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Thursday, 22 November 1973
Page: 3729

Dr PATTERSON (Dawson) (Minister for Northern Development and Minister for the Northern Territory) - One of the most remarkable aspects of the speeches made by members of the Opposition - the Country Party and the Liberal Party - is that in their condemnation of quotas, in (heir condemnation of ministerial direction, in their condemnation of the formula in the current Wheat Stabilisation Act they forget that it was their Government which introduced this legislation into the Parliament over the years.

Mr Corbett - We handled it better.

Dr PATTERSON - I think that that remark need not be answered.

Mr Corbett - You could not answer it.

Dr PATTERSON - You handled it better?

Mr Corbett - Yes.

Dr PATTERSON - Let me analyse that type of statement. You introduced quotas. You were the ones who handled it over the years, not we. " Mr Corbett - We did not force ' credit sales of wheat.

Dr PATTERSON - Your Government stopped the full owner-operator allowances, depreciation allowances, interest on land, as well as interest on capital. Your Government stopped that, not this Government. So be a bit careful when you interject. I did not introduce this Bill. It was introduced by my colleague the honourable member for Riverina (Mr Grassby). I intend to dwell on some of the comments that have been made. The honourable member for New England, the Deputy Leader of the Country Party (Mr Sinclair), said, in criticising the Minister for Primary Industry (Senator Wriedt), that the industry had always stood on its own feet. That is really quite a remarkable statement because, after all, the whole principle of stabilisation is to stabilise incomes through prices and to minimise ups and downs, and trying to achieve a stable income for producers through a stable price. There have been serious ups and downs, as has been said. In this current stabilisation scheme something like $129m has been contributed by the taxpayers. Since 1960 it has totalled $285m. In this year the surplus contributed to credit - one might say by the wheat growers - will be an estimated $46m. It is fair to say that in the first 10 years, and I have said this many times in defence of the wheat industry, it has contributed heavily, virtually subsidising the taxpayers of Australia to the tune of $390m. When one takes into account the relationship of the domestic price to the guaranteed price and the world price since the wheat stabilisation scheme was introduced, it is perhaps not true to say that the taxpayers of Australia have subsidised the wheat industry. I accept that, but the point 1 am making is that there have been serious ups and downs, and this is in fact the whole reason for stabilisation. This is where I part company with the honourable member for Wakefield (Mr Kelly) who, from the impression I got, was opposed to stabilisation. If he casts his mind back to approximately 4 years ago - most of his comments today were trenchant criticism of quotas - he did not make any criticism of quotas at that time when it was extremely difficult to sell surplus wheat. After all, it was the industry and the States which agreed on quotas. The Australian Government has no power to impose quotas. That is entirely the responsibility of the States, except in the case of the Australian Capital Territory and the Northern

Territory. What the Australian Government can do, through the' first advance payment and the total liability, is'. in effect to fix a quota. It does that indirectly. Let us at least get the facts straight.

One matter on which I take issue with the Deputy Leader of the Country Party is that he said that in the present proposal there is no provision for an increase in the home consumption price of wheat, whereas previously there was provision to grant an increase in the home consumption price of wheat by making a variation in the movement of cash costs. This is not true, because clause 9 of the Bill provides that the home consumption price can be adjusted by the Minister from 1 December, taking into account the movements in these cash costs, which are prices, wages, interest charges and transport, handling and storage charges,' etc. Provision is made for those costs. Reference is also made to them in, I think, clauses 2 and 27 of the present Bill, although I could be wrong in relation to the numbers of the clauses. Certainly it is not true to say that the domestic price of wheat will not be varied by changes in cash costs; they will. Of course, it is true to say that the domestic price of wheat will not be varied by increases in the movement of total costs, which include the. owneroperated allowance, depreciation, interest charges on land, interest charges on structures and interest charges on plant. I remind the honourable member for Darling Downs that it was his Government that took out that provision, not this Government.

Mr Corbett - Did you agree with it?

Dr PATTERSON - I did agree with it, and so did the honourable member's Leader and everybody else in this House, and I will explain why.

Mr Maisey - I did not.

Dr PATTERSON - I will look at the honourable member's speech. He did not vote. If I remember rightly - I will look at the record - he walked out; he did not vote. Is that not right?

Mr Maisey - That is right. I walked out of the House and would not support it.

Dr PATTERSON - The honourable member showed his disgust in that way, but he should have voted. Let me explain to the honourable member for Darling Downs why honourable members supported the proposal not to increase the guaranteed price and the domestic price of wheat Dy variations in the movement of total costs;- One of the greatest problems in measuring . the costs of production of wheat was, firstly, that one had to put an imputed figure on the value of land. At times when there was.. an increase in the domestic price of wheat, when the economy was good in terms of . wheat production, the value of land increased; and interest charges increased. It was like the dog chasing its tail all the time. It was an extremely difficult concept; it was a concept which in the end the industry agreed was a fictitious one. It had no relationship to the world market price of wheat and it had no real relationship to the guaranteed price.

