_ JI EBARGO: AGAINST DELIVERY
PRIME MINISTER
FOR MEDIA TUESDAY, 22 Jq i
ADDRESS TO THE FIRST STATE CONFERENCE i, j] cu-A t '! l
SOF THE Li:. A V I
UNITED FARMiERS AND STOCKOWNERS' ASSOCIATION
OF SOUTH AUSTRALIA
I welcome the opportunity to be with you for this your
inaugural conference as the United Farmers and Stockowners'
of South Australia.
The formation of this organisation is recognition of the fact
that, although rural producers are involved with different
commodities they have over-riding common interests; and these
interests are best served when the industry speaks as one voice.
I can assure you that the Commonwealth Government looks forward
to working closely with you in the future; and I am equally
confident that you will be able to respond successfully to the
rural challenges of the new decade.
We meet at a time when Australia's rural industries have won
significant achievements; and confidence in Australia's future
has reached its highest level for many years. This confidence
is soundly based. Australia's greatly inproved export performance
to which rural industries have contributed significantly, has
played a prominent part in our recovery.
In the last financial year total exports rose by nearly 33%
and rural exports rose by 41%. For 1980/ 81, the BAE forecasts
rural exports to increase by another 6% to a record of more than
$ 9 billion. What is pleasing to the Government is that Australia
has been able to maintain and improve its level of economic
activity at the same time as a significant downturn is taking
place in a number of major world economies.
Australia's vast possibilities, in the decade ahead, have been
widely canvassed by international authorities and policies
of the kind being pursued by the Australian Government are now
advocated by most Western governments. The OECD has recently
drawn attention to the fact that Australia's grQwth prospects
are very much better than those anticipated for the OECD area
as a whole; and much better than prospects for the U. S. A. and the
U. K. A number of important surveys conducted in Australia
bear out thu OECD's optimistic view. S./ 2
-2
The May survey of investment projects by the Department of
Industry and Commerce shows $ 29 billion of projects committed
or in the final feasibility stage. And these prospects-are
supported by the Australian Bureau of. Statistics' Survey,
taken during April and May, which shows that expec ' ted investment
for the year ahead is 40% higher than expectations which existed
at this time last year. So that, in spite of the difficulties
that are being experienced overseas, there are very soun~. and
well based reasons for having confidence in our future.
Our natural resources, our energy endowment and our
geographical position give us the potential to reduce the
iitpact on ' Asrai' development of the conditions in the
world economy. For examPle, as a result of the d{ Lversification
of our markets, some 47% of our exports now go to Asian anid
Middle East countries which, in general, are likely t~ o do
relatively well in sustaining their growth rates in the years
ahead. Foodstuffs which remain a most important export from
Australia, appear to be in good demand..
our success in achieving efficient and lower cost industries,
is helping us to meet the difficult international econom~ c
conditions. Central to these international difficulties has
been the dramatic rise in the price of oil by 125% since the
end of 1978; and increased international tension has increased
the uncertainty about the reliability of oil supplies in the
longer term.
I know that the price of the long term supply of fuel are vital
issues for all rural producers. Both these matters occupied
the attention of the recent economic summit meeting in Venice.
The leaders of the seven major industrialised countries
pronounced that the link between economic growth and oil
consumption must be broken this decade. And they stressed
that this must be done through maximum reliance on the pricing
mechanism, supplemented, where necessary, by other measures.
The summit confirmed that the Australian Government's import
parity pricing policy is the right policy. That only by allowing
prices to bring supply and demand together can we hope to encourage
exploration and development of new energy resources; to moderate
the growth in demand for oil; and to facilitate the shift to
alternatives to oil-fired energy.
