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Thursday, 26 September 1974
Page: 1473

Senator WALSH (Western Australia) - As Senator Maunsell has already indicated, there are 2 major Bills being discussed jointly in this debate. The Wool Marketing (Loan) Bill 1974 provides for a 5 per cent levy to establish a growers' capital fund to support wool prices in the future in the market place and to provide for promotion and research. The second important Bill is the Wool Industry Bill 1974. It is the most important Bill in my view without any doubt and authorises the Government to appropriate anything up to $ 150 m for the purpose of supporting the stated reserve price of 250c a kilo clean for 21 micron wool for the remainder of this year. I emphasise, and I note with approval, that for the first time ever an Australian Government has had the courage and the gumption to serve notice to the rest of the world- to the entire wool trade- that wool will no longer be sacrified in a period of temporary market depression. I cannot stress too strongly the simple fact that throughout 23 years of Liberal-Country Party government, in spite of the fact that they were under continual pressure from a wide crosssection of the wool industry and an overwhelming number of growers to make such a move, the Country Party consistently declined to do so. I shall state some facts which are pertinent to the meaning of a 250c 21 micron clean floor price. I am pleased to note that Senator Maunsell has interpreted, I would think correctly, the meaning of that floor price in terms of an average greasy price for a clip in western Queensland. Such an interpretation, unfortunately has not been made by every person who has commented on this floor price. I refer in particular to a couple of statements made by the Premier and Deputy Premier of Western Australia, statements made by a number of people who claim to represent wool growers throughout Australia and a rather appallingly inaccurate editorial which was published in the 'Australian' shortly after the Government announced that it would support the market in this way. According to which version one likes to take- they vary greatly- the 250c floor price translated into terms of an average greasy price was anything between 40c and 45c a lb, which is nonsensical. In the case of the 'Australian' editorial it juxtaposed figures which referred to greasy prices and clean prices without bothering to differentiate between the two. It declined subsequently to publish a correction. However, I am pleased to report that Senator Maunsell has stated what seems to me to be the significance of that floor price for his area of Queensland.

In terms of an Australian average price the 250c, 2 1 micron clean, according to information supplied to me last month by the Australian Wool Corporation, equals 133c per kilo average greasy price or 60c per lb average greasy price. Probably most wool growers still tend to think in terms of pounds. The allegation that an average greasy price of 60c per lb is equivalent to the 36c deficiency payment price guaranteed some 3 years ago by the previous Government cannot be accepted without very grave reservations. Since December 1970 the consumer price index has moved up 43 per cent. Almost certainly in that period the consumer price index has over-stated the true average increase in prices because it is comprised of a weighted average of a particular and limited index. For that reason it is not a realistic guide. Moreover, if we use simple indexes of prices paid and prices received for agricultural commodities or any other commodity over a significant period, it becomes quite unreliable. For example, an exercise related to an index of prices paid, and prices received by farmers, based on 1951 figures and projected forward to the mid-1960s would prove that virtually every farm in Australia had become non-viable. Even if one accepts this exaggerated estimate of a 43 per cent movement in the consumer price index, it does not equate the price of 36c per lb in 1971 with 60c in 1974.

I wish to say a few words on the philosophy and assumptions, as I see them, which underlie the major Bill. I think that I have interpreted the position in the same way as the Government has. It is impossible to predict accurately the present market price for wool because the price is being supported by a non-commercial buyer, namely, the Government. But a reasonable estimate of the present market price in a free market is something below 200c clean per kilo compared with the 250c support price. The assumption is that that price level is unrealistically low and is the result of a temporary downturn in demand, principally because of Japan's withdrawal from the market. In the medium term that price will rise to a higher level. Assuming that it is a temporary decline in prices, the Governmemt- I stress again, for the first time- has moved in and served notice to the trade throughout the world that wool will no longer be sacrificed in periods of temporarily depressed demand at give-away prices, as it was when the Country Party governed Australia.

