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Tuesday, 13 September 1983
Page: 678

Mr O'NEIL(5.13) —I would like to answer the honourable member for Maranoa (Mr Ian Cameron) who talked about the number of farmers in my electorate. He is quite correct. I have very deep concern for those farmers and primary producers. I have spoken to many primary producers about the proposed legislation and all of them agree that it is positive and constructive. I also go further by saying that the primary producers to whom I speak firmly support the present Minister for Primary Industry (Mr Kerin) and believe that he is something primary industry certainly has not had for a long time. They think he is a wonderful Minister. I also thought that the honourable member for Maranoa would have said something about the drought subsidies which people in his electorate have been very duly paid by the present Government.

The Live-stock Slaughter (Export Inspection Charge) Amendment Bill, the Grain ( Export Inspection Charge) Amendment Bill, the Eggs (Export Inspection Charge) Amendment Bill and the Edible Oils (Export Inspection Charge) Amendment Bill seek to amend the export inspection charges on livestock slaughter, grain, edible oils and eggs. The general principles involved in recoupment of these charges from the industries concerned are similar in the case of all products. These principles were not originated by the present Government. The Industries Assistance Commission in 1975 recommended that the Federal Government, which had previously borne all export inspection costs except in the meat industry, should transfer these to the relevant industries.

It recommended that meat export inspection costs should be wholly borne by the Government because, it said, this was a case where 'export inspection imposed a significant cost burden, the removal of which could be justified on efficiency grounds as assistance to a low cost industry'. However, the IAC modified that stand in its more recent report on the abattoir and meat processing industry when it said:

The Commission can see no reason why export inspection per se should be funded by the community as a whole.

In this case it noted that any move towards full recovery of meat export inspection costs would amount to a significant decrease in the current low level of assistance to the meat industry. The previous Government did not act on the 1975 recommendation that it should bear the full inspection costs and in May 1979 the former Treasurer the honourable member for Bennelong (Mr Howard), in his statement preceding the mini-Budget said:

Steps will also be taken to recover a greater proportion of the costs incurred by the Commonwealth in providing cattle disease eradication and export services. To this end, the disease eradication component of the livestock slaughter levy will be increased from $1 per head to $3 per head from 1 July, and arrangements, effective from 1 July, will be made to recover, in respect of meat, wool and grains, approximately 50 per cent in total of the costs incurred by the Commonwealth in providing export inspection services for those commodities.

That was estimated to be worth $30m in extra revenue. That was not a sudden decision. As the digest of that Bill noted, a review of the whole question of charging for export inspection of meat and other products had been foreshadowed in the 1978 Budget Speech. So for the Liberal-National Country Party coalition having considered the principles for nearly a year and having come down in favour of it, the acceptance by each industry of a fair proportion of a charge that is, after all, made for a service that is in the interests of its own lasting profitability, becomes more or less a bipartisan one. The Budget statement indicates that the cost of meat and livestock inspection services, estimated by the Department of Primary Industry, during 1983-84 will be $70.1m, an increase of $11.4m over the previous year. The rate of recovery decided on is 50 per cent which will increase meat export inspection charges for cattle from $ 1.80 to $5.40 a carcass.

I think the whole question of export inspections and the apportioning of their benefits and costs was dealt with quite definitively in the IAC interim report of December 1975 on financing promotion of rural products. It made the point that in the absence of government-administered export inspection, local industries competing for export would, if their products were to remain competitive in world markets by meeting requirements of importing countries, have to arrange and finance in full their own export inspections. This would be much more expensive than using a centrally organised service with advantages of scale and standardisation and with access also to part time employment of State Department employees.

The case for government-financed export inspection has always been that the Australian community benefits from raised standards of quality, that better standards enhance national prestige and that this extra prestige tends to help promote other exports to the overall good of this nation. In that regard I will quote a section from the IAC report, which applies equally well to rural exports other than meat. It states:

To the extent that the various State Governments Acts designed to maintain the quality of products and hygiene have been influenced by export standards and to the extent that goods produced for export have been influenced by export standards, and to the extent that goods for export are consumed locally, export inspections have raised quality.

However, it cannot be assumed that the improved meat quality has been a net gain to consumers which can be classed as an external community benefit, nor can it be assumed that any benefit to consumers would have entailed a loss to producers for which some compensation payment by the Government would be warranted. The Commission believes that export inspection of meat is profitable, in the sense that returns from export sales are higher than would be the case in the absence of export inspection and of meeting the standards set by the export regulations.

All the evidence points to a close relationship between the export parity price and the domestic price of meat. This means that, in the absence of an export inspection subsidy, the prices paid by Australian consumers are raised by the extent to which net export prices are raised.

It is a normal commerical relationship that a higher quality product entails a higher cost to producers and a higher price to consumers, and no case for subsidy seems to be involved.

No evidence was submitted which suggested that export standards were so high that they imposed quality standards on the domestic market which were clearly in excess of those wanted by local consumers.

The report went on to say that although the remarks applied to meat they applied equally well to other products subject to export inspection. This Government is not intending to abolish its subsidy of export inspections. But I think it reasonable to expect the industries that clearly benefit from this form of quality control to share rising costs, at least to a degree that recognises quality control as a legitimate production cost in any industry.