On all these fronts, as a result of our gil parity pricing
policy, the Government-has secured significant success. In
oil exploration and development,
expenditure levels are five times what they were in 1975
during this year 50-60 on-shore wells are likely to be
drilled compared with six in 1975
in the last four years one billion barrels of petrcoleum
liquids have been added to Australia's economically
recoverable reserves
$ 4-5,000 million of investment is about to proceed on the
North West Shelf, and
ESSO BHP have already announced programmes of $ 1.2 billion
for the next four years. ./ 3
-3
In conservation, Australian vehicle manufacturers recently announced new
targets for fuel efficiency and economy, based on voluntary
standards sugqested by the Government
This will result, on current usage, in a saving of motor
spirit in 1983 and 12% in 1987, and
pe-trol con~ sumption for May 1980 was 9.800 below that
for May 1979.
In promoting t he use of alternatives to oil,
the Government's pricing and taxation measures are encouraginvg
motor vehicle conversion -to LPG, expecially in vehicle fleets.
It is anticipated that between 10-15% of motor spiri~ t usage
could ultimately be replaced by LPG.
In 1979, two million barrels of fuel oil were saved in the
Sydney market alone by industrial conversions from oil to
natural gas.
And the extension of natural gas pipelines will result
in further savings.
The Sydney-Newcastle pipeline due to be completed
later this year will save the equivalent of about
3 million barrels of oil a year.
Without parity pricing, the increasing interest being shown
in producing oil from coal and shale-would not exist. Planning
of the Rundle project, for example, provides that, by about
1990, it would be producing approximately 200,000 barrels per day;
equal to about one-quarter of Australia's crude oil de-ma:-ids at
that time.
of course, in the short term, oil parity pricing poses difficulties.
Farmers in particular have voiced concern at the price increases.
This is understandable. Nobody likes increased prices for petrol.
But in the current world energy situation, it is the height of
irresponsibility to talk about cheaper petrol. Cheaper petrol
would give us an unlimited right to use up our scarce fuel
reserves. Cheaper petrol means that exploration and development
would cease; that the development of shale oil deposits, such
as Rundle, would not take place.
With cheaper petrol, industry would be encouraged to postpone
new techlnoloqies. Cheaper petrol would make Australia, in thne
years ahead, a defenceless victim of OPEC countriesbeggars
for fuel with prices much higher than we now have to pay.
We would lose our independence and with it our chance of oil
self-sufficiency. Such a policy of cheaper petrol would be a
selfish policy; a policy for today; a policy which ignores the
needs of our children. It would be asking our children to make
adjustments in the future, more extreme and much more difficult
than are being asked of us today. We owe our children something
better than that. / 4
4
On our-farms and properties we put a lot of money and effort
into development and improvements; not necessarily because theywill
add directly to farm income, but, partly, because these
improvements will make our farms and properties better for our
children when they take over. This is part of the motivating force
of everything we do.
But shouldn't we do the same for Australia and make decisions
that will leave it a better place than otherwise it mig-ht have
been? That is, in effect, -the reason for our oil parity priuinig
nolicy. The Governmrett has orjv ta. ken the decision it has because we know
it is not on. y-right', but also necessary. And even with
par ity pricing, our petrol prices of around 32-33 per litre
in capial cities, still compare more than favourably with
New Zealand 45 per litre; West Germany 57c per litre, Britain
62 per litre, Japan 67 the Netherlands 67 France 73' and
Italy 77 per litre.
Of course, I recognise that rural communities are paying more than
city areas. Because of this, we introduced a fuel policy for
country areas whereby the difference between city and country
petrol prices, on account of freight, would be kept to less than
half a cent a litre. Yet some people wonder why the price in
inland areas is still higher than it is in capital cities.
There is a simple reason for that. The retail mark up in the
capital cities, because of present discounting and intensive
competition, has been driven to as low as one cent. In rEgional
areas, where these forces do not exist, the mark up is commonly
6-8 cents per litre; occasionally it is even higher than that.
our energy policy is a key par t of the Government's overall
economic strategy. Another part of that strategy, of equal
importance, is the reduction of inflation. To achieve this,
the Government must continue to pursue restraint in publiLc
expenditure; reduction of the budget deficit., resistance
to excessive wage increases; and support for the co-ordinated
development of Australia' s resources.
our dedication to international competitiveness has been a key
factor in securing new markets in the face of tough competition
from other exporters. To retain our old markets, and to improve
our access -to them., the Government has negotiated, and is
continuing to negotiate, on behalf of our rural industries.
