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Thursday, 30 September 1971
Page: 1774

Dr PATTERSON (Dawson) - This Bill is concerned with the continuation of the payment of bounty on phosphate fertilisers until December 1974. The Phosphate Fertilisers Bounty Act came into operation in 1963 and has continued up to the present time. At the present time it provides for a payment of $12 a ton on standard superphosphate and $60 a ton on phosphorous pentoxide content or other superphosphate and ammonium phosphate produced and sold for use as fertiliser in Australia. From time to time amendments to this legislation have been debated in the Parliament and it is interesting to note that since 1963 the total amount of bounty paid to manufacturers to offset costs and, in the end, indirectly affecting the price of superphosphate to primary producers has been $234,852,323.

Mr Chipp - It was $224m.

Dr PATTERSON - That is the figure I was given by the Department of Customs and Excise. The difference could be the estimate made for last year. But the fact of the matter is that a very large amount of money has been injected into the economy as a counter to increased costs of phosphates. There is a perennial argument - 1 know the honourable member for Mallee (Mr Turnbull) and I always have a friendly argument on this - as to whether the primary producer is getting the full benefit of the bounty. On the one hand it can be argued that the prices of superphosphate or the price of the phosphate content of fertilisers has not increased, and this is true if one looks at the index of prices paid, produced by the Bureau of Agricultural Economics. We find that the actual price of superphosphates to primary producers has shown practically no increase since 1963, due to the fact that the bounty has been progressively increased to counter the increase in manufacturing costs.

The argument, of course, is whether this is in fact really offsetting some degree of inefficiency in the manufacturing of phosphatic fertilisers, and, when one looks at the profits, whether the primary producer should be getting fertiliser today at a lower price than he is actually paying. I can only assume, I think rightly, that the Department of Customs and Excise periodically checks the cost figures of fertiliser companies and would be concerned if in fact what I allege is true. It would be concerned to ensure, in other words, that the bounty is being paid correctly to counter legitimate increases in costs. But the allegation is always made, not only by producers but also others who are not directly concerned with the manufacture of fertiliser in Australia but are more concerned with the import of fertilisers, that this bounty is not all serving the purpose for which it was established. But this is a moot point. As I say, I must accept the explanations given by the Government that it is acting as a watchdog over the costs of fertiliser companies.

The fertiliser industry is going through a fascinating stage at present. It is a very worrying time, I would think, for the major producers of most phosphatic, nitrogen and potash fertilisers in Australia because almost every day one sees reports of large losses, mergers or consolidations of important fertiliser companies in Australia, some selling out to other bigger companies, and this process has been accentuated in the last 2 or 3 years. There is always the worry, of course, that monopolistic practices will eventuate from amalgamations, but here again one has to rely on the watchdog activities of the. Government to see that there is a relationship between the import parity prices of nitrogenous fertilisers and the actual prices being paid.

It is interesting to have a look at the way fertiliser companies are being consolidated. Consolidated Fertilisers, a consortium which is now being formed, has as its major shareholders: Imperial Chemical Industries of Australia and New Zealand Ltd with 38 per cent; Dow Chemicals (Australia) Ltd with 20 per cent; Swift Chemicals Pty Ltd with 13 per cent; the Sulphide Corporation Pty Ltd with 9 per cent; Mitsui & Co. (Australia) Ltd with 2 per cent; and King Ranch with 4 per cent, leaving 14 per cent of the total shareholdings held by Australian institutions. So this giant company, the Consolidated Fertilisers consortium, has as its shareholders a wide range of powerful companies. There are 4 subsidiaries of the Consolidated Fertilisers consortium. They are: ACF and Shirleys Fertilisers Ltd; Eastern Nitrogen Ltd; Austral Pacific Fertilisers Ltd; and the Ammonia Co. of Australia Ltd.