Somebody once said that if you took a figure out of the telephone book you could get the average yield. In other words, one could vary the cost of production by whatever yield only wanted to take. If you took 19, 20 or 21 bushels, who could say which was the true yield to take? Nobody could say what the true yield was. In other words, the cost of production figure became a political plaything. This was accepted by the industry, by the previous Government and by the then Opposition. The best way to overcome this problem was to be realistic and, in fact, to take the actual cash costs that the farmer had to pay and vary those costs by movements in the measurement of price relatives and by an index. That movement in the indices showed an increase or a decrease in the cash costs.

One might say that that does not take into account the owner-operator allowance. That is true, it does not take that into account, but it is the relative figure, not the absolute figure. If those cash costs move by 3 per cent or 4 per cent, that percentage is applied to the increase or decrease in the domestic price of wheat. I believe, and the industry believes, that this is the best method. It is not a foolproof method, but at least it is a method which I think illustrates a fair adjustment in the movement up or down in the actual costs paid. If one is going to put interest on the value of land, what does one take as the value of land? What interest rate do you charge today? Is it 10 per cent or 1 1 per cent or 4 per cent? All I am illustrating are the difficulties involved in this matter and the criticism which has been levelled at the wheat industry over the years. In the end it was the industry that accepted this; it realised the difficulties involved.

I want to deal now with .the section in the parent Act which refers to directions given by the Minister. It would seem from the criticism levelled at the Minister for Primary Industry (Senator Wriedt) that it was this Government that introduced that particular section into the Act. The facts are that the Labor Government introduced into the Wheat Stabilisation Act of 1948 a section which provided that the Board may, subject to any directions of the Minister, do certain things. At the time members of the present Opposition considered that that was not clear. In 1954 the then Leader of the Country Party, Mr McEwen - in actual fact, I think that Sir Philip McBride introduced the Bill, but certainly Mr McEwen was Minister for Commerce and Agriculture - proposed an amendment which made it quite clear what the authority of the Minister was to intervene on certain things. I will read what Sir Philip McBride said in his second reading speech. He stated:

Honourable members will note that there is a provision in the Bill which will enable the Minister for Commerce and Agriculture -

That was before the Department of Commerce and Agriculture was divided into the Department of Primary Industry and Department of Trade - to issue directions to the Australian Wheat Board on wheat-selling policy, if that should prove necessary at any time. It is far from the Government's intention that this should open the way to government interference in the wheat-selling operations of the Board, but it will be obvious to honourable members, and it has in fact been clearly stated to the Wheat Growers Federation, that as the Australian Government assumes the financial responsibility of guaranteeing the plan from public revenue then, in the interests of the taxpayers generally -

This was the former leader of the Country Party-

Mr King - It was Sir Philip McBride, I think you will find.

Dr PATTERSON - It was written by Mr McEwen.

Mr Maisey - That was Sir Philip McBride who made the statement.

Dr PATTERSON - The honourable member knows as well as I do that if I introduce a second reading speech concerning primary industry, they are not my words but the words of the Minister for Primary Industry. Sir Philip McBride was representing the Minister for Commerce and Agriculture. Let us not quibble about that and say that Mr McEwen did not say it. The honourable member knows full well that Mr McEwen did say it. They were his Department's words, and he okayed them. The quote continues: it cannot be indifferent, for instance, to the price at which the Board may be willing to sell wheat at some particular time or to some particular market.

That is the section of the Act which is in question. That amendment was introduced by the Liberal-Country Party Government - not by this Government - to give a clear meaning to the Act in order to allow the then Minister for Commerce and Agriculture to intervene in policies concerning wheat trade when he thought it necessarily to do so.

There has been lengthy discussion concerning intervention as regards Egypt. As I understand the position - and what I have heard today has not changed my view - it was extremely difficult to sell wheat at the time. It was at a time when the Chinese market temporarily folded up. There was this 3-year arrangement with Egypt.

Mr Maisey - As to quantity.

Dr PATTERSON - As to quantity, but if the honourable member recollects what happened at the time, the terms were for 3 years. When this Government came into office it adopted the policy that, as regards developing countries we have an obligation to try to help them. We realise that they have balance of payments difficulties, and we believe that there ought to be credit sales for up to 12 months. This was accepted by the Wheat Board and it was conveyed to the Egyptian Government. When hostilities broke out between the Arab States and Israel the Board reversed its decision. It wanted cash.

