7
4,, AusTRALA 1i-( AS DELIVERED) VUh.
PRIME MINISTER
FOR MEDIA MONDAY 9 JULY 1979'
ADDRESS TO LIVESTOCK AND GRAIN PRODUCERS ASSOCIATION
Let me say at the outset that the Commonwealth is not in the
* business and my Government is not in the business of ending
death duties merely to replace it with a capital gains tax.
We have made that plain on many many occasions. Other political
parties have the introduction of a capital gains tax on their
agenda and high on their list of priorities. It is not on ours.
We will not contemplate such a tax. We believe that getting
rid of probate for farms, pastoralists, and for small businesses
generally, and . to a very wide section of the Australian
community was something which was long overdue
and essential for the continued successful and viable
operation of small businesses, whether they be farming operations
or manufacturing businesses or trading businesses of other kinds.
We are not going to diminish the effect of those policies.
I am very happy to be here at this Second Annual Conference.
It builds on the success of last year. With a large number of
delegates from something approaching 100 branches, I believe it
shows the vitality of the organisation. Amalgamation of farming
organisations in recent years has, I believe, been good for
rural industries because it enables rural industries to speak
with greater vigor, with greater unity. I think that is very
necessary indeed.
There are some things, if I am advised rightly, about your
organisation which I envy very greatly. The rules for debate,
the mover I am told has three minutes. Two subsequent speakers
have two minutes. A reply of two minutes. If we could only have
that we could get through the business of Parliament much easier
with less noise and thunder and I hope with a little more accuracy.
I would like to say something about the position of rural
industries as I see it, about the nature of Government policies
and then about the broader implications of Australia's role and
the kind of world that Australia has to live and trade in, and
the direction of Government policies in relation to that.
Quite plainly prices for rural products are better than they
have been. I am not going to say that farmers have never had
it so good, because I know quite well that the betterprices that
have been coupled with a better season, had been desperately
necessary for many producers. Many were facing bankruptcy and
having to leave their properties. Farmers sons were wondering
whether there was any future on the land. It was a grim position
indeed. So the better prices that are now present are needed to
repair the damage of previous years and to enable producers to
./ 2
-2
build up their financial reserves once again. As we know,
in the beef industry what happened in 1974 when we lost all
our access to Japan in the very year we were shut out of
Europe. Again, there were restraints in the United States
at that time.
Is there any wonder that prices fell catastrophically and that
large parts of rural Australia were grieviously damaged as
a result. Average prices now may be two and half to three times
the price of a year ago. I think that with the reduction of numbers
in the United States and with the reduction in numbers in
Australia, which may not yet have bottomed-out, that we ought to
be able to look forward to a continuation of reasonable returns
for some time. We can't guarantee what the weather will do, but
apart from that, I believe that with the trade negotiations we
have undertaken, we have done more to secure export markets for
that industry and to secure its future than at any other time.
The wheat harvest was an excellent one with a gross value of
over $ 2 billion, more than double last year's. Again, the new
stabilisation agreement that has just been negotiated
will enable the industry to build on its past achievements.
The wool industry is much stronger and in a much healthier positionas
is the sheep industry generally-than for a number of years.
You will know that we have been able to lift the floor price to
318 cents per kilogram for the wholeper clean kilo clip average against
the actual average of about 360 or 361 cents at the present time.
I think that is quite a large margin between the average and the
floor. But at the same time, the floor has been increased. The
general level of wool reserves is about 350,000 or 360,000 bales,
less than half of a year ago. All in all the industry is in
a very strong position. Again, I can see no real reason
why that should not continue. I think a verydifferent position from the
one whichi led a thousand or so woolgrowers to parade outside
Parliament House one morning four or five years ago, when at
the very time you needed stability in wool marketing, confidence
in the price of wool, confidence in the Wool Corporation, the then
Government reduced the reserve price by 50 cents. It didn't last.
It didn't survive against the uproar that came from Australia
and overseas. But that particular action showed something of the
mind of our predecessors.
A number of other rural industries are also doing better. The
gross value of agriculture output in this year is over 40 percent
up on the year before. That is the biggest increase for many
years. Admittedly, in some industries, from a pretty low base.
It has been an increase that has been desperately needed in most
parts of rural Australia. It has occurred and therefore it is
necessary to do what we can to consolidate the gains and make
sure that they are not lost.
I know you have expressed concerned about the levies in relation
to meat for the meat export trade. The restrictive trade
practices organisation, I think is considering taking out
action. I think it might already have done so in relation
to ( inaudible). . The Minister is also drafting conditions which
would be attached to export licenses to make sure that the levies
are paid to the extent that they are into the terms and conditions / 3
-3
of the legislation, and that they are not passed back to
producers as the exporters had sought to achieve over recent
times. I can well understand the annoyance of producers at
the actions of exporters. I think that the 45D action and
the action that the Minister has taken with conditions attaching
to export licenses, will achieve a continuation of the previous
means ( inaudible) of those levies. I think a resolution
also goes to the substance of the levies themselves. I would believe
against the present incomes of primary producers, of the meat
industry in particular, and I can speak in this instance as a
beef producer--I think that those levies are not unjustified.
