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Thursday, 23 August 1973
Page: 370

Mr LLOYD (Murray) - I hope that what we have just witnessed will be the exception rather than the rule. What we have just seen seems rather strange after all the pure statements we have heard about what the Government would do in regard to giving time for everybody to put his point of view.

Last night the honourable member for Angus (Mr Giles) and the honourable member for Robertson (Mr Cohen) spoke about the removal of the exemption from sales tax on non-alcoholic carbonated beverages containing not less than 5 per cent of Australian fruit juice. The removal of the incentive for soft drink manufacturers to include fruit juice in their product puts in jeopardy outlets for approximately 50,000 tons of apples and 15,000 tons of citrus, and a market which is building up to 15,000 tons of pears. This is a significant amount of fruit, a significant percentage of the total Australian fruit production. This Budget decision comes at a time when the market outlets for fruit are being jolted by increasing freight rates and increasing European Economic Community levies. Reports come in that processors in Queensland, New South Wales, Victoria, Tasmania and South Australia have abruptly cancelled all future orders. Processors are left with large amounts of concentrate for which they now have no market. An article on page 2 of today's Hobart 'Mercury' reports the possible dumping of one million bushels of apples next season. That is 15 to 17 per cent of the Tasmanian apple crop. Telegrams from the Australian Apple and Pear Growers Association and from other grower associations have been sent to the Minister for Primary Industry (Senator Wriest). But the Minister, in replying to a question asked by Senator Louche yesterday, had a different opinion. He said:

I question the suggestion in the honourable senator's remarks that this will have a marked effect on the manufacturers and also on the growers. He asked me specifically what the Government intends to do. The Treasurer spelt out quite clearly in the Budget Speech last night that any problems which arose for the growers or the industry as a result of this decision would be looked at as favourably as has been the case with other restructuring problems in the fruit industry.

That is a grim warning for the fruit industry, if it is expected to be only as favourable as the fruit grower reconstruction scheme has so far been.

The Minister for Primary Industry and the Treasurer Dr Coombs' demolition squad when it made its report. That report states:

If so, this would suggest that the concession may be an inefficient substitute for more rational schemes of both 'minimum income' . . . and for appropriate industry reconstruction schemes.

By the time Dr Coombs' report had reached the Treasurer and the Minister for Primary Industry, all suggestion of a minimum income had been dropped. That was a most valuable suggestion because we see that, in the United States a minimum income agricultural policy has just been passed through the Congress of that country. A minimum income policy certainly would be of value to the industry. But these people are ignorant of what happens. If it meant that IS per cent of those in the industry could receive compensation for leaving it, that might not be so bad, but this does not happen. It means that all growers in the industry will have their already depleted incomes reduced even further. Very few apple growers, particularly in Tasmania, would be receiving even the basic wage at the present time.

In the Goulburn Valley pears for juicing form a most valuable addition to growers returns because off-sized pears - those that have already been picked and graded out as off-size for canning - can be used for juicing at no extra cost to the grower. This additional income is most valuable. The fruit industry has been told time and time again that it must diversify, that it must obtain new markets and get away from this tradition of canning everything. Already the fruit industry has done this. It has spent millions of dollars on world standard processing equipment in order to diversify. But what has happened? The industry has been kicked in its adam's apple for doing it because it took seriously this advice to diversify.

We shall also look at what the honourable member for Robertson had to say on this question of compensation. We have the Coombs' report saying that there should be a minimum income. We have the Treasurer saying that there should be reconstruction. The Minister for Primary Industry, in the answer to which I referred previously, said:

There will be an Increase in expenditure from Sim last year to $4m this year: I suppose that In a simple mathematical way one could say that one cancels out the other.

I have looked through the Budget documents. I have looked under the 'heading 'fruit industry' to find reference to payments to industry. I find that payments to the fruit industry this year are down by $500,000. Although we find that payments will be down by $500,000, we must remember that some phoney accounts are being used for the industry. Growers payments are included as Government payments and transfer payments to and from the Reserve Bank are included as advances to industry. It is interesting to note that fruit industry grower research and promotion levies are included. We have an interesting figure of $2m for fruit growing reconstruction when last year only $400,000 could be spent because both the previous Government and this Government have refused to set down criteria that will allow the scheme to succeed. These are fond hopes. The honourable member for Robertson went off on another tack and said:

I understand that the amount of money set aside will be approximately the sum that normally would have finished up with fruit growers; that is about $5m. It will be put aside to assist fruit growers so that they will receive the same amount of money as before.

I think it is time, with all these contradictory statements, that the processing section of the fruit industry was told by somebody in authority what the Government is actually going to do to help it - whether there will be some sort of compensation fund, whether there will be a minimum income or whether there will be just ordinary fruit reconstruction. If there is to be ordinary fruit reconstruction, the criteria will have to be widened if the scheme is to be a success.

I ask the Government to reconsider its decision to abolish this incentive to include fruit juices in cordials. If the Government will not reconsider this decision because of its sudden death nature, it should do one of 3 things. It should postpone the introduction of this proposal for 12 months or it should do as was suggested to me in a rather long telegram from the northern Victorian fruit growers, and that is, to introduce a double rate sales tax - say, 10 per cent if fruit juice is included and 25 per cent if it is not included. In this way the Government's income would be increased but there would still be an incentive to use fruit juice. The second proposition submitted by the fruit growers' was that the exemption should be phased out over 3 years so that growers and processors have time to adjust.

There is a very interesting series of contradictions, because one of the curious omissions from the Coombs' report is reference to the fact that income is foregone by sales tax exemption on grape wine and apple wine but sales tax is still imposed on other fruit wines. This is an injustice to the pear industry which I had hoped would have been rectified in this Budget. As a result of this action, children's soft drinks will bear a rate of sales tax of 15 per cent but adults' wine, whether it is apple or grape, will be free of sales tax. That does not appear to me to be socially just or desirable.

I do not have time to develop the other contradiction, and that is something that would not cost the Government any money if it abolished it. I refer to abolishing sales tax altogether on all fruit wines so that all other fruits can be put on the same basis as apples and grapes. But I return to this point about sales tax exemption if fruit juice is included. The Government should forget about the proposal, postpone it for 12 months, bring in a double rate of sales tax so that the incentive is still there to use fruit juice or phase it out over 3 years and give the industry a reasonable time in which to adjust instead of having the sudden death nature of the proposal.

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