There has been a lot of concern expressed, particularly by primary pro- ducers, regarding the effect on fertiliser prices of these amalgamations into this giant consortium. It has, of course, been argued and, in fact alleged, that because we now have a consortium of this size, a monopoly of this size, that particularly in the field of nitrogen there will be the temptation to use monopolistic practices to place prices at a higher level and that this will not be subject to challenge. Of course, we know that under the Act if there is evidence that a company is charging a higher price than the import parity price then action can be taken to stop the subsidy. I deal with nitrogen as distinct from phosphate, but the principles are nevertheless relevant because it is of concern to producers in Australia that if we have fewer manufacturing companies then the chance of higher prices being charged for phosphate becomes greater due to lack of competition.

The figures I quoted before show in total that the upward trend in superphosphate usage slackened off several years ago. One would suspect that there is some reduction in the use of superphosphate anyhow throughout Australia because of the problems of the wool and wheat industries. One of the fields of research which must be accelerated in the immediate future is the residual effects of phosphate in the soil, because it is now quite clear that many producers, particularly in the wheat and sheep areas, are questioning the principle of the annual application of many fertilisers. In fact, in many areas which I have visited in the last 18 months this has been one of the most topical questions discussed. People have reduced the application of superphosphates and yet have seen no diminution in the response of their pastures. Over time, of course, there certainly would be a marked decrease in this response.

It has been shown by scientific research that when superphosphate is applied to the soil, only about 40 per cent of that phosphate is actually utilised by the plant itself. The balance stays in the ground. Some may be wasted by leaching but most of it stays in the ground and has a residual effect. The problem of science is to determine optimum rates of application, because Australian soils, with some exceptions, are deficient in phosphorous. They are deficient also in nitrogen and other elements but the principal deficiency is phosphate, which we are now discussing. In Queensland, where recent work has been done some soils are notorious for this deficiency. The newly developed wallum soils are perhaps the most notorious in Australia in terms of commercial development because already there has been a profitable response to applications of up to 25 cwt of superphosphate an acre. This is a pretty solid application of any fertiliser. For many other soils 8 cwt of superphosphate is recommended.

It would seem, therefore, that with large amounts of superphosphate or phosphatic fertilisers being applied to the soil, some thought must be given to undertaking more intensive research into the residual effects of phosphates. One of the interesting aspects of experiments in recent years is that in the case of continuous cropping, as distinct from, say, perennial pastures, there is little residual effect because the phosphorous is used by the plant. With perennial pasture, it has been estimated, from experimental work, that up to 25 per cent of residual phosphorous remains in the soil. In pastures in the southern tablelands of New South Wales, experiments have shown that up to 50 per cent of residual phosphate remains in the soil and in New England up to 70 per cent of the phosphate is not used by the plant. Strangely enough, in time, through systems of reversion, this residua] phosphate reverts to a fertiliser something like the rock phosphate in its original form. So, this is an area where much research could be done on residual effects on little known soil types.

The Commonwealth Scientific and Industrial Research Organisation, the State departments of agriculture and other Commonwealth departments have been doing some research on this matter. However, with costs increasing and commodity prices decreasing, more work needs to be done in avenues which can reduce costs of production. Many phosphates are returned to the soil as organic fertilisers through humus or through animal excreta and, consequently, there is the continuous problem of measuring the residual effects of phosphates. Perhaps the most lucrative area for development of phosphates in Australia is the northern part of Australia. The field has been well explored in the southern part of Australia in relation to wheat and pastures, mainly subterranean clover, but it has been only in the past 5 years that the scope for the development of tropical pastures in association with phosphatic fertilisers in the north has been appreciated. We all know of the tremendous importance of the association of phosphates with, say, Townsville lucerne and what this can mean to the cattle industry. It can revolutionise the cattle industry not only in terms of carrying capacity and turnoff but also in relation to reducing mortality rates.

