ADDRESS TO QUEENSLAND CANEGROWERS COUNCIL 28 FEBRUARY 1977
It is a pleasure to be here today to open the Fiftieth Annual Conference
of your Council. The industry you represent has a long record of
sustained progress of which you must be properly proud. Over the fifty
years your Council has existed, the Australian sugar industry's
production has grown more than six-fold. It now exceeds three million
tonnes a year.
The domestic market has made an important contribution to this growth
but the primary factor has been your successful penetration of world
markets where competition has been strong and conditions have been
subject to many and sudden changes. Many commodity markets are subject
to sharp price movements and to the introduction of substitute
products. In your -case, you also deal in a product that can be produced in numerous
parts of the world under widely different climatic conditions. You
have had the energy and skills to overcome these difficulties and to
capture a large export market. Your negotiation of long term export
contracts at stable prices with major purchasers was a notable step
towards establishing a firm and reasonable foundation for in., vestment
and production plans.
The Government is alert to the importance of the industry, -and to
Australia, of these contracts with Japan, Malaysia and Singapore.
We have demonstrated our concern and willingness to provide appropriate
support for the industry whenever the question of renegotiation of
any contracts has arisen.
When I was in Japan in June last year, I discussed the long term sugar
contract with Mr Abe, the then Japanese minister for Agriculture and
Forestry. I drew his attention to the deferment of shipments to which
the Australian industry had agreed in an endeavour to ensure the
smooth operation of the contract.
I know that discussions between Australian and overseas commercial
interests regarding the operation of the various contracts have taken
place and are continuing. My Government's objective is to ensure that
at all times the Australian commercial negotiators receive adequate
advice and assistance from the Government. .22/
from the Government./ 2
The Government has made it clear that, although it is not a party
to the contracts and believes that the matters at issue should be
resolved commercially without Government intervention, it will follow
the negotiations closely.
We will continue to provide appropriate support and assistance to the
industry and to the efforts of C. S. R. Limited to foster the long term
continuity on fair terms of these commercial arrangements. Firm long
term contracts between producers and the consumers are desirable, and
to be encouraged.
In addition however, as the recent volatility of the world sugar market
has once again highlighted, there i5 a need for cooperative and
workable solutions to the problems of producing and consuming nations.
Negotiations are now scheduled for a new agreement to replace the 1968
International Sugar Agreement.
In these discussions, there will be close cooperation between the
Queensland Government, the Australian sugar industry, and the Commonwealth
Government. The industry has shown before that it can cope with short
term downward swings in sugar prices. And that such movements do not
undermine your confidence and ingenuity in finding new and growing
markets. I have no doubt that your industry will continue to maintain its
contribution to the development of Queensland and Australia, and it
is a very valuable contribution. Your 1976 export earnings of some
$ 600 million made a substantial contribution to our export earnings
as a nation and placed Australia mong the top three sugar earning
countries. In terms of productive value, sugar ranks first among Queensland's
rural industries. Over seven thousand producers rely on the production
of sugar cane as their main source of income. Approximately two
hundred thousand people directly depend upon the sugar industry for
their livelihood.
The expansion of the sugar industry has done much to provide employment
opportunities away from the big cities and underpin the growth of
regional towns. Between 1971 and 1976 Mackay's population grew by
14.3%. Cairns by 21.8%. Bundaberg by 20%, and Townsville 19.5%.
By comparison, Sydney and Melbourne grew by 2.9% and 4.1% respectively.
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respectively. This trend towards a better balance in our national development is
to be welcomed. The Coalition Government recognises the importance
of the ru.~ ral industry to Australia, the close inter-dependence
between city and country. We also recognise the difficult situation'
many rural1 producers have been facing.
We recogn~ ise the fact that rural producers have been caught in the
vice of sharply rising costs on the onehand, and often severe
marketing difficulties and depressed world prices for their products
on the other. We recognise the fact that in the three years between
1972/ 73 and 1975/ 76 prices paid by rural producers rose by
whereas prices received rose by only 7%.
We recognise the fact that adverse seasonal conditions have often
seriously aggravated these problems. The Labor Government resolutely
refused to face these facts.
You all remember that their " Rural Policy" was a policy to attack the
rural sector on all fronts. You remember the Coombs Task Force;
the abol-Ition of the superphosphate bounty; the attempt to reduce
the wool reserve price by 20%. You all remember Mr Whitlam
telling a rural audience in 1974: " You never had it so good".