Through the recently concluded MTN negotiations Australia
secured improved access for beef and dairy products to the
European and U. S. markets; and won new commitments on beef
from the Japanase. Australia secured a quiaran-teed minimu~ m
access level for globalbeef imports of 1.2 billion pounds per annum
in the vital United States market. This is the first timie suc~ h
a guarantee has been given by the United States government.
This commitment will be of particular importance whenever
U. S. beef production is high and the recently enacted U. S. A.
counter-cyclical legislation operates to reduce imports.
Australian beef exporters are now better able to plan for the
future on the basis of a firm and predictable minimium import
level.
We were also successful in securing a useful reduction in U. S.
beef import duty from 31 a pound to U. S. 2 a pound which is
expected to yield an extra $ 6 million to $ 7 million per annum
to Australia's beef producers.
After strong pressure from Australia, the United States
also-agreed to reduce the duty on raw wool by 60% over a
three year period.*
As a result of tl-e negotiations with Japan, Japanese bee"
imports are increasing steadily and it is our expectat ion
that they will reach at least 142,000 tonnes in 1983.
Sincea Japan ais our second largest market for beef, after
Li-e United States, these new comimitments provide a more,
secure basis for our : 3::-ports.
Our success in the Japanese market is in stark contrast to
the performance of the Labor government which sat back
passively while the Japanese market was closed to Australian.
beef producers in 1974 and 1975.
We also negotiated some useful increases in access for
manufacturing beef and high quality beef imports into the:
European Economic Community.
We have had some initial difficulty in getting the
E. E. C. to fully implement these new concessions and we have
made strong representations on the issue.
I am hopeful that the Community will live up to its commitments
on beef and that our trade will increase.
6
Unfortunately, the E. E. C. continues to cause difficulties
for Australia on a range of other agricultural commodities.
There is no economic justification for this provocative action.
In order to meet the demands of French sheepmeat producers,
a new scheme has been proposed involving the support of
prices paid to local producers;. levies on imports; and
export subsidies for European exporters to third markets.
This new regime is estimated to cost the E. E. C. about
$ 275 million in its first year of operation.
In effect, Community consumers and taxpayers are being
asked to subsidise Community producers $ 500 for every tor. ne
of shegpmeat produced. This figure a isi nCa1db4. oiuate half theeX tecturrent
world market price ' or sheepmeat and cates the entent to
which the proposed subsidy would insulate E. E. C. producers
from normal market forces.
As a significant exporter of sheepmeat to Europe and as
the world's largest exporter of sheepmeat and live sheep to
markets outside Europe, Australia is vitally concerned at:
these developments.
E. E. C. Commissioner Gundelach visited Australia last week and
had discussions with Doug Anthony and Peter Nixon. They both
made him aware of our grave concern.
We intend to press our case strongly; and stress that
the E. E. C. benefits greatly from its access to the Australian
market. Indeed, now, two senior officials are in Brussels and,
depending on progress with negotiations, Mr. Anthony could be
going to Brussels in September.
Our hard won concessions in our more established markets are
significant, but they should not obscure the importance of
selling more to the Middle East and Asian markets, where
living standards are increasing rapidly. One of the most
encouraging aspects of the rural recovery has been our success
in these markets.
Meat exports to the Middle East, including live sheep, have
sh;.-m strong growth; while the Wheat Board Chairman,
Sir Leslie Price, recently commented that the Middle East is our
most rapid-y expanding wheat market, likely to take nearly.
of Australian wheat exports in 1980.
The Asian market has also become much more important for our
rural export industries, with rising sales in grain, wool, meat,.
cotton and dairy products.
