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Tuesday, 7 December 1971
Page: 4174

Mr GILES (Angas) - My electorate and I welcome the introduction by the Government of these measures to assist the canneries referred to in the Bills before the House. I intend to refer specifically to Riverland Fruit Products Co-operative Ltd as it affects my own area. My personal involvement with this measure goes back some time to 12th November 1968 when I wrote to the State Minister for Agriculture, at that time a Mr Story, suggesting that perhaps he could apply for a section 96 grant in relation to the particular difficulties with which that factory was faced. I think that the next step probably was made on 25th February 1969 when in answer to other letters I received a lengthy and very detailed letter from the Deputy Prime Minister of the time, Mr McEwen. I. intend to refer to that letter in a short while. The next relevant date was 1970 when the Ives interdepartmental committee was set up to look into the problem associated with canneries. In 1971 we received this welcome decision by the Government on top of assistance made available to the Shepparton Preserving Co. Ltd affecting Jon Preserving Co-operative Ltd and Riverland Co-operative. The original reason for the commencement of this chain of events relates primarily to the market development allowance which the canned fruit industry set up for a variety of purposes.

As it affected the Riverland cannery the market development allowance funds were used heavily to promote Australian peaches in competition with American canned fruit, in particular on the West German market. It was in 1967, for instance, that Australia made heavy sales of canned peaches in West Germany at very low prices. The results of these sales, which were heavily underwritten by the payment of the market development allowance, were twofold. Firstly, the Australian Canned Fruits Board incurred a debt in its market development allowance fund which, apart from requiring government legislation to facilitate amortisation, meant that rates of market development allowance payment in 1968 had to be reduced. I understand that the Australian Canned Fruits Board decided in December to pay the market development allowance on 1968 sales at an interim rate of 671 per cent of the 1967 rates. The second result of the heavy sales to Germany in 1967 was a threat of retaliatory action by the United States. The United States, the traditional and major supplier to the German market, considered that Australia's substantially increased share of the market the year before had been won through the assistance of a government subsidy - the market development allowance.

Whilst arguing that the market development allowance arrangements did not represent a subsidy in terms of the General Agreement on Tariffs and Trade, the Government was unable to sway the United States from its determination to retaliate by introducing a direct subsidy itself by way of so-called section 32 funds in America unless steps were taken substantially to modify the Australian system. I am sure the House will appreciate that a subsidy to the American industry would have had the most severe repercussions for our own Australian industry. The Government was able to avoid the threatened retaliation by the United States only by agreeing at a meeting in Washington in July of that year to suspend the payment of the market development allowance on the export of canned peaches to our major markets.

The problem which resulted from that action will be more easily understood by the House when I refer to the fact that while in the case of the Victorian section of the industry canned pears represent the largest and most important section of the exported product, in South Australia, and particularly in the case of the Riverland Co-operative, by far the largest export component is canned peaches. I hope that the House will recall, from the remarks which I made earlier, that it was canned peaches in particular that were hit by the series of events which I have just described. To illustrate the difficulty which faced the Riverland Co-operative company I will quote some estimated production figures. The estimated ultimate production potential of that company of canning fruits is 10,000 tons of apricots, 35,000 tons of peaches and only 5,000 tons of pears. That Co-operative has a total potential capacity of 50,000 tons of fruit.

The growth of this company, which was formed only in 1959, represents another problem which puts it completely out of comparison with the older traditional canning companies of Victoria. The amount of money borrowed and the tremendously rapid expansion of that company have been other contributing causes of its problems in terms of liquidity. Before following on with this theme I will just point out the third reason for that company's problems. The Australian Government in its negotiations under GATT at an earlier stage had to take away a certain proportion of the preference granted to tinned peaches but not to pears, fruit salad, etc. The preferential tariff was removed as it affected entry into both Canada and the United Kingdom. The fact of the matter is that at this stage the Riverland Co-operative has been granted this assistance which amounts to $1.8m. This amount of money is to be made available, by agreement, by the Federal Government and the South Australian Government, with each Government contributing equally towards the assistance offered.

There has been some talk in this debate about the fact that no conditions apply in the granting of this assistance. I have to hand letters that deal with an agreement agreed to by the State Bank of South Australia on the one hand, operating through an Act called the Loans to Producers Act, and the agreement between the Riverland Co-operative company and the South Australian Government through its banking instrumentality. The conditions in that agreement are: Firstly, the Co-operative has acknowledged that the debt continues on the basis that so long as the Co-operative acts in a manner and to an extent considered reasonable by both governments no interest or capital repayment should be required by the State Bank for a period of 20 years. Thereafter new conditions may be set. Secondly, from the freeing of commitments in this way, 4 per cent of this otherwise interest-free loan must not be disbursed to growers but must be held for the purpose of crediting an amortisation reserve. Those funds must be retained to act as a reserve fund to help in the general liquidity of the company. The third condition is that if the company were to go into liquidation the whole of the loan would be repayable. I do not know whether those honourable members who mentioned this aspect in this debate were aware that these conditions do apply, and, frankly, I have not checked to see whether these conditions also apply in the case of the Leeton Co-operative Cannery Ltd. Certainly the Riverland Cooperative has signed an agreement containing these conditions as they affect the situation in South Australia.

The honourable member for Balaclava (Mr Whittorn) did say that he would be in favour of this Bill if it were aimed and geared to help the growers. In the case of Riverland Co-operative this Bill will certainly help the growers because firstly it is a co-operative, as is Jon Preserving Cooperative Ltd. I think that the honourable member for Adelaide (Mr Hurford) will deal with that company later on in this debate. Secondly the whole idea of the thinking of both the State Government and the Federal Government on this matter was to free funds from the business activity of these co-operatives so that they would not have to pay less for the raw material, the fruit produced by growers in those areas. By freeing them of their commitments I anticipate that larger amounts will be made available to the growers for that raw material as a result of action by this Government in association with the State Government. There is no question in my mind that this Bill is of very great signi ficance to the growers. I refute the suggestions to the opposite effect which I heard during this debate. I assume that the honourable member for Balaclava will therefore support the Bill as he made that a prerequisite to his opinion.

I would like briefly to finalise my remarks. The Riverland Co-operative is situated in the town of Berri which is in my electorate. That town is the focal point of 3 other very important, up-to-date, modern, good looking and dynamic towns of the type that this country would like to see a lot more. It is my opinion that this sort of action by the Government is exactly the action that is necessary to look after provincial cities of this type. I for one welcome, without the reservations inherent in the amendment moved by the Opposition, the action taken by this Government to substantiate and to help the liquidity of all the shop owners, the centre store shop people in these areas, lt is of vital importance in this day and age, with the prolonged tentacles of centralisation around huge areas and huge capital cities, that towns of historic interest, towns such as that set up by people, like the Chaffey brothers, towns that are modern and which have up-to-date facilities, should receive some attention from the government of the day. It is for this reason that I particularly welcome this legislation. I congratulate the companies concerned which have supplied a tremendous array of statistical information to the Government and to people such as myself and no doubt the honourable member for Riverina (Mr Grassby) in order to help us in our efforts on behalf of this industry. Personally I am proud of my involvement with this industry since the early days of 1968. It gives me pleasure, as I am sure it will give the people in my electorate, to see this Bill come to fruition. I support it with a great deal of gratitude and I inform the Opposition that I cannot support its amendment on this occasion.

Debate (on motion by Mr Foster) adjourned.

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