The Coalition Government has adopted policies towards the rural
community in stark contrast to Labor's hostility. Our policies are
designed to assist the rural sector maintain the productive activities
which are so important for the well-being of all Australians.
We have taken a substantial number of specific initiatives to aid
particular rural industries. And I would briefly like to mention the
measures we have taken to assist other important rural industries,
in particular wool, beef, and wheat which, together with your own
sugar ind. ustry constitute the backbone of Queensland's rural strength.
For the 1.976/ 77 season for wool, the Government initially guaranteed
a minimumt reserve price of 234 cents per kilogram clean clip average,
a rise of' 14%. We also undertook to retain not less than such minimum
price throughout the 1977/ 78 season. After the devaluation in November,
the minimium reserve price was raised to 284 cents to give growers the
full benEfit of devaluation. J
benefit of devaluation.!
There has been continued strength in the wool market and the
present price of 322 cents is well above the reserve price.
The beef industry has been facing extremely difficult times.
The plight of many beef growers is recognised by the
Government in its provision in the last budget of a further
million to be made available for carryon loan assistance to
be jointly financed with the States.
Conditions of these loans have been liberalised to enable producers
who-. had already obtained finance to apply once again.
The Government has also suspended the meat export inspection charge
and is contributing in excess of $ 10 million for the tuberculosis
and brucellosis eradication campaign. The best indicators -For
future prosperity in this industry Are the prospects for 7rreater
m-arket access, ? articula-rly to
Japan, the USA, the EEC, the Soviet Union and the Eastern Bloc.
The recent Australia/ Japan ministerial Committee Meeting in Tokyo
resulted in a supplementary global quota of 15,000 tonnes for
the second half of this fiscal year; a special additional quota
of 5,000 tonnes boiled beef and beef ro Japan's school lunch
programme; an undertaking by the Japanese officials to endeavour
t o announce the quota for the next six months as soon as possible
after 1st April.
Negotiations have also led to an increase of 9,000 tonnes in
our entitlement in the US. market for 1977, and probable shipments
of about 70,000 tonnes of beef to the Soviet Union.
It is expected that the'meat board will soon announce a 15,000
tonne order to Egypt and the possibilities are that-this will be
the fore*-runner of a long-term arrangement. Tepossibility!
this year are for record meat sales and the abbatoirs will be
at or near full capacity. Wheat growers have had a less difficult
period, although total production this year will be slightly down.
The first advance on wheat for 1976/ 77 has been increa sed 20% to $ 66
per tonne. The home consumption price for wheat has been increased
by $ 6 per tonne. General initiatives benefitting all primary
producers have also been taken by this Government.
this Government./ The Income Equalisation Deposit
' Scheme supplements the existing tax averaging arrangements. It should
greatly assist primary producers in providing a flexible method of
evening-out fluctuations in farm incomes. It will place them in a
better position to withstand natural disasters and unusually poor
returns. It can be particularly helpful when a producer receives
an abnormally high income from forced sales and insurance proceeds
arising from a natural disaster.
Despite the fact that the Scheme was recommended by the I. A. C.,
Mr Whitlam denounced the Scheme in the Parliament a couple of weeks
ago as the " latest lurk for Pitt and Collins Street farmers".
The Labor Party's hostility towards the rural community has not been
altered ' by its period in Opposition.
The other recommendations of the I. A. C. regarding the averaging of
incomes have not been rejected by the Government and remain under
consideration. A new rural adjustment scheme has been introduced
in cooperation with the ' States. This new scheme replaces a variety
of earlier schemes and like the Income Equalisation Deposit Scheme
it is based on I. A. C. recommendations and will apply to all rural
industries. We have reintroduced the superphosphate bounty. In the case of the
subsidy on nitrogenous fertilisers, we have accepted the I. A. C. report
in principle, but a decision has not been taken as to the rate of
subsidy to apply from the end of this year.
Devaluation will, of course, also be of great assistance to the
primary producer. Our competitive position in world markets where
over hal~ f our rural products are sold should be improved. Rural
producers incomes should be boosted.
We are currently proceeding with plans for the establishment Of
a national rural bank. The purpose of this new institution will be
to provide long term finance and specialist services to thE! rural
community. Other taxation reforms which have been introduced will
yield benefits to primary producers as well as to income ea~ rners
gene rally.
earners generally./-6
Indexation of personal income tax is a major ' reform, designed to ensure
that the tax take will not rise automatically as the result of
inflation alone. All taxpayers will benefit; and the revenue foregone
this financial year will total about $ 990 million. Next year, the
amount of tax foregone by the Government is estimated at $ 1050 million.
