrict trade, investment or, indeed, immigration.

We want a growing economy that is first class and competitive by world

standards and we must continue to adopt the changes that are necessary to

achieve that.

I am confident we have put the right structure in place to help the red meat

industry get value for money under the new industry structure.

I am confident that the new tax regime will be right for the country as we

move into the next century.

And I am confident we have got the right policies in place for the longer-term.

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Don’t be misled into thinking there are easy quick-fix solutions for your

industry or the nation. They simply don’t exist.

Looking to the future, the best way the beef industry will prosper is from

supplying a reliable, quality product at a reasonable price which customers

know they can depend on.

I see it as extremely important for the industry to strive to maintain the

highest quality standards and produce a consistent product under a grading

system customers can identify with.

Beef has many competitive products in this diet and safety conscious world.

It is up to you in the industry to convince consumers how good your

product is and ensure, through consistent quality, convenient presentation

and innovative marketing, a strong and viable beef sector.

As a government, we want to help you achieve a vision of a dynamic and

profitable beef industry. The reforms I have outlined, the programs that are

contained in the AAA package and the Action Plan will, with your support,

bring us all closer to a genuinely sustainable rural sector.

Thank you