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Tuesday, 10 December 1974
Page: 3313

Senator WRIEDT (Tasmania) (Minister for Agriculture) - in reply- I say initially that it was certainly not the Government's intention that the amendments which had been originally proposed and moved in the House of Representatives should not be moved and debated here. It is unfortunate that we have arrived at a very late stage of the current sitting and that the House of Representatives has risen. I do not want to develop that point. I believe that earlier this afternoon an adequate explanation was given by Senator Douglas McClelland as to why we find ourselves in this position in respect of this Dairy Adjustment Bill and other measures. I am very pleased that the Opposition will support the legislation. Basically, it is designed, as I think was said by Senator Scott, to replace the old dairy bounty legislation which the Government commenced to phase out last year. The whole thrust of this legislation is towards trying to assist dairy farmers to stay in the industry and to assist them to become viable operators.

As a Government we felt that under the old system the maximum benefit was not going to the people who needed it most. This was the essence of the redirection of assistance under this legislation. Of course it involves not only the old defined marginal dairy farmer but also it extends beyond that to assist the other dairy farmers to transfer from the old delivery of butter into the whole milk refrigerated delivery system. At the same time the Bill will assist the dairy factories to rationalise their operations as a result of the changed supply which they will now experience.

Two or three points have been raised which were really the essence of the amendments which the Opposition had intended to use. The giving of assistance to factories for a rationalisation process has been looked at quite exhaustively by the Government. When we originally proposed this scheme we sought opinions from the dairy industry throughout Australia to find out exactly what it thought should be done. But when we get into the area of rationalisation of factories, we get into a very expensive area. It was never intended under this legislation or under the previous marginal dairy farm reconstruction scheme introduced by the previous Government that assistance should be afforded beyond the farm level. In fact in this legislation we are doing this in respet of receival facilities and so on. But that is quite distinct from rationalisation of factories. The proper course is to go through the Australian Industry Development Corporation. The Government has endeavoured to amend legislation in relation to the AIDC to allow cooperatives to become eligible for loans under the AIDC. As we know, that legislation has been held up because it has not passed through the Senate. To try to encompass factory rationalisation in this legislation would mean that great sums of money would be required. I do not think it is reasonable to expect the Government to bring that rationalisation program under legislation of this nature.

Senator Bessellreferred to the upgrading of vats which are currently installed. Again, one would have the problem of making the scheme open to an enormous range of people in the industry. As the whole purpose of the legislation is to assist the person who needs help most and who is likely to go out of dairying if he cannot get assistance, we have to direct our effort to that area. It is true that this tremendous exodus from dairying in Australia which has been going on for many years is a bad thing. The Australian consumer will find that there will be insufficient milk for the Australian domestic market if this trend is allowed to continue. Not only will it deplete our export earnings; also, quite obviously, we must provide for our domestic market first. Unless dairying is an economic proposition for the dairyman then quite obviously he will move out.

Sitting suspended from 6 to 8 p.m.

Senator WRIEDT - Before the suspension of the sitting for dinner I dealt with most of the points that had been raised during the course of the debate. But there are two or three other points to which I will refer quickly. During the debate earlier this evening it was claimed that the Bill does not enable dairy farmers to relocate. Of course, there are specific relocation provisions in the Bill. They are contained in clauses 8, 9 and 12. It is important to recognise that the Bill does provide for a dairy farmer to sell an uneconomic farm and to buy into a suitable dairying area as an alternative. Of course, he can be assisted to develop a new farm. These provisions will be important to many dairy farmers. It is for those reasons that such provisions have been included in the Bill.

Another point that was referred to by Senator Scott concerned clause 1 1 (2), which refers to the need for a dairyman to attempt to obtain finance through a normal banking source on reasonable terms as an alternative or before he qualifies for assistance under this plan. Assistance for the development of an uneconomic dairy farm into an economic unit, for diversification purposes or for development after amalgamation is subject to the administering authority being satisfied that finance is not available on reasonable terms from normal commerical sources. No attempt has been made to lay down what are reasonable terms or what are normal financial sources. These are questions for the administering authority to determine in the light of the circumstances of individual cases. It is important to remember that the administering authorities will be State authorities. Under this legislation it is necessary for there to be the utmost co-operation with the States. The Government has already been advised that the State governments are fully in support of the legislation. I am quite sure that we will get the utmost co-operation from them, as we did under the old marginal dairy farm reconstruction scheme.

However, insofar as finance from normal banking sources is concerned, it may be expected that, where a producer is unable to borrow from his bank or pastoral house at the going rates of interest or is unable to service the debts on terms that the bank or financial institution demands, such difficulty would be prima facie evidence that the condition laid down in clause 1 1(2) (c) had been fulfilled. Provided other requirements in the Bill are met, such an applicant farmer could be expected to be eligible for assistance. It is important to bear in mind, as I have mentioned before, that the basic idea of the Bill is to help the man in the dairy industry who is in trouble. It is a legitimate or justified case in which Government or public moneys should be used at privileged rates of interest- of course, in this case no interest is chargeable- to ensure that people can stay in the industry; otherwise we will see a continuation of this massive exodus of dairymen from the industry which is gradually bringing more and more problems to the industry. I think this point was made by Senator Bessell when he mentioned the reduction in the throughput in dairy factories and the need for further rationalisation and the maintenance of throughput in order to keep the unit cost down.

The other matter on which I will touch very quickly was also raised by Senator Bessell. I refer to the matter of equalisation. This is a very complicated area, as I am sure all of us who are interested in this subject would know. It has been the practice to try to let the industry work out its own destiny in respect of equalisation. This Government, as was the case with the previous Government, does not wish to impose any rigid rules about equalisation on the dairy industry. That is something that the industry ought to be able to sort out for itself. Currently a great deal of thought being given to equalisation because of the problems that have suddenly grown up over the changed emphasis of the market on the various products- on skim milk powder in particular, whereas at one time the emphasis was primarily on butter. But the industry can be assured that this Government will work to the maximum of its capacity in co-operation not only with the States but with the industry itself to ensure that some satisfactory solution can be found to the equalisation problem.

In closing, I wish to reiterate the intention of the Government to ensure that the moneys which are being spent under this scheme will strengthen the dairy industry. It is terribly important that we do this, and if the moneys are directed wisely to the dairymen who can become viable or who can remain viable and who would otherwise go out of the industry then I think they are moneys well spent. Not only will the industry benefit but the economy as a whole will benefit, in particular in the depressed areas in northern New South Wales and southern Queensland, where a great deal could have been done in the past had there been a more intelligent- I deliberately use the word 'intelligent'- direction of such moneys into the industry. I am glad that the Opposition is not opposing the legislation. Despite the reservations that some Opposition senators might have on specific points there seems to be a unaninimity of opinion that this legislation is good legislation that can only benefit the dairy industry.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

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