The current competitive position of the Australian exporters;
the underlying increase in world food demand; the vigorous and
successful attempts by exporters and the Government to. expand
our markets; all these have established the foundation for
continuing growth of our rural industries. / 7
-7-
It is a tribute to the resilience of the Australian farmer,
and his capacity to respond to improved circumstances, that
the recovery from rural depression of the mid 70s has been so
commanding between 1976-77 and 1979-80.
In this time: the value of rural production rose by 69% e;
the value of rural exports rose by 65%; and real-income
per farm almost doubled.
Forecasts released today indicate that the value of rural
production in 1980-81 is expected to increase by a further
to reach a record ofL" more than $ 12 billion.-
Al1though real income is expected to moderate in 1980-81, the
Bureau points out that the three years ended 1980-81 are expected
to , e th~ e best three consecutive years for the rural sector
since the Ko-rean War boom of the early
All major rural industries are sharing in these achievements.
The beef industry has come out of the years of bitter depression
and market prospects are favourable. Wool has bounced back as
a competitive industrial fibre that, for the first time in quite
a long while, has increased its textile market share. Cotton
production nearly trebled in the past four years and expansion is
continuing. Rice production is increasing, and the sugar industry
is considering a significant acreage increase in response: to
better market prospects. For the wheat industry, the decade
ahead is one of real promise.
Two landmarks reached in 1979-80 were the emergence of
Australia as the world's second largest wheat exporter; and
wheat becoming Australia's largest export industry in value terms.
I understand that at this stage, South Australia is looking to
another good crop this year.
Our stature as a world exporter has meant that the UnitEd States
has looked to us, as an ally, for support in their grain
sanctions against the USSR. Australia will maintain its firm
support for the United States in its attitude to the invasion
of Afghanistan by the Soviet Union. Part of our response, in
concert with the has been to restrict grain sales t~ o the
Soviet Union, to make sure that we do not make up any of the
shortfall created by the U. S. withholding supplies.
In this financial year the Unitecl States is only allowing sales
to take place up to the level of 8 million tonnes provided for
in its bilateral agreement with the SoviLet Union.
Australia-is supporting that action by restricting its grain
sales to the Soviets in this financial year to a maximum total
for all grains of 3.9 million tonnes which-is about the ' Level
of last year's sales.
The improvement in returns to Australia's wheat farmers, and
other rural producers, owes much to the harmonious partnership
over the past five years between industry and Government which
provides a solid underpinning for future development. / 8
-8-
It is only when the range of new measures is looked at
in full that the extent of the improvements in rural policy
measures can be appreciated.
Farmers now have access to long term credit through the
Primary Industry Bank which, in response to heavy demand, has
already approved $-230 million to 3,200 borrowers.
Farmers now have the ability to even out tax payments th-rough
the income equalisation deposit scheme.
The fuel freight subsidy scheme will benefit people in country
areas by over $ 120 million in* 1980-SI.
We have provided special dep re, 4a t -Lon p) rovisions frbui7. din-s
for the scorage of hay, grain at~ d fodder; and recently in~ ounced
the introduction of mjrnew taxation concessionrs to assist
with increased water storage; whether by helping farmers to
increase their capacity to withstand drought or in developing
their own irrigation schemes.
For the key industries, we have provided the support they need
to plan confidently for the future. The wool floor price has
been increased progressively from 250 cents in 1975-76 to the new
level of 365 cents per kilo. The wool market support fund has
been placed on a permanent basis with provision that growers'
earlier contributions will be returned when the fund balance
exceeds predetermined maximum level. We provided assistance
for beef producers when prices were low and have gained Secure
access and new markets for meat. The Government has int-roduced
a new wheat marketing scheme to underwrite wheat returns and
facilitate earlier payments for wheat deliveries. We have stood
by the troubled dairy industry while it went through an
adjustment period and were able to recently announce a 20% lift
in the 1980-81 underwriting level.
