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Thursday, 14 October 1971
Page: 2399

Mr CREAN (Melbourne Ports) - I want to comment on the Wool (Deficiency Payments) Bill and to say at the beginning that, in my view, the immediate problem of wool - this is what we are talking about here, because the scheme is described as a provisional one - is not one of costs at the moment but one of price. The other day I happened to be reading a paper written by Dr Harris of the Bureau of Agricultural Economics about primary production and the national income generally. He indicated that the figure achieved for the sale of wool last year was the lowest figure since 1948-49. Of course, two or three things need to be looked at. Firstly, the same sum as in 1948-49 would have a very different purchasing power in 1970-71. Secondly, it took more sales of wool, in the physical sense, in 1970-71 to achieve even that low figure than it took in the 1948-49 period. Roughly, as I understand it, the production of wool now is somewhere between 6 million to 7 million bales annually. In 1948-49 it was in the region of 5 million bales. So there has been .an. increase in the quantity of about 30 per cent. But the sum received for the sales overseas was the same in 1970-71 as it was in 1948-49 even though we were selling more of it. Of course, the purchasing power of the money received is probably only . about half of what it was in 1948-49. To my mind, to some degree this speaks for the great resilience of the wool industry in that it has been able to survive in the face of that sort of circumstance. I do not know that any other industry would have been able to do the same kind of thing.

The question to which I find it difficult to get an answer is: Why has the sale price dropped so dramatically and to such a proportion in such a short space of time? The honourable member for Bradfield (Mr Turner) who has just spoken said that the sale price had dropped because wool did not have a monopoly. I do not think that anybody has ever claimed that wool did have a monopoly. It has been recognised for a good number of years now that wool is no longer used purely on its own. It has been used in blends with synthetics. Until this season there have been no accumulations of wool. Growers have sold all they produced annually and there has been very little carry over. I am not sure - these are the kinds of problems one has to look at - that our problems might not have been significantly fewer if our total production had been a million bales or so less than it is. But we have reached the point we are at because of the remarkable improvement in the productivity of the industry, something that in other directions by and large we claim as a virtuous performance.

The honourable member for Bradfield quoted from a paper delivered at a seminar some time ago which referred to the capital that was employed to produce 1 lb of synthetic fibre compared with the capital employed to produce 1 lb of wool. If we were talking - we need to get to the bottom of these 'ifs' in the discussion - about an industry that did not exist and we were going to create A or B, the relative costs of the two might be of some significance. But our problem in the wool industry is that we have vast amounts of capita] employed that is not capable of being transferred. That sort of argument is all right if we are not faced with the prospect, as in my view we are here, that if the wool industry goes a lot of capital simply goes out of existence; it is not transferable somewhere else. As I see it, what we are doing here is trying to provide a bridge of 12 months or so in which to take stock of the whole situation. I took part in a private discussion some time ago on this question, and one might polarise the argument by saying that some people - there is a significant number of them in Australia - believe that the wool industry is doomed, almost totally.

Mr Grassby - But why did they say that?

Mr CREAN - I am simply trying to put the two poles of the argument. On the other hand - this is the side of the argument to which I subscribe- I think the wool industry is viable and has shown itself to be so in the past, the reason it is in any kind of economic jeopardy at the moment is, I believe, not because of costs but because of prices. It would be nice if costs were lower, but costs are rather like the problem of the transfer of capital. There is no way by which one can suddenly and dramatically reduce costs. I think that honourable members, if they are honest, will admit that in many ways labour is not a very prime factor as far as the immediate problem of the wool industry is concerned.

I am astonished sometimes when I find that for debating purposes honourable members on the other side of the House offer the bogy of the 35-hour week, which we do not have as yet, as a sort of answer to a problem that we do have. All too often this is what the Government does. It does not face up to the problems that bedevil us immediately; it runs away and says: 'Well, if the Labor Party does this or something else, in 12 months or 2 years it will be so much worse.' I am not too sure that some of the people we are talking about have 12 months or 2 years to wait. This partly is the reason we have written our amendment in the way we have. If money is to be devoted to saving sections of the industry it should go to those sections of the industry which need it most. After all, there are some who are surviving fairly comfortably on today's prices; there are others who will not survive with the small amount that they will get from this kind of bounty. It is not, as my friend the honourable member for Eden-Monaro (Mr Allan Fraser) suggests, a tariff.

There are differences between a tariff and a bounty. I often define a tariff as a tax which the person who makes the good hopes will never be collected because he hopes still to make the good in his own country, and the tariff is there to stop the article being imported but he produces the good at a price plus the tariff and he sells it accordingly. What is envisaged here is in the nature of a bounty and what we are suggesting is that the bounty could be more equitably distributed. It is not right simply to say that if a person has 20,000 sheep and the floor price is such-and-such and the average that is agreed upon is 36c, and the difference between the price he gets and the 36c is 6c or 7c, then the bounty is paid on the number of pounds of wool offered and the number of sheep that he has. We regard that as inequitable. That is the basis for our objection. If honourable members opposite regard this as equitable and the most sensible way to do it, I suppose they are entitled to their opinion.

