FOR PRESS 18 AUGUST 1978
SPEECH AT LACTOS FACTORY, BURNIE
I appreciate this opportunity to be with you in Burnie this
afternoon. It is a specially significant occasion.
I understand the plant was almost wiped out in a disastrous
$ 4 million fire on August 19 last year. That was just three
days after last year's Budget.
Well, you know what happened just three days ago in Canberra.
Today, this wonderful new factory still stands indestructible.
I would like to think of that as a good omen not only for
Lactos, but for the Budget.
The Budget faces up squarely and honestly to the facts of life
in Australia today. At no time have we ever pretended that
there were quick solutions to Australia's economic problems.
We had to front up to, and take, hard decisions.
It is easy to fudge, it is easy to pretend that a difficult
situation does not exist. It is easy to spend money, to throw
it around saying that will solve all problems.
The Bud&, et rejected that course. It's a responsible document
that has faced up fairly and honestly to Australia's problems.
This Budget has one overriding objective to build on the
foundations already set for the longterm economic stability
of Australia. We will do this by reducing inflation even
further. This will make us more competitive here and overseas,
set the conditions for a sustainable reduction in interest
rates, and offer incentive to investors and create new job
opportunities. Those who still claim that the Budget has done nothing to
stimulate the economy, and to provide new job opportunities,
miss the point. They see stimulus as equivalent to more
Government spending and running the printing presses ever
faster.
Australia learnt, to our cost as some overseas countries
have learnt to their cost what this kind of approach does to
confidence and to inflation, and inevitably to employment
prospects. ./ 2
The real point is that by reducing inflation, by reducing interest
rates, this itself will provide the greatest possible stimulus
to the economy.
No industry, no business, no manufacturer, no farmer is going
to employ more people if they knowe prices and costs are going
to keep rising rapidly and unpredictably.
On the contrary, they are going to shed labour, pull in their
horns. Reducing inflation and reducing interest rates will do more to
help home buyers, pensioners, * businesses, farmers, exporters
will do more for jobs than any other single act of government.
Of coarse, there is another key area central to the problem of
containing costs and providing jobs and that is wages.
As the Treasurer made abundantly clear on Tuesday, the sharp
increase in labour costs relative both to the price of output
and the costs of other factors of production has encouraged
firms to shed as much labour as they can.
Clearly, companies have been replacing workers with machines;
replacing full-time people with part-time people; replacing wage
and salary earners with self-employed contract labour. They
have been making do with less labour all around.
Wage and salary earners know the score. They know the choices
are perfectly plain.
Union leaders can show greater sense and moderation in their
wage and salary demands, or can continue to press for higher and
higher wages for those in work at the expense of their mates
looking for a job.
If they opt for the latter something they have been doing
then I can guarantee that unemployment will stay high.
Moderation in wage demands is essential for a reduction in
unemployment. This is an inescapable fact in modern economic
life. It is one of the great tragedies of the modern. trade union
movement that its leadership has not been prepared to seriously
look at this question of moderation in wage demands.
Surely the lessons of 1974, 1975, when wages went up by
and consequently thousands of workers were priced out of jobs
surely these lessons are still fresh in their minds.
The Budget sets Australia clearly on the path to an inflation
rate of five percent by June next year that is just 10 months
away.
That is not a claim I make2 . as Leader of the Government or as
Prime Minister, but the official Treasury forecasts documented
in Budget papers.
There is no doubt at all, that by the middle of next year,
Australia's inflation rate will be the envy of our trading
partners. Apart perhaps from Japan and West Germany, our inflation will
be lower than most people we trade with. This is a remarkable
achievement when you consider that when we first took office,
inflation was running in the order of 15 percent or 16 percent.
What will this mean for Australia?
It will benefit every individual, every family, every farmer.
It will provide new optimism, new spirit for our industries,
our exporters.
Our great industries our great rural industries will be
more competitive both within Australia and on world markets.
You all know what this will do for jobs, for confidence, for
growth. Significantly of course it means that as a resource rich
nation we will become a favoured nation for investment.
Countries will be looking to Australia with low inflation,
with-a-sound and stable economy as a resource supplier for
years ahead.
This is an appropriate time to make reference to Australia's
great rural industries and to the Dairy industry.
I have got little doubt that the strength and health of our
rural industries affects the lives of every Australian. City
and country are interdependent. If farmers are not producing,
not selling, then they are not adding to their farms, not
making improvements and not investing.
This of course has direct impact on companies in the city
producing farm machinery and equipment. But the horizon is
changing for the farmer. For the first time in maybe a
decade the men and women on the farms right throughout Australia
are looking ahead with confidence. They are optimistic about
the future.
Clearly, the ' Key reason is the fall in inflation. No group
feels the effects of raging inflation harder than farmers
and the rural industries.
Of course, there is confidence in rural communities for other
reasons, sheep prices are reasonable, wheat and wool prices
are good and the beef industry is now coming out of its trough.
A bonus is that the damaging drought has broken for most of
Australia. I think this gathering would be aware of the Government's support
for the Australian Dairy Industry. We have strongly supported
the industry by underwriting prices up to a level of 75 a
pound butter fat this financial year. / 4
We have allocated $ 17.4 million this financial year to cove~ r
previous underwriting commitments.
I know you are interested in Government policies and
actions as they affect the fortunes of dairy farmers,
and dairy factories. I think you all know of our vigour
in seeking increased access for our agricultural products
to the great markets of Japan, the European Economic
Community, the United States, the Middle East and
other markets. our attempt to gain increased access for
agricultural goods has been recognised as fair and
reasonable by other world leaders, and by the world press.
President Carter recently wrote to me and said that he
wouldn't consider the Multilateral Trade Negotiations
in Geneva a success unless they lead us towards a
significant liberalisation of world trade in
agricultural products.