We all know that there has been a continuous demand on the
Government to reduce expenditure. We also all know here, that
primary producers and exporters have more to gain by the containment
of inflation and more to lose by the loss of the battle against
inflation than almost any other section of the Australian community.
Because, above all, what you sell, what we sell, is dependent
upon prices that we can get overseas. To the extent that we
can keep our inflation below that of many other countries, then
our exporters are advantaged. If our inflation gets ahead of
that than many other countries, then we are in a much worse position.
Therefore, against that general background and against the
background of current prices in the meat industry, the Government
felt that it was not unreasonable for producers to pay a larger
share, or the industry to pay a larger share, of the cost of
the various processes in meat inspection.
I know it is not liked, but at the same time I indicated that
if industry gets into difficult times then the Government will
pick up the bills as indeed we have in the past. We can do that
again. But against the totality of expenditure restraint, the
tiries we had in getting to an overall budget position that will
be responsible when that comes out in August--the action that
we took I believe was necessary. I also believe against the
background of current incomes, that it was justified.
I would like to suggest that the recovery in the rural sector
is certainly not an accident. It has come about as a deliberate
application of Government policies over three and a half years.
I think we can all recall in 1974 when farm costs rose by 30 percent
in one year. Again, as deliberate application of a number of
policies and as a result of Government policies which allowed
inflation to run rampant in Australia. It has been necessary
to control expenditure. It has been necessary to exercise the
most rigorous restraint in what the Government itself does; how
we spend tax dollars. It has also been necessary to reduce
taxation-and we have, very substantially.
This year is the first for over a decade, and maybe much longer
than that, in which actual income collected from income-tax
payers will be less in real terms than it was the year before.
That, I think, is a substantial achievement in terms of tax cuts.
As against earlier tax scales, the total collections are $ 3,000 millio:
less than they would have been if the 1975/ 76 scales remained
in force. / 4
-4
We have indicated very plainly that we are prepared, and will,
-help industries when it gets very difficult. There are
special programmes, especially for the beef industry. But more
than that, we have introduced long-term programmes which-are
designed to help producers re-build their assets, re-build their
reserves. Income equalisation deposits maybe won't be much use for
producers who wouldn't have had an income to invest, but under
current circumstances, I hope they will be more freely used.
The revised system of tax averaging is of greater benefit to
primary producers than ever before. The Primary Industry
Bank has re-financed loans up to more than $ 100 million. We have
already made decisions to supplement the funds of the Bank, but
that will be announced in a little while. There are still some
negotiations in relation to it. The new Wheat Stabilisation
Scheme has been approved. But above all, we have done much
I believe to secure the position of Australia's primary producing
exporters through trade negotiations with Europe, with Japan,
and with the United States. This has been a deliberate campaign
by the Government over the last two to three years.
So far as Europe is concerned, there are many who have said
" why do you bother. They have shut the door against us and they
are not going to allow that door to be opened". We believe that
the justice and the merit of the Australian case will enable
us to make some advance. We never expected a major advance, but
we did expect to be able to get that door open, and we have got
that door open. We have done that against the background of a
very difficult negotiation over more than two years. We will be
establishing means and mechanisms of a continuing negotiation
with the European Community to build on what has in fact been
achieved. I can well remember the first time I visited Brussels
and had some discussions with the Commission. It took the
best part of a day of long argument to get them to agree even to
negotiate with Australia. Even to admit that there was a case.
In the end they did. But much has been achieved since then.
Indeed, I think we have achieved a different attitude to the debate
in the European Community itself, about the Common Agricultural
Policy. Because now from Britain, from Dr. Gundelach,, and from
many within the Community, there is opposition to the very high
cost of their agricultural policy. At the same time, there is
a very real recognition that a country such as Australia or
New Zealand has a very real case indeed. That is a significant
turn-around.
The Multilateral Trade Negotiations with the United States and
Japan will have again done much to reassure and guarantee markets
for our major exports; f or meat and for wool. In Japan we are
already up to about 115,000 tonnes and the agreed amount, under
the trade agreement, will be significantly above that,~
The United States' position has also secured. -I think it is
worth noting that while many other Governments over about 30 years
had spoken of getting the United States' wool tariff reduced,
it is my Government that in fact has got it reduced. Others have
spoken about doing it, but had never been able to achieve it.
That wool tariff will be reduced by-60 percent as we know.