Investment allowances have been introduced to help lift private
investment'from its depressed levels. Next financial year, the tax
savings to the private sector from this concession are expected to
reach $ 550 million. Farmers will share in these benefits. The
requirements covering the distribution of profits by private companies
have been eased. This will relieve the tax burden on small businesses
which are of great importance in the Australian economy.
Estate duty relief has been introduced in cases where an interest
in an estate passes to a surviving spouse.
Actions demonstrate clearly the Government's willingness to
act quickly and decisively to assist the great rural industries to
maintain their viability and continued growth in our economy.
But the most important thing we can do for rural producers and all
other Australians is to defeat inflation, so that we can have a full
return to economic prosperity.
During 1976 considerable progress was made towards the Government's
three year goal of bringing Australia's economic problems under control.
The strategy we have pursued since being elected is based on the
fundamental recognition that renewed economic growth could occur only
if an environment was created in which the private sector would
emerge with higher levels of production, profits, investment and hence
employment opportunities. Fundamental to that is the control of
inflation. The revival of the private sector also required measures aimed directly
at restoring incentives in the private sector and cutting back on
the growth of government. We have carried through that strategy and
we have already begun to see its fruits.
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see its fruits./
A considerable winding down in the underlying rate of inflation
was achieved during 1976. This was apparent in a number of
important indexes. For instance, in the first three quarters of
1976 the deflator for the major components of gross national
expenditure the sum of all domestic final expenditure, private
and government rose by 2.7% and 2.2% respectively.
I mention these indicators of inflation because much emphasis
sometimes too much is understandably placed on movements in the
C. P. I. as the measure of inflation. In fact of course, that index
merely records price movements for a specifically confined set of
goods and services. Despite the limitations of the its
recent: movement viewed in their proper perspective, confirm other
signs of a marked downward trend in inflation during 1976.
The effect on the C. P. I. of such once-for-all influences as the
health insurance changes have nothing to do with underlyi. ng inflationa."
pressures in the economy. For instance, in t1e second half of 1975
underlying inflationary pressures were great. J
But in the September quarter of 1975 the CPI rose by only it was
artifically depressed by. the introduction of Medibank and was an
inaccurate reflection of basic inflationary forces. This is
demonstrated by the fact that the 1975 December quarter CPI rose
to The most recent December quarter index rise must be
discounted for the effects of changes in health insurance
arrangements. Once this adjustment is made, the CPI increase is
well below the 6.3% increase recorded in the December
quarter of 1975.
The Y: aizi f5act ia that inflation in the second half of 1976
was running at an annual rate some 4 percentage points or more lower
than in the second half of 1975. The C. P. I. figures, adjusted as I
have described, were 10.2% in 1976 and 14.3% in 1975. Whichever way
one looks at the figures, a broadly similar conclusion emerges.
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conclusion emerges
Considerable progress has been made in the fight against inflation.
That there is justification for adjusting the C. P. I. for Medibank
effects is borne out by the deflator for major components of G. N. E.
This broadly based measure of price change automatically adjusts
for Medibank effects. It makes this adjustment because inherent
in its construction is the plain fact that the community must always
pay in one way or another for its health care. Health services did
not suddenly become free on 1 July 1975; nor did they suddenly become
more costly to the community on account of the charges effected on
1 October 1976.
Any rational assessment of the C. P. I. and other indicators of inflation
underlines the progress that was made in the fight against inflation
in 1976.
In other respects too, the economic environment has improved.
The distortions which developed to key economic relationships
during 1974/ 75 began to be corrected during 1976. There has been a
recovery in business profitability.
In the September quarter of 1976 company profits were up 39.4% on a
year earlier. This partial climb bank from the extremely depressed
level to which profits were driven in 1974 and. 1975 is central to the
revival of business confidence; business investment; and, of course,
the creation of new job opportunities.
On the activity front, aggregate expenditures and national production
began to grow again in 1976. Most striking has been the -provisional 7.5% ri.-
in real gross non-farm product between the December quarter of 1975
and the September quarter of 1976. I
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September quarter of 1976.
' A most impressive but little appreciated feature of the growth recorded
in 1976 is that it occurred despite a reduced level of real government
spending. The momentum for growth lay entirely in the private sector.