In northern Australia there are about 180 million acres, mainly in the spear grass area, which are suitable for the application of phosphatic fertiliser in conjunction with other fertilisers and for the establishment of known perennial pastures such as the stylosanthes and desmodium. Coupled with this pasture revolution through the use of superphosphates, there is tremendous potential for increased development of the cattle industry. One of the Government's most progressive moves in northern development was the establishment of the CSIRO Townsville laboratories under the then control of Dr Griffiths Davies. This was an extraordinarily good move in that it set up a team of scientists in the environment in which they were to work and to apply their results rather than in Canberra, Brisbane or some other capital city. Already the research work of the Townsville laboratories has made a profound impact on the cattle industry in the north, particularly in the spear grass country.

Earlier I mentioned that about 180 million acres of tropical land is suitable for more intensive development. When it is realised some areas are carrying only one beast to 100 acres and that the carrying capacity can be increased to, say, one beast per 7 acres with the turnoff being increased even more than that, because mortality would be reduced, one can see the tremendous potential for increased production in the northern part of Australia. Of course, the whole objective of a phosphatic fertiliser is for it to be used in association with a legume which itself will, by the various rhizobium processes, produce nitrogen in the soil. So, by the utilisation of phosphate with a legume, nitrogen is promoted. This is what is most needed in our north because soils are highly deficient in phosphates and nitrogen. Even the sceptics can now see for themselves the outstanding results that can be achieved when superphosphate is used with Townsville lucerne and the other stylos. The other legumes - desmodium, glycine, indigofera, phaseolus and so forth - are all making their mark in the northern areas when used in association with phosphates.

It seems clear that this is the new area in Australia in which great interest will be shown in relation to the application of phosphate fertilisers because, as I mentioned in an earlier speech today, of all the major exporting primary industries the beef industry is the one that appears to have the greatest future, provided that synthetics can be kept under control. It is in this area of northern Australia, almost untouched in terms of potential, that this development of pastures and phosphate in association is going on.

Mr Chipp - What sort of synthetics are there for beef?

Dr PATTERSON - -The Minister for Customs and Excise, who is at the table asks me what sort of synthetics there are for beef. I spoke for about 20 minutes on this subject today. I referred to the use of soya bean protein which is being utilised for the manufacture of synthetic beef, particularly in Japan.

Those are the main points I wished to make about the role of phosphate fertilisers. I mentioned earlier the problem of controlling the price. My worry is about the fertiliser consortium because it is becoming more powerful through lack of competition. Through amalgamations it will perhaps be able to exert greater influence than before on the price of fertilisers. Let me give one example of this. It does not relate to phosphate, but it is relevant. It follows the same principle. I refer to nitram. It was always thought that after the phosphate fertilisers bounty legislation was passed the price of nitram and urea and other nitrogenous fertilisers could not be increased very significantly because of the import parity provisions. But in recent weeks the price of nitram has increased by $5 a ton in Brisbane, $8 a ton in Mackay and $9 a ton in Townsville. People are asking: 'Well, did we not tell you this? Did not we tell you that the consortium would do this? As soon as this monopoly was formed, up went the price of fertiliser'. I am being criticised in the north because I was defending the fertiliser companies. Of course the only way they could reduce costs was to amalgamate.

We saw the tremendous excess capacity of Austral Pacific Fertilisers Ltd. Now we have the concrete proof with nitram rising by this pretty significant figure. When one looks at the explanation of it, one finds that the undumped price of nitram is still significantly higher than the price that is being charged in Australia. The undumped price of nitram is $73 a ton. The lower price charged previously was apparently caused by competition between nitram and urea.

I have directed a question in relation to this to either the Minister for Primary Industry (Mr Sinclair) or the Minister for Customs and Excise because I am not particularly satisfied with the explanations being given by the fertiliser companies. As I keep emphasising today, what we have to guard against is that as more and more fertiliser companies of necessity are having to amalgamate for economies - whether they be economies of scale or something else - we have to watch that they do not have an undue influence on the price of fertiliser in Australia. The Government has to exercise this watchdog approach all the time. As far as the Bill is concerned, provided that the farmer is receiving the full benefit of this bounty - T say this for my friend the honourable member for Mallee - the Opposition supports the Bill.

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