PRESS OFFICE TRANSCRIPT WEDNESDAY 29 AUGUST 1979
PRIME MINISTER INTERVIEWED BY RURAL WRITERS
CANBERRA Question The President of the Wheatgrower's Federation in Toowoomba
yesterday criticised the Government for not having a cogent
policy onl the supply and regulation, prices, for the
wheat industry. Can you give us-
Prime tMinister
Of fuel?
Question Of fuel, yes.
Prime Minister
Well, there is a policy, and a comprehensive energy policy,
in broad terms, based on the conservation of a scarce resource
and the promotion of alternative energy forms and the promotion
of maximum exploration and development within Australia. That
has already led to much greater reserves. World parity pricing
is an essential tool in achieving those three policy objectives.
I can well understand the wheat industry, or any rural industry,
any other industry for that matter, the very real need to have
available fuel supplies if there is if you are going to
harvest your crop or you want to spray a cotton crop or you
want to sow your wheat crop yo've just got to have the fuel to
do it.
Question But can you guarantee supplies?
Prime Minister
I believe that industries will get the fuel that is necessary.
When ycu say guarantee, nobody can totally guarantee what is
going to happen politically in the Middle East. Now, the
assessments available to us at the moment are that the general
world supply situation is easing a little. That is carried
forward into the coming months. It would be a bold person indeed
who would guarantee there would be no further political instability
in the Middle East. If that happened, nothing on earth would
guarantee supplies. In those circumstances, of course, we would
have to have very firm allocation systems within Australia which
gave priorities in appropriate cases.
All the forecasts we have is that that sort of situation will
not arise. But, you asked me a question of guarantee and you
can't guarantee Middle East politics.
Question What priority would you give, though, to the rural industry. / 2
-2
Prime Minister
I have said on many occasions, and I said as much as a month,
six weeks ago, that essential industries would obviously be
given priority. The wheat industry is plainly an essential
industry. There is no doubt about that. We will be announcing
very shortly an industry government committee which will have
a job of recommending supply, or drawing up a national system
of supply and allocation, if. there should be a more stringent
supply situation than we at present believe is likely to emerge.
Question If the demand for fuel continues, have we got sufficient supplies
to meet these demands?
Prime Minister-
What do you mean if the demand continues?
Question We are looking at an increase of 15% 1 think for this, compared
to the first quarter of this year.. Other fuel supplies, the
demand is increasing. Whether people are hoarding or not I
don't know.
Prime Minister
It's not demand increasing by anything like that extent. With
some exceptions, and Avgas is the major one and for reasons which
we are all well aware of, the supply situation has been met.
Now, I have said that the world supply situation over coming
months on present estimates is likely to ease. There always
-has to be . the proviso about political instability in major oil
exporting countries because nobody can guarantee that.
Question The wheat industry, and all our rural industries use fuel of
course for export industries, and they are facing the Canadian
and the Am-erican situation where fuel is cheaper to their
farmers. Is there going to be any moves by your Government
at all to make fuel
Prime Minister
In North America they are starting a system of increasing the
price of fuel and they have announced a policy of introducing
world parity pricing. They are very slow to achieve it. But
there won't be a fully fledged energy policy in North America
until they do. With fuel priced as it is, it is obviously
going to be used much more abundently in a whole host of ways
than if it is priced on a world basis. I think it is worth
noting that some recent sales of wheat which have been undertaken
are pretty much at world record prices. The outlook for the
wheat industry is good, dependent upon seasons. Rains over the
last week have helped ten days have helped in many areas.
But the season has been touch and go through the winter. / 3
-3
Question But will you ever consider having some sort of a price
preferential for the export-orientated industries, as the
price goes up?
Prime minister
It is not only a question of export-orientated industries,
because there are some domestic industries which are just as
important to us as export industries. Some local industries who
operate on a import replacement basis, they'dmake it unnecessary
to import. And other industries and a number of decentralised
industries.-If you were talking about preferential treatment
for industries probably have just as much grounds for claims
-on support as export industries. So once you start down that
path, it becomes very difficult. Nobody has recommended it
to nobody within the Government has recommended it. The
point that ought to be made is that the best part of $ 50 million
is spent on freight equalisation. -There is a further commitment
there. That will be met, which would in fact more than double
Itth ath asc onmomti tmbeenent opno sstihbe lei nittoi ailn tfriogduurcees thtahta t wwiet hihna vet hihsa d. B* udget
but the first part of the commitment, equalising freight to
within 4 a gallon has been met. It is worth noting that
in many cases in inland Australia the price is much more than
that above capital city prices. Where that occurs it is because
the retailer's margin is very much more than the margin in
capital cities. Now we don't have powers to do something about
that, but if any State Government wanted to, they could.
In some cases the retailer's margin is a very high one indeed.
Question
Can you foreshadow when ( inaudible) might be allocated?