In these areas, then I believe, we have done much to secure
the future of Australia's major export industries in a way that
has not been done before. I think we should look forward to
more secure prices and more secure trading positions, with the
one provision that the countries with whom we have undertaken
agreements stick to those agreements. I have not reason to
think that they won't.
I would like to say something about the general position
Australia finds herself in as a result of continuing high
inflation around the world.
Since the years of high inflation in 1973, world trade has
grown by three or four percent a year. While it continues to
grow by as little as that, unemployment around the world
will certainly stay high. In the 20 years before 1973, world
trade grew by about 8 percent. In those figures, 8 percent
falling to 3 or 4 percent, we see much of the difficulties of
the western economic countries, much of the difficulties of
the western system of trade and payments.
Unfortunately in many countries, inflation has not been
adequately dealt with. There are pressures around the world and
in Australia which at the moment tend to move inflation in
other directions. But in the United States it is approaching
11 percent and rising on the last six-monthly figures. In
Britain 13 percent and on the admidssion in their own budget,
going to 16 or 17 percent. In Germany, where it had been
well-controlled, it has risen to 7.3 percent. That is a two
or three-fold increase over the last six to seven months.
The total picture of Europe, the OECD countries, is over 10 percent.
Australia is running around 8 percent, but again with pressures
to increase inflation, but I believe not by as much as in other
countries. Those pressures have come significantly from
increases in meat prices, which was good news for meat producers
and very necessary for meat producers. But it is bad news for
inflation. There have been other pressures also. The size of
the wheat crop. That didn't help with the money supply, but
arrangements have been made about that. Better metals prices
have also added to the money supply. There are inflationary
pressures from that course, as there are also from wage increases
of course, and from oil prices.
I think others will be affected much worse than Australia in
relation to oil supplies. I announced a major policy on energy
a few days ago. The purpose of that was of course to make
quite sure that essential producers, when it is necessary,
will be able to get the supplies that they need. We have had
people overseas examining whether or not there should be
Government-to-Government purchases. That that would secure the
supplies of Australian fuel. We believe that additioihal supplies
of Avgas have been obtained which help to relieve significantly
the particular shortages and difficulties in Queensland and in
the north of Australia, because those areas were earlier supplied
from Iran. Those supplies are now not so readily available.
Southern Australia is largely supplied from Australian refineries.
/ 6
-6
The Government knows quite well, and will make sure that
producers who need fuel at particular times will be able to
get fuel if there are general shortages. Of course the
Kurnell Refinery in which I believe would not
have occurred if the State AWU hadn't been given encouragement
over a long period to break out of the Federal Award, has led
to very particular fuel problems in this State. That just shows,
against the general background of a world shortage, how important
it is to make sure that Australian refineries keep operating.
Because if reserves are run down as a result of a dispute of
that kind, I think it become very difficult to re-build those
reserves.
Industrial relations is a matter of concern and it is of
concern to the Government. One of the problems in the Telecom
dispute over recent times is that it has taken two and a half
weeks to get the dispute referred to the Full Bench and it
wasn't being dealt with by the single Presidential member.
Sir John Moore, as President of the Commission, did not have
authority to take over that particular case in the national
interest. That deficiency in the law will certainly be
rectified when the Parliament meets, to make sure that the
President of the Commission does have authority and.-full authority,
to take over a case if he regards it as being in the national
interest.
A number of measures that we have introduced have, I believe,
assisted in a better industrial scene. Section 45D of the
Trade Practices Act has been useful on many occasions, especially
in protecting Australian exports.
We have a general position of seeking to support the various
wage tribunals and the Arbitration Commission in particular.
That doesn't mean to say we always approve or always like the
decisions that those tribunals make, but the impartial umpire
has been established in Australia for very good reasons.
The rash of industrial disputes over recent times not all over
wages but significantly over wages has come, as I believe,
because there is a lack of willingness on a number of union
leaders to accept arbitration; a great lack of willingness
on the part of a number of union leaders to put aside bans and
limitations and strikes and to allow the arbitration machinery
to work. If this continues, it obviously maintains a very
difficult position. It is totally irresponsible and totally
against the interests of trade unions, the industries and the
nation to go to industrial action as a first resort weapon,
as so often is the case at the present time.
It is against that background that Tony Street called a conference
with the ACTU last Friday because we believed, at least, that
the ACTU would be prepared to support the system of arbitration
and to lend its weight and influence in that particular
objective. Mr. Hawke refused to do so and indicated that it
was because of Government policies and economic policies which
he indicated, in his view, had reduced the living standards of
the working people of Australia. Well, of course, the facts
are quite different because average weekly earnings have not
-fallen when measured against the CPI in any general sense.
Both have marched, roughly, hand -in hand, over the last two to
three years.