Mr McVeigh - It had not made a decision to reverse it.

Dr PATTERSON - It did make a decision to reverse it. If the honourable member wants proof of that I will show him the relevant letters. The policy of the Government was to adopt an even-handed approach in that conflict. It was then that the Minister for Primary Industry informed the Wheat Board of the Government's decision. Let us get the facts straight because some misleading statements have been made. Agreement was reached approximately 2 weeks ago between the Egyptian Government and the Wheat Board on the sale of one million tonnes to be shipped next calendar year. Under the terms of the sale there is to be a period of 18 months credit with the Board carrying 25 per cent of the credit risk, the Export Payments Insurance Corporation being responsible for $10m, and the Government covering the balance under the national interest provisions of the Export Payments Insurance Corporation Act. When the Chairman of the Wheat Board announced this agreement he said the wheat would cost in excess of$130m on an f.o.b. basis. Let us at least stick to the facts. The decision of the Government and the intervention of the Minister for Primary Industry was a responsible decision in terms of foreign policy and in terms of this Government's policy in relation to developing countries.

I just want to refer in passing to the sugar industry in order to reply to the honourable member for New England, the Deputy Leader of the Country Party, who said that the groundwork in relation to wheat sales was really done by the Wheat Board. I will not argue against that. The Minister for Overseas Trade has made the position quite clear. However, I join issue on the claim by the honourable member that this also applied to the sugar agreement. I do not want to carry on a debate on sugar, but let us at least stick to the facts. First of all I did not intervene in anything. I was asked by the sugar industry before I went to China to do 3 things. Firstly, I was asked to secure, if I could, permanent access for Australian sugar. The industry had been trying to do this for some time but it had failed. Secondly, I was asked to try to get the Chinese Government to upgrade its bulk handling facilities.

Mr Fisher - I rise on a point of order. Is the Minister allowed to speak about sugar sales?

Mr DEPUTY SPEAKER (Mr Drury - As I understand it, the Minister is making a passing reference only to certain comments made earlier in the debate by the Deputy Leader of the Country Party, and to that extent I will allow him to continue.

Dr PATTERSON - The third thing I was asked to do was to get a team of Chinese experts to come to Australia to study bulk receiving facilities. I achieved those 3 things for the industry. Let me quote from an official Press statement issued by the industry. It reads:

As a result of the Peking discussions with Dr Patterson, the Chinese Government had agreed to pro- o vide long-term access for Australian sugar.

The sugar industry representatives told Dr Patterson that they welcomed the initiative he had taken with the Chinese Government which had achieved the basis for long-term access to the Chinese market for Australian sugar. This achievement has now set the stage for the negotiation of detailed terms of an agreement and related commercial contracts.

That is what the industry had to say. I have always - and I do so again - paid a tribute to the Colonial Sugar Refining Co. Ltd for the pioneering work it has done in the last 2 years on aspects of our trade with China, particularly with respect to bulk handling facilities. I gave credit to that company when I was in China too.

Mr Sinclair - That company initiated the talks with the Chinese 3 years ago.

Dr PATTERSON - At no stage did it talk about long term agreements. At no stage did it talk about quantities at all. If the honourable member wants to check up on this he should ask the sugar industry itself. I will say no more about this matter. One of the doubts raised by the honourable member for Moore (Mr Maisey) was about what happened to the money which would be retained in the Fund. Clause 12 of the Bill seeks to amend section 32 of the Act by providing that money in the Fund at 30 September 1974 will go forward as credit into any new stabilisation fund. This is what the industry wants. This is what it suggested in its proposal for a new stabilisation scheme. However, if there is no stabilisation scheme the money will be refunded or returned to the industry under the provisions of section 32 of the Act. This is set out in the Bill.

Practically all the remarks of the honourable member for Wakefield (Mr Kelly) were an attack on the quota system. Certainly there are grave deficiencies in that system. It is one thing to talk about them now. But why was not this trenchant criticism levelled by the honourable member at a time when there was a great surplus of wheat and when the Australian Government was charged with the liability of meeting the first advance payment? No Australian Government, including the Government that represented Australia for 24 years, or this Government would agree to an open ended liability, that is, having a first advance payment without a liability as far as the ceiling was concerned. No government would do that, and that is why the quotas were introduced. We could have had double the production if we had wanted it. But we would not have got $1.10 a bushel or whatever the amount was for the first advance payment; it would have been much less than that.


Order! The Minister's time has expired.

Question resolved in the affirmative.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

In Committee

Clauses 1 to 7- by leave-taken together, and agreed to.

Proposed new clause 7a.

Suggest corrections