Senator Webster - Are you saying that your Government will give a continued guarantee of support?

Senator WALSH - Senator Webstershould hear me out. I cannot guarantee what the Government will do.

Senator Webster - That is right, but you have just attempted to do that.

Senator WALSH - Did your Government ever give a guarantee at any stage or did it ever support the market?

Senator Webster - You were saying that you would do it, that is all.

Senator WALSH -We have said that we will do it for 12 months, and that is more than any Country Party government ever did. If Senator Webster cares to listen for another few minutes I will explain to him not only the assumption on which, as I see it, the Government based its policy, but also the philosophy which underlies it. I regret that from what I have heard of Senator Webster's comments in the Senate he probably will not understand it. To understand the philosophy requires a minimal comprehension of economic reality and analysis which, from the comments that I have heard Senator Webster make so far in the Senate, I estimate he does not possess. The philosophy is that it is not the function of governments to provide incentives to produce in normal circumstances. In a market economy incentives should come from market prices. Nor is it my belief or, in my opinion, the belief of the Government that governments should intervene indefinitely in a futile attempt to protect from the realities of the market place industries which are losing or have lost their comparative advantages.

For the edification of Senator Webster I mention that the Country Party Government of which he was a member attempted to do something very much like this for the dairy industry for a period of 20 years, during which time about $750m, which would have bought half the dairy farms in Australia, was poured into the dairy industry to produce butter for many years at a marginal on-farm price of about 7c per lb. In the middle of that 20-year exercise in futility an expert committee of inquiry made certain recommendations. The economists whom Senator Webster detests comprised most of the members of that committee. I do not know why he detests economists so much. Presumably it is because they generally deal in factual statistics rather than metaphysical claptrap. The committee of inquiry into the dairy industry pointed out the irrationalities of the present policy. That was as far back as 1960. At the end of the 1960s, after this futile policy was continued for 10 years, even

Senator Webster'sGovernment began to recognise that it was counter-productive in the long term to attempt to insulate from market realities industries which are losing or have lost their comparative advantage. Moreover, it does not eliminate poverty in an industry. No substantial agricultural industry in Australia has ever had as many low income farmers as the dairy industry had during the period when the policies of Senator Webster's Party were implemented.

Senator Young - By your theory, you are opposed to tariffs.

Senator WALSH - Senator Youngwishes to discuss tariffs.

Senator Young - I do not. I asked you for your theory.

Senator WALSH - I am astounded that anyone who claims to represent the interests of exporting industries- anyone on the other sidehas the audacity to raise in this Parliament the question of tariffs. If they want to talk about tariffs, their argument is as vulnerable as is their argument on the question of supporting the wool market because for 25 years what did they do about tariffs except to increase them progressively under the influence and domination of the then Minister for Trade and the Leader of the Country Party. I may repeat all the scurrilous allegations that I have heard from the Liberal Party, but not necessarily endorse them, that if one wants to know the most highly protected manufacturing industries in Australia one should look at the subscription list to McEwen House and one will find that the names are the same.

Senator Webster - You should look at the subscription list of the Labor Party.

Senator WALSH - Senator Websterhas indicated that he is anxious to have political parties disclose the sources of their funds. I understand that in the not too distant future the Government intends introducing into the Senate legislation which will oblige political parties to do just that. I eagerly anticipate Senator Webster's full support for that legislation when it comes before the Senate.

Senator Webster - Not only will I support it, but I will be making inquiries to find out how the Hansen Rubensohn-McCann Erickson account was paid by others for the Labor Party.

Senator WALSH - I am sorry, Mr President. I should not have permitted the asinine comments that have floated across from the other side of the chamber to distract me from the central purpose of this debate.

Senator Webster - Who is finding the $lm for the Labor Party building in Canberra? Do not get upset. Just tell us that. We opened a letter containing a cheque from one of the big multinationals -

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