Let me get down to the question of the price, which seems to me to be the bedevilling factor. If, as some people say, the Japanese are holding off in the market - they ought to be paying a higher price but they are not - would not the fact that the Australian Government proposes to underwrite the price lead the Japanese to say: *We would be fools, would we not, to pay 36c a lb for the wool if the Australian Government is to underwrite the difference?' At least I think that would be the sort of argument that some shrewd buyers might arrive at, and this is why I think that ultimately we are right in our amendment when we go on to suggest in the second part that there should be a single statutory marketing authority to acquire, appraise and market the entire wool clip. It seems to me to be a curious kind of auction when we are doubtful about the principal buyer in the first place, and when the only buyer who is matching the principal buyer is the Government auctioneer who is buying in at certain prices. I would like to give it another 6 or 8 months to see whether this is a viable scheme. Up to date it does not seem to have been a very workable scheme.

If it is not successful I think the next logical step is to come down to compulsory acquisition. If people believe as I do, and as I am sure the Minister does, that the wool industry is viable why are not the principal buyer and other buyers paying a fair price for the product? After all, the Japanese would not sell a motor car to us at lower than the cost of production, and this seems to me to be something of the problem of the wool industry. Two or three years ago for the same quantity, and roughly the same qualities in aggregate of wool, we received $839m I think the

Minister said, yet in the last full year for which figures are available - 1970-71 - this amount had dropped by nearly $300m. Why? Is it because the buyers are better organised than are the sellers? The view that we on this side hold is that this has been the main difficulty. It is not that wool as a product has a monopoly. I do not think anybody suggests that. But surely we are as entitled to claim for wool as a product something like a reasonable cost of production as we are, or were, in the case of iron ore when it was sold by contract in Western Australia to certain Japanese buyers, and in the case of wood chips. Through private negotiation between the 2 countries we got a better price. Is not the same kind of thing a possibility as far as wool is concerned? One other matter was raised in the Minister's speech about which I want to say something. He said:

During the course of the year it is anticipated that there will be a' settlement of the international currency siuation

I would submit that one of the difficulties at the moment as far as Japanese buyers are concerned must be in relation to the ratio which they think should apply to the yen and the Australian dollar. I have been prepared to accept the view that up to date the Government may have been wise to sit out this sort of crisis. But in a situation where, as I understand it, the yen has dropped from 360 yen to the American dollar to about 330 yen to the American dollar, or a variation of about 9 per cent, surely Australia has to make up its mind in its trade relationships with Japan what it thinks are fair trading terms in the 2 currencies.

I would submit that instead of waiting on what is taking place at the meeting of the International Monetary Fund and the meetings of the Group of Ten - it has now become a group of nine versus the United States as the tenth - it is about time that Australia began to do something about arranging separate terms if need be, between Japan and itself and, if need be, in respect of wool. After all if, as some people say. we should follow the American dollar - I cannot say that I subscribe to that view either - and there is likely to be a drop in the yen compared with the American dollar from, say 330 even down as low as 300 yen to the American dollar, it is extremely unlikely that any Japanese buver will buy something when he floes not know what the Australian exchange rate will be in the circumstances.

I would suggest that we have reached that critical time in Australia. It is interesting to see that the Treasurer (Mr Snedden) on his way home is at least to spend a day or so in Japan. It seems to me that these are some of the matters that will have to be strenuously examined in the next few months. Is one of the hitches at the moment the uncertainty about the currency? On the other hand, if we in this country really feel that wool is underpriced, why should we let it be further underpriced by accepting an unsatisfactory arrangement about the exchange rate, which is surely what the Government is proposing to do.

Listening to. the kinds of arguments that have prevailed in this debate, particularly from the Government side, I suggest that there is a little bit of whistling in the dark rather than a tendency to face up to what is a highly critical situation. I do not think there are any simple answers to these problems, and I think we are foolish sometimes to suggest that there are. But at least here is a proposal before us that we think is inequitable as far as the immediate difficulties are concerned, and the difficulty arises out of the fall in the price of the product that is being sold. What this measure does is simply to distribute on an inequitable basis to everybody irrespective of bis total income or relative circumstances in the industry, the same flat payment.

As my colleague the honourable member for Dawson (Dr Patterson) showed, the biggest part of the subsidy goes to people who in one way are not doing very badly at the moment. They certainly would be doing better if their wool cheque were greater, but they are not going out of existence. On the other hand, when recently I went to the Western District of Victoria, to the electorate of the Minister for Education and Science (Mr Malcolm Fraser), I was told that even with this assistance payment many of the smaller people there still would not survive. Maybe we can callously say that their capital would be better employed in a synthetic plant somewhere else, but that is a very unrealistic and uncharitable attitude to the problem.

Therefore I support the amendment moved by my colleague the honourable member for Dawson, and I hope that honourable members on the other side of the House will realise that it is a genuine view on our part that this is an inequitable way to bestow temporary largesse to the industry. la the words of my friend the honourable member for Eden-Monaro, even if it means having something in the nature of- a means test, means tests are not unknown on the other side of the House either.

Mr DEPUTY SPEAKER (Mr Cope)Order!The honourable member's time has expired.

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