Against that background, it is not possible to say that the
system of indexation as it has been applied, has reduced the
living standards of the working people around Australia../
-7
PRIME MINISTER ( continued)
It's quite plain that unless there is to be a greater
acceptance of arbitration concilation and arbitration
and a greater acceptance of the decisions of that body must
be accepted, then we are going to be faced with the kind
of stand-up situation which I think you indicated, Mr. Chairman,
when you introduced me a few moments ago.
If the Government is forced into that particular position well
then we will be. We will stay until the end of the course.
But I feel on a number of occasions when industrial disputes
have arisen, in the early stages there is fire and thunder
and support but after the first few days and after the week
how many people are there still in support? How many people
are still in support at the end of the second week or would
be at the end of the third? The test will come then, as to
whether a community, if it is forced into that position, is
prepared to stand and support a Government that is in that
particular position. Because let there be no mistake about
it, if a Government embarks upon that course, if my Government
does, it will stay the course ' til the end of the race. I only
hope, Mr. President, that your organisation and every other
organisation involved in the private enterprise way of life
will stay with us in relation to it. Because it is easy before
the test is there. But if you have a situation, for example, in
which there were no telephones of any kind in this State, how
many people would stay with that. It is a serious matter.
There are elderly people in homes who need to be able to ring
up the doctor. There are elderly people living by themselves
who need to have contact. There are hospitals that must be
able to get contact for emergency supplies. If the union
movement therefore, is prepared to shut down a total system as
a result of a Government taking some further resolute action,
the consequences could be very severe indeed.
We need to understand these matters. It is the easiest thing
in the world to say ' take out a club and knock somebody's head
with that particular club'. But what we have to do is to make
sure that this community works and to make sure that we try to
get to a sensible resolution to industrial disputes. If a
Government has to take action that leads to more difficult
circumstances, if it has to proclaim some legislation which it
has passed but has not yet proclaimed in relation to its own
employees, then certainly it will be prepared to do so. But
I just make the point that I have seen in one or two'other
industrial disputes over the last two or three years that
a Government starting to take that course very soon people start
to say ' why don't you conciliate, why don't you negotiate, why
don't you consult'.
Mr. President, I think this is a matter of common concern.
I would agree with you, with the thrust of your remark,
-8
it is the only issue that could cause Australia to blow
the 1980s and to destroy the advances of the last three years.
In terms of the full thrust of the Government's economic policies,
they will be maintained. Even if we don't have inflation
as low as we had anticipated, even if it rises a bit as a result
of oil pricing and also as a result of beef I believe it will
be rising more in a number of other countries. If that is so,
our exporters will still be becoming more competitive, will
get into more markets and our industries-also will be encouraged
because our inflation is below that of other countries.
In the industrial arena, we can either consolidate the gains
that we have won, work and support economic recovery, or we can
destroy it. I believe that all in all we will show too much
commonsense in Australia to blow it. Because we have opportunities
and options available to us that are not available to all other
countries. our inflation is now lower than many. Our
industries are more competitive than they have been for seven
or eight years and are getting into export markets in many
places. I wonder how many people here realise that we can
build, design and construct fishing vessels and win contracts
against competition from Taiwan, Hong Kong and Singapore.
That's a mark of what at least one Australian industry can do.
Our home and our export markets are therefore more secure.
We have great minerals; coal, iron ore, bauxite, nickel.
There is $ 2,000 million worth of investment going into the coal
industry now and another $ 2,000 million going into the bauxite/
alumina industry. Because of economic stability in Australia,
because of policies which encourage that kind of investment,
we are likely to attract more than our fair share of the world
investment in major commodities in minerals. Because of
political stability of a kind that you don't find in every
resource-producing nation, we will again attract more than our
fair share, even if there is low world growth. Because of a
world shortage of energy, because of our possession of coal
and natural gas and a signifcant quanity of oil not as much
as we need, but a significant-quantity, we are again much
better placed than many other countries.
For all these reasons, we have become a more attractive source
for investment from overseas. We are a more reliable supplier
than many other countries.
Against this total background, Australia has many many advantages
indeed. I believe that we will capitalise upon those advantages.
It is certainly the intention and the policy of the Government
to make sure that we do. That means keeping our economy right,
even if sometimes it is some immediate political cost to ourselves.
Because we are not prepared to throw away these advantages.
We are not prepared to throw away the gains of the last three
years. We have taken sometimes difficult decisions.' The mini-bidget
was certainly one of them. But it would have been greatly
irresponsible not to do the things that John Howard then announced.
/ 9
9
I believe very strongly that we have the right policies,
that they are responsible policies. In particular, they are
the kind of policies that Australia's export industries need.
The kind of policies that Australia's primary producers need.
For the future, I believe we can see a prosperous rural sector.
That is not only good for farmers and pastoralists, it is good
for all Australians. I am certain that we can look forward
to the 1980s with great confidence. 000---