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Tuesday, 27 November 1973
Page: 2114

Senator WRIEDT (Tasmania) (Minister for Primary Industry) - I move:

That the Bill be now read a second time.

The purpose of this Bill is to provide for an extension of the wheat industry stabilisation arrangements, currently scheduled to expire with the disposal of the 1972-73 season's wheat crop, to cover the marketing of wheat of the 1973-74 season. The first wheat industry stabilisation plan was introduced by the Labor Government in 1948. Stabilisation arrangements have since then been continued in 5-yearly rests, the existing plan covering the wheat crops of the 5 seasons 1968-69 to 1972-73 inclusive. All of these plans have followed a general pattern, inasmuch as they have contained provision for wheat growers to contribute to a wheat prices stabilisation fund a proportion of their returns from export sales in seasons when prices have been in excess of a pre-determined level, the moneys so contributed being returned to the growers to supplement their returns in the market place when prices have fallen below that level.

The Australian Government has been a party to these arrangements by its agreement to provide funds to subvent growers' returns whenever the stabilisation fund has not contained sufficient moneys from industry contributions to lift prices to the specified level. The State governments are party to the orderly marketing and stabilisation arrangements in that, under law, they vest the ownership of wheat produced within their borders in the hands of the Australian Wheat Board and authorise the Board to market wheat within the Australian States at uniform home consumption price levels. The States have always complemented the Federal legislation to give effect to the marketing and stabilisation arrangements and have agreed to continue to do so for the purpose of the 1973-74 season's extension of the existing arrangements.

The Government is providing for this extension pending the outcome of a thorough-going review of the operation of the wheat industry stabilisation plan. Under direction of the Government a review group in the Department of Primary Industry has presented a preliminary report for the Government's consideration. Formal discussions with the wheat industry and the States on stabilisation arrangements to apply for the period beyond 1973-74 are expected to commence very shortly. With the present benefit of hindsight, it is of interest now to reflect upon some aspects of the second reading speech by the then Minister for Primary Industry when he introduced the enabling legislation in 1968 to implement the existing stabilisation plan. In that speech the Minister drew attention to the amount of money that had been contributed by the taxpayers under the terms of the Government's guarantee for stabilisation purposes in the period up to 1968. As he stated at the time, that amount of money was $156m, of which $95m was provided during the 5 years ended 1967-78. He suggested that this was a considerable sum to provide to one of the most prosperous rural industries and would of itself be sufficient justification for changes in important features of the stabilisation plan.

The then Minister indicated that the stabilisation proposals put forward by the industry at the time would have cost an amount estimated at $250m over 5 years and said that this would have been an intolerable position and could not be justified. He said that the shape of the guaranteed price arrangements on wheat exports being provided by the Government would cost at least $68m over the 5 years, if the cost experience in the ensuing 5 years and the level of export prices turned out to be much the same as in the previous 5 years. It eventuated that in the first 4 years of the current 5-year plan the price of wheat in the international market place consistently weakened. The reason for this was, of course, an over-supply of wheat in the main producing countries with severe competition between exporters for markets, but these recurring problems of divergence between supply and demand cannot be avoided, at least in total. In the event the current stabilisation plan in the first 4 years of its operation has cost the taxpayer $2 19m- a figure substantially more than anticipated by the then Government at the time of its introduction.

This Government shares the concern of the previous Administration that stabilisation provisions which would leave the way open for potential subvention to the wheat industry of the magnitude that has occurred in the last decade or so cannot be allowed to continue. I might mention that, whereas in the earlier years of wheat stabilisation, the stabilisation fund was selfsupporting and there was no call on the Treasury prior to the 1959-60 season, the Government has since been required to contribute in every year up to the 1 97 1 -72 season. Thus, as I have already indicated, the Government has moved for an indepth review of the arrangements that might apply beyond the 1973-74 season. It is an approach which has been accepted by the State governments which are party to any arrangements and by the wheat industry through its central spokesman, the Australian Wheatgrowers Federation. Pending the negotiation of new arrangements with the industry and the States, this

Bill seeks to continue the existing stabilisation provisions for next year. Without attempting to prejudge the outcome of these negotiations, I must express the view that a strong case seems to exist for future stabilisation arrangements, and the guaranteed price provisions of such arrangements, to have regard to realistic market forces.

Turning to the main substance of the Bill, the measure provides for the guaranteed price on exports of 5,443,108 tonnes or 200 million bushels of wheat from the 1973-74 season's crop- the same guaranteed quantity as at present-to be set at $58.79 per tonne or $1.60 per bushel f.o.b. This figure has been accepted by the States and the industry, as indeed have all other features of the Bill. The other basic provisions of the Bill are: That, in line with the existing arrangements, the home consumption price for the 1973-74 season will be determined according to movements in cash costs, in rates of interest and in rail freight and handling charges; that the 1973-74 season be defined as a 'quota season'; and that the legislative arrangements for the marketing of wheat, that is, those excluding the guaranteed price and stabilisation arrangements, be extended for one season to cover the 1975-76 season. This continues existing arrangements whereby the Wheat Board is empowered to cany out its functions relating to the marketing of wheat for 2 seasons beyond the end of the period of stabilisation.

The opportunity has been taken by means of the Schedule to the Bill to convert all quantities in the principal Act to their metric equivalents. It seems probable that the existing high and abnormal value of wheat in the market place will not recede in the next year or so to a level which would require any call on Treasury funds in terms of the Government's price guarantee. On the other hand, the likelihood is that the industry could contribute the maximum amount, set under the terms of the scheme, to the stabilisation fund, that is, $5.51 per tonne. On anticipated exports from the 1973-74 season's deliveries to the Australian Wheat Board of 8.4 million tonnes this contribution would be of the order of $46m. I have said that the extension of the plan as proposed for one year has the support of the industry and State governments. The passage of the legislation by the Australian and State Parliaments will provide the industry with the security afforded by orderly marketing and stabilisation while arrangements for the future are being formulated. I commend the Bill to the Senate.

Debate (on motion by Senator Laucke) adjourned.

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