And of benefit to all farmers, Federal death duties have been
abolished, and a comprehensive rural adjustment scheme introduced.
One area of real concern in recent times is the unjustified
disruption of Australia's $ 180 million live sheep trade which
has dra. rn cries of protest from misdirected -union militants.
The live sheep export trade to the Middle East is one of
particular inuercst to South Australians.
Tn 1979, over two million live sheep, valued at almost $-60 imillion;
were exported-from South Australia alone. The trade has grown
progressively over the last ten years and since 1970-71, we have
exported over 24 million live sheep, mainly older wethors.
The Middle East countries which take these sheep do so mainly
becausa the:-y have a long established traditional preferencce
for fresh killed meat. They are importing steadily increasing
quantities of frozen lamb but they are not prepared to purchase
these older sheep in frozen carcass form.. It is obvious that
there is little likelihood that banning the trade would lead to
increased slaughtering or increased job opportunities in
Australian meat works.
-9-
In fact, a study conducted by the Director of the Bureau of
Agricultural Economics in 1978 found that, far from jobs
being lost in abattoirs through this trade, significant
other jobs were actually created by it. The Bureau has now
done further research which shows that these conclusions
are still valid.
While the live sheep trade has increased, our exports to
the Middle East of frozen meat, especially in the form of lamb
and hogget, continue to rise.
To assist this trade, the Conmmonwealth Governmen-has recently
made decisions which will more then treble Australia's air-freighted chilled
meat tonnage to the Middle East. Ralph Hunt will shortly be
announcing these decisions in detail.
They will mean additional benefits to the meat industry in
Australia of at least $ 4 million; and these gains for producers
will of course mean more jobs for meatworkers in the abattoirs.
( A benefit that I hope the A. M. I. E. U. will appreciate).
Regrettably, these significant benefits can be jeopardised
by sections of the union movement bent on achieving massive
wage increases and shorter working hours. The recent national
wage judgement granting a 4.2% increase to wage earners will
significantly add to cost pressures.
And on top of this is the selfish and unrealistic campaign by
metal workers for a 35 hour week which would increase costs and
prices; reduce sales; sacrifice our competitiveness; and
increase unemployment throughout Australia.
These developments represent not just a challenge to industry
viability and our competitiveness in world markets; but a
challenge to the whole momentum towards national economic recovery.
Coming as they do on top of substantial industrial disruption,
they offer us an urgent warning about the consequences of
unchecked militant left wing union leadership.
In spite of our resource endowments, our strengthening economy
and our stable political environment, overseas customers will not
continue to tolerate the disregard they are shown by sections
of Australia's union leadership.
The time is now for Governments, employers, union membership and
the whole community to place Australia's future well being ahove
the selfish pursuits of unrepresentative and militant minorities.
If this can be done, the portents for the future are most
favourable. The big industries of Australian agriculture, wool, meat, sugar
and grains, have sound long term prospects. The dairy industry
is now much better placed to take advantage of market potential.
Moreover, there are emerging industries the growing
rice industry, the developing oilseeds industry and a spectacular
growth in cotton production.
The fruit industries, which are of great importance to
South Australia, have undergone major and successful adjustment.
We are well located geographically to meet increased food
import demands from the high growth Middle East and Asian
markets. In the 80s, Australia will have an increasingly
important ro e -s a net food and energy exporter.
The Government is determined to make sure that we have the
economic environment in which these roles can be fully and
productively played out. Tnevitablv, one of the challenges 4n
any decade i the challenge of change; so it will be with
rural industries,
There will be new domestic and international agricultural
demands and new and rapidly developing markets. A cohesive
organisation such as yours will be a valuable spokesman for
South Australian producers, not only on the commodity issues,
but on the role and viability of rural industry in an
expanding and complex economy.
Farm organisations have become much more involved in discussion
of these wider issues, and I am sure that your new body will
be a constructive influence in the years ahead.
I am grateful for the opportunity to be with you today and have
pleasure in declaring your inaugural conference officially open.
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