Prime Minister
The first step for Stage Two no I can't, but that's
a commitment and I am saying that commitment will be met.
There is no doubt about that.
Question During your present term?
Prime Minister
That was the commitment, yes.
Question There has been criticism of the fuel policy from the National
Farmer's Federation and others that more revenue-raiser that the
crude oil levy is more a. revenue-raiser than a conserver of fuel.
If I could lead on to that, that the jump, direct jump into
/ 4
-4
Question ( continued)
world parity pricing compared with the gradualism in the
Crawford Report where there won't be ( inaudible) the need
for adjustment, there won't be an IAC reference relating
one, the IAC won't report until the mid-1980s. There seems
to be a real contrast to the Goverment's approach. Is it
anything to do with the $ 2,000 million that is hooked up
in the revenue.
Prime Minister
No. It was mainly to do with the fact that until you get
to world parity pricing you can't have an energy policy.
To make a decision you need an energy policy now, as opposed
to having an energy policy in three years time or whatever.
Clearly you've got to go to world parity pricing. It's through
that mechanism that you can achieve greater exploration and
greater development. It's through that mechanism that you
will encourage people to divert into other forms of energy.
It is through that mechanism that you will encourage conservation
of a scarce resource. You are not going to achieve any of
those three major objectives without world parity pricing.
There are other things, obviously, in tax incentives and
investment incentives to encourage people to move away from
oil fuels, oil-based fuels. There have been a number of elements
in the total energy policy which are moving in that direction.
Question If the farmers do go over to other forms of energy, will there
be moves by
Prime Minister
It's not just a question of farmers. There obviously,
because I think in many parts of rural Australia the capacity
to go to other forms of energy is pretty limited. I am well
aware of that.
Question If they go to gasahol there is a problem of excise. Is your
Government doing any about the alcohol excise, because if they
make stills they are contravening the excise, customs...
Prime Minister
Well, they are not at the moment. Nobody is making it.
Question They are going to be. There was a report in yesterday's paper
that there is a still going to be marketed in the next couple
of months in Australia and there is
Prime Minister
Well, I haven't seen a report of that.
Question So nothing is being done at the present moment to make it
legal for people to make their own fuel, help pay an excise.
Prime minister
Alcohol? Question
Alcohol. Pri= me Minister
Well I haven't heard that proposed.
Question Could I move onto the Crawford Report It s eems that there
is never a right time to reduce protection and while the
Government has embraced the thrust of the Crawford Report.,
the Government isn't apparently grasping the nettle, at this
time. Is there ever a right time to reduce protection?
Prime Minister
You can never take dramatic steps in that area unless you
are prepared to pay a very high price for it. in terms of
jobs lost and dislocation to industry. We are not prepared
to pay that sort of price for it, no. I don't think any
Australians would wan t to. One of the best markets for
Australi-a's exporters, or primary producers, is the domestic
market. If you are not going to look after that domestic
market and make sure the domestic market grows, then the
position of Australia's rural producers will certainly be
weakened. So that's one point. I don't think Australia's
farmers want us to say New Zealand lamb can come in without
any restraint, New Zealand butter can come in without any
restraint. There is an unwritten agreement, or understanding,
between ourselves and New Zealand in these particular matters.
that New Zealand iJs not going to put our farmers under too
pDr essure in these areas. New Zealanders sometimes wonder
why they should be under that restraint. The question of
protection can work in more than one way.
Question A lot of people argue, a lot of industry argues, that protection
per se does not protect jobs. In fact counterproductive.
Prime Minister
I know people argue that.
Question Bradmill? ./ 6
-6
Prime Minister
I think a lot of this depends upon degree. If you take
these arguments to the extreme I think they will all become
false.
Question But in the textile industry, big companies like Bradmill
apparently are grasping the nettle and they've seen the writing
on -tne wall and they are moving in the sort of direction
which critics like the National Farmer's Federation would see
as th'-. e right direction.
Prime Minister
Well, they are moving in the right direction but I don't think
they would be wa nting to operate with no protection.
The other side -to this coin of course, is that in terms of
world protection Australia is one of the lowest protected
countries in the world. That might be hard for some farmers
to accept, but when you look at the new forms of protection
in Europe and ! Lmerica and Japan which are not practiced in
Australia, then what we might do with tariffs or quotas can
be quite puny by comparison with the totality of the protective
devices used in many countries of the world.
T. 1he other way we can look at this question of course is access
to our markets. ASEAN countries, developing countries, have
a better access to this market than they do to any other
developed country.
Question wonder if 1985 is just a bit too far away to expect
the IAC to bring down a report and the Government to consider
that report.
Question 1935 is not ver-y far away~ but is it as far off as that?
Question
Why the timing?
Question It won't get a reference until 1981. I am told it will take
two or three years to ( inaudible).
Prime Minister
I think it's too early to make that sort of judgement.