The growith in demand and production has not yet been translated into
a decline in unemployment. As in the early stages of past recoveries
employers have begun by making fuller use of their existing workforce.,
At today's much higher levels of wage and salary costs, there is an
even stronger incentive than before for employers to seek out
every alt~ ernative means of increasing output before hiring additional
fulltime workers.
The gover~ nment's objective is to get people back into jobs. We are
particularly concerned at unemployment amongst youth and have initiated
a number of innovative schemes to deal with this problem. But
ultimately, the speed with which unemployment is reduced depends on
the degree in wage restraint that is achieved in the course of the
year. In your own State, the signs Of ecOnQ-X-. c -eccYjery are encoir', ac* in-. It appears the
building industry is now sharing in the strong recovery in dwelling
construction activity since 1975.
The buoyant levels of new motor vehicles registration for the second
half of 1L976 suggest that Queensland has shared in the strengthening
of consumption evident for Australia as a whole. In the year to
January .1977 registrations were 13% higher than the previous year.
The corresponding national figure was 2.6%.
Civilian employment in Queensland increased by 3,200 between NOvember
1975 and November 1976. Although this has not been sufficient to
bring about a decline in unemployment, it compares with no change in
employment over the year to June 1976.
As well there has been a recent intensification of planning
activity in the area of natural resource projects in Queensland which will
be of great importance to Queensland and Australia in the
years ahead. Devaluation ahas clearly strengthened the planning
basis for projects of this kind. Some of the largest projected
developmrents are in the coal industry. Projects such as the
Collinsville Project; the proposed expansion of operations at
Blackwater; and the vast Norwich Park, Hail Creek and Nebo projects
in central Queensland will, hopefully, proceed in the years ahead
years ahead,/
resulting in hundreds of millions of dollars and perhaps
as much as a billion dollars being invested in mineral development
in Queensland.
Development of mineral resources, of course, is not something that
can be turned on quickly. The government recognises this fact
and has done a great deal to restore the incentive for exploration.
In this context I must stress that the benefit of devaluation in the
form of increased private investment in natural resource based projects
and in manufacturing, will accrue only after a time lag. You will
readily understand that it takes-time for the businessman to capture
new markets and to plan and implement new investments.
on coming to Government, we made savings of over 000 million
Gopenemdnn g his year we have announced savings
of $ 250 million in the current financial year. And we have
committed ourselves to keeping outlays for 1977/ 78 to within
zero real growth. These decisions are designed to reduce the
deficit and provide the maximum room for income tax reform.
We have already made personal income tax reforms which will amount
to $ 990 million in 1976/ 77 and $ 1050 million in 1977/ 78.
Those that call for immediate reductions in taxation ignore the
magnitude of our tax reforms to date, and they gloss over the fact
that the consequences of tax cuts now would have to be futher
large cuts in government spending which no one has advocated or
further government loan raisings which would involve a significant
increase in interest rates, or a bigger deficit and the printing
of more money which would be disastrous. Our commitment to carry
through tax reforms clear, and so is the significance of the steps
we have already taken. Although tax cuts are inappropriate at
this time we are committed to having further tax reforms when it
is responsible to do so. In this context, the government will be
monitoring the wage situation closely in addition to its
continuing search for economies in the expenditure. Evidence of
a significant moderation in the rate of wage increases would be
an important ore--condition for any further revisions in taxation.
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We have been using all the instruments within our power
monetary policy, budgetary policy, and external policy to the
fullest extent possible in bear down on inflation.
In budgetary policy wehave made the major savings mentioned
earlier. In monetary policy we have moved to prevent excessive
easing in monetary conditions which would be accommodating to
inflation. And the exchange rate is right.
Moreover, -hrough tax indexation and the family allowance scheme,
we established the situation where the community and the rank
and rile trade unionists have accepted wage restraint.
The Government does not however have direct power in respect of
wages and salaries. It is the Arbitration Commission which has
this power, and with this power, a large responsibility. A
responsibility not only for resolving industrial disputes but
for the health of the Australian economy.
Nothing would more quickly and surely undermine the economic
progress which has been made than a flow on of the full six
percent December CPI increase into wages. This would increase
inflation, this would increase unemployment, it would erode the
benefits of devaluation the increased investment, the more
healthy growth and increased job opportunities.
I believe that the community and rank and file unionists
accept the need for wage restraint. Since the end of 1975
we have made considerable economic progress. We intend to make
further progress in fighting inflation and unemployment through 1977.
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