We do not intend to desist from trying to get a fair go
for Australia in the world's largest and richest market.
I am sure that no-one in the rural community or people
in the cities want us to stop trying. I think this
industry exemplifies in stark terms the problems we face
with the European Economic Community in particular.
Domestic support policies overseas have led to increases in
butter stocks, and continued high stocks of skim milk powder.
This has led to a consequent lowering of international
prices. Those policies have also stimulated increased
production of cheese and whole milk powder with a similar
depressing effect on prices. That's not an encouraging
international market outlook.
The cost of such policies is high. It costs taxpayers and
consumers of the protectionist countries, who must bear the
added tax burden and pay higher prices for food. It
costs Australian industry, which is denied some export markets
and must compete in others against subsidised productivity.
On top of that, it costs the world in general, whose
agricultural resources are misallocated from low-cost
efficient producers to high-cost inefficient producers.
The figures give a fair example of what I am talking about.
The cost of the EEC's export subsidies on products competing
with Australia's exports is about $ 4 billion per annum.
The EEC's Common Agricultural Policy has the net effect of
prohibiting imports, while subsidising exports. It throws
the entire burden of adjustment of the high-cost suppliers
in the EEC onto low-cost efficient suppliers such as
Australia and such as this industry in Tasmania.
A look at the cheese industry graphically illustrates my
point. The EEC's support price of $ 2,250 per tonne for
exports is more than twice the world price of $ 950 per tonne
for cheddar cheese. As a result, Australia cannot export
any cheese at all to the EEC.
On the other hand the EEC exported 4,000 tonnes of
heavily subsidised cheese to Australia last year.
Lactos and other aggressive marketing orientated Australian
companies have been endeavouring to expand their
production of speciality cheeses. I know the increasing
presence of these low-priced imports has made this
difficult. As a consequence we have asked the Industries Assistance
Commission to inquire and report on the protection needs
of the cheese industry.
We want to be certain that the industry can produce with
confidence an increased variety of fancy cheeses and obtain
a reasonable share of this valuable growth market.
We have been actively seeking reform of international
trade in dairy products. We played a leading role in the
dairy negotiations in Geneva. In the MTN negotiations,
Australia is fighting for an international dairy agreement
which would involve not just mimimum prices for milk powders,
butter and butterfat but which would contain worthwhile
provisions covering world trade in cheese. So far, we
have been almost a lone voice in pressing to have
cheese included.
It is inexplicable, however, that cheese trade should not be
included in a new dairy agreement. While our efforts
relating to the EEC are most important, we are not
pursuing them to the neglect of other markets, which we must
protect and foster.
I understand that the Lactos Factory is expecting to export
around 2,500 tonnes of Gouda and 2,000 tonnes of Cheddar
in the coming season to Japan. This is additional to its
other specialty cheese exports to markets such as the U. S. A.
We have a strong position as a supplier of dairy products
to Japan. We must make every effort to make sure this
position is protected and hopefully improved on.
Overall, the international trade in dairy products is
fraught with difficulties to which a great deal of
negotiating is still being currently directed. As a
significant exporter, these problems necessarily have a major
impact on the Australian industry.
It is to this Company's credit it has through energetic
marketing and technological innovation been able to
maximise its trading opportunities. There is little doubt
that these facilities here reflect not only the personal
success of Milan Vylnalek, but more broadly the success of
a business enterprise that benefits the community, the State
and the reputation of Australia as an enterprising exporter
of rural products.
6
This is a great day for the Lactos Company. It is most
pleasing to welcome friends from Japan especially from
Snow Brand, the Company's largest export customer and
friends from the United States.
Lactos and Snow Brand formed their present close association
in the early 1970' s when the two companies signed a contract
for Lactos to manufacture Gouda cheese to Snow's
specifications. In record time, Lactos designed and built probably the
world's first completely automated Gouda plant with an
annual capacity of 3,000 tonnes of show-type Gouda.
The plant was officially opened in 1972 and Lactos became
the largest Australian supplier of Gouda cheese for Japan.
Although other companies have since entered the Japanese
market, Lactos continues as a major and expanding supplier
to Snow Brand and I understand Snow Brand executives have
stated publicly that they regard Lactos Gouda as the best
obtainable from any world source. That's a compliment to
the Company, and to the dairy industry in this great State.
Let us not underestimate this achievement. Here is an
Australian company in a highly specialised market making
a quality product competitive with the best in the world.
Surely there is a special and relevant message for the
retailers gathered here today.
The Government has a policy of buying Australian goods.
Should not Australian companies, Australian retailers
wherever they can support local producers like Lactos,
who are producing world class products. Let us not
belittle what we can do in Australia.
Not only will this kind of decision add to our economy, but
will greatly increase community awareness of, and national
pride in, Australian skills, achievements and potential.
The Government, in the Budget, launched what we call " Project
Australia" and we will be looking for support from all
sections of the community in this great national endeavour.
We want to recreate a real feeling of pride, of achievement,
of community spirit, so that what we make will be more
eagerly sought by consumers here and overseas.
Today in Burnie on this site is a good place to start for all
you retailers. Here are world class products produced on our
own doorstep. Let us get behind companies just like Lactos
and make " Project Australia" a living and vital thing. / 7
V 7
Mr. Chairman, I think we would all agree that it is a
remarkable achievement to restore from the ashes
" Phoenix-like", this wonderful new factory, which I
understand is the second largest of its kind in
Australia. The investment in new plant, equipment, and people, is
real proof of this Company's confidence in the future
of the cheese market. But perhaps more important, it
is a strong demonstration of this Company's confidence
in the future of Australia. 000---