Matters are under reference by the IAC and the Government took
the view that we ought to have those reports and be able to
make decisions on those before further references are made.
./ 7
-7
Prime Minister ( continued)
In all of this, the primary industries need to understand
that the maip protection we can provide them is access to
markets overseas through trade negotiations. We've been
remarkably successful in that. And making sure that inflation
stays as low as we can get it, certainly below that of our
major trading partners. They are the things of greatest
importance to rural industries. On top of that, other forms
of taxation incentive, investment allowance, abolition of
probate and gift duties so far as the Commonwealth is concerned.
These are all benefits to the rural industries of a kind that
T h-n have not been equalled by any other Government. In
addition to that, it is worth noting the special depreciation
allowance has reappeared in the last Budget. in relation to
( inaudible) conservation. Special depreciation allowances
was one form of benefit which farmers certainly appreciated
very much before it was knocked off by the Labor Party.
Question It was being criticised in the last week as coming too late
because there was an excess, particularly in wheat, on production
last year which meant they had to make a storage last year not
this year.
Prime Minister
If they get another good harvest this year, they might have to
make more storage. I've got no doubt that every benefit
would be a greater benefit if it was introduced earlier, but I
doubt-if any farmer would say they would prefer to be without
benefit now that it has been introduced. If they want to, it
is perfectly open to them to ask their tax accountants
not to make allowance for it when they put in their tax returns.
I don't really think anyone will do that.
Question In the Budget, with reference to the fact that the Wheat Board,
may again be asked to go commercial... ( inaudible).
Prime M, 4inister
It may well be, but it won't be at any cost to wheatgrowers
and ( inaudible). It is an important instrument in monetary
control.
Question Do you see this as a forerunner of any further steps in
that direction?
Prime Minister
What do you mean any further steps?
Question Is it likely that the Wheat Board may be asked to go commercial
permanently, on a permanent basis? / 8
-8
Prime Minister
I think it is useful to have it as a flexible ingtrument
in monetary control. It is helpful in the fight against
inflation. It is a very large increase in the money supply,
as it was done in the past. The main thing in the Government's
view, is to protect wheat farmers against any additional cost.
Well, they have been fully protected so as far as the Wheat
farmer is concerned, I can't see cause to worry one way or the
other. You ought to prefer us to do it in the way that contributes
best i-n the control of inflation.
Question Next week, next Thursday, the counter-cyclical talks with the
Un ited States will be held. What sort of stance are we going
to take. Are you going to be adamant about requiring the
1.3 billion.
Prime Minister
We will be arguing for it as firmly as we can. I don't think
we can disclose what we are going to do or what we are going to
say before we get into the negotiations.
Ques-t--ion
( Inaudible) Australian Wool Corporation, the Chairmanship,
would you be seeking a grower or a public servant.
Prime Minister
The best possible person for the job. I am not putting a tag on
it or a label on it. The best possible person for the job. It is
a--very. important job. -The WooV-Corporationisoneof the-great
-success stories which had full support from the Government, where
it didn't get very much support from the previous Government. I
think everyone remembers the time when it needed that support
and the price was lowered by 5O in a most damaging way. But the
confidence that has been shown by giving it support, and taking
that supportIL forward into the future, has built up an underlying
strength_ 4n the 7market, or contributed to building up because many
other things are also involved, which has put a strength in-to
the wool market and as we believe at the moment, a stability which
hadn't been there for a very very long while.
Question Do you think it is possible to increase the type of money offered
to say the Chairman of the Wool Corporation, to attract a better
sort when I say better sort of man, a man from outside? / 19
9-
Prime Minister-
I haven't heard that that is going to be a problem in
getting a good man. Obviously you've got to do what's
necessary in getting the best person for the job. But I
haven't heard that put as a problem.
QuestLLion There is some concern in the rural sector that the $ 4 billion
in short-term overseas borrowing, for the short term deficit
problem, if that's not repaid soon well if the Governmnent
doesn't have to repay there will be some sort of Federal
revaluation. Could you give us some guidance-
Prime Minister
I'm not going to speculate one way or another about the value
of the dollar, but it ought to be noted I think that the
mechanism for management of the dollar has been altered~ over
the last couple or three years. It now happens smoothly, and
gently. The alarms and excursions and speculations of past
days seem to be gone. I think it is again one of the great
success stories. The dollar is much stronger and I would hope
everyone would welcome that. I well understand the concern
of exporters in relation to these matters, but I am not going
to enter into speculation about the dollar. We all ought to be
encouraged by the fact that the dollar has strengthened, which
means that overseas confidence in Australia is much greater.
Still, 1 the most important policy for farmers is a policy to
ficht inflation anda policy to make sure that what inflation
we do have is less than a number of other major countries
overseas. We have been successful in that. In addition, we've
developed a range of special policies to assist Australia's
farmers and pastoralists which I believe have not been equalled
by any other Government. 0 00---