AS DELIVERED
AUSRL
FOR MEDIA WEDNESDAY, 27 OCTOBER 1982
ADDRESS TO THE NATIONAL FARMERS FEDERATION, CANBERRA
Thank you very much for the invitation to be with you this
morning and to open this conference of the National Farmers
Federation. I would like to congratulate you on having
if not reached, nearly reached your target of the construction
of your own national headquarters. It is an objective
which farmers' organisations have looked forward to for a very
long while and to know that it is now very close to reality
must be encouraging indeed.
The National Farmers Federation can take a good deal of pride
in the way it has represented the interests of the farming
and pastoral community in the relatively few years since the
foundation of the Federation. An amalgamation of old and
historically experienced organisations into one was not a
particularly easy task, but it is one that has been encompassed
well, effectively and generally with the interests of Australian
farmers. I wish the organisation all good fortune in the
future.
The work that it will have to do, the policies that it will need
to advocate-are going to be all the more important in the
period ahead of us. Most people here are practical farmers,
so there is no need to emphasise the difficulties of the
present circumstances, but they are real and they are
substantial. It is going.. to take wise and sensible leadership
to make sure that the industries come through as-strongly
based as possible and as well able as possible to take advantage
of a break in the drought when it does come.
The importance of agriculture to Australia does not need
emphasising. It has formed the foundation and the base of the
Australian economy for a very, very long while and there have
been occasions when people have said farm exports are not going
to be so important over the next decade because something
has been happening in iron ore or coal or other minerals.
After the first flush of that kind'of euphoria is passed by,
people come back to recognising that the export income earned
by Australia's farmers and pastoralists is really just as
important to this country for the maintenance of living
standards right around Australia as it ever was. Whether
it is 40% or 50% of Australia's export earnings, the product
of Australian farmers have been there to provide a base
in which other. exports and other commrodities can build, but
without the contribution of Australia's farms and properties,
Australia would be in a very difficult situation indeed.
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We well know that there are many current difficulties not only
caused by drought. The present world downturn which has gone
on longer, is a deeper recession than any that we have known
since the 1930s, certainly since the end of the war is
having its impact on the prices for our commodities. There
is stagnant trade. There is in many countries a rising
tide of protectionism and it is a major objective of the
Australian initiative. Doug Anthony will be at the = Ta ministerial
meeting to stem that tide and if possibleturn it back. In
addition there are rising costs, rising wages of a kind that
make it very dif ficult indeed. All this is on top of the worst
drought in the living memory of many Australians.
The Government has obviously been concerned about these
situations. I know when the Budget was first introduced, even
though there were some useful things, wiping off a debt in the
beef industry and of course continuing other policies which I
believe are a significant advantage, income equalisation
deposits to support the Primary Industry Bank and tax
averaging of course, these things go on they tend to be
taken for granted, but they are a very real benefit and
assistance to Australia's rural industries. In spite of that
I know when the Budget was introduced there was a feeling of
has the Government paid adequate recognition to the problems
that farmers are facing today and for the emerging drought,)
I well recall a conversation I had with Peter Nixon when the
budget was fraxned. He asked what we were going to do about
the drought,. I said " How serious is it?" This was in July.
" How serious can you persuade our colleagues that it is in
July?" I think we agreed then that it is much better to wait
a little later till the full seriousness of the drought for
not just farmers or governments, but indeed for the whole
country and that enabled the circumstances to unfold where
we took the decisions which you know about and which I believe
are the most imaginative or most generous in relation to any
drought. Generous, but still necessary because this drought
is more severe than any that I can remember since my childhood
days in the Riverina in the 1930s. There was no drought
assistance in those days, in those years, but I can remember
knocking lambs on the head three years in a row in an effort
to try and save the mother.
That was the year when Carter Brothers, the biggest poultry
farmers of Australia started to buy sheep to be boiled down
for chook feed. I can remember my father hearing about this
and they were being offered about 4 pence a head. Then he
found that they had had so many offers they said if we paid
the freight from Deniliquin to Werribee, they would accept
delivery and take them off our hands. ' That I thought was a
very generous offer.
It is no consolation to know that in different parts of Australia
sheep are being slaughtered, that there is very real hardship,
very real difficulty of a kind that we had hoped we had put
behind us for all time. The Government's policies I believe,
will enable Australia's essential breeding herds to be preserved
and therefore enable farmers to be in a position in which they
can take advantage of relief when the season finally breaks.
NFF / 3
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There are other things of course which all Australians benefit
from and so the farming and pastoral community also does.
The changes in taxation arrangements, the reduction in taxation
and a number of other measures in the Budget help the farming
community just as much as anyone else. The Australian
Bicentennial Road Development Program is one which is going to
provide I would have thought very great assistance to the rural
community. It is a program that is of benefit to the whole
country. There will be cheaper transport costs,-and I would have
hoped a lesser road toll. Local roads, arterial roads, as
well as national highways are going to be enormously improved
over the five or six years of this program. With an additional
$ 2 billion being spent on road construction we can see a*
revitalisation, an advancement in the quality of Australian
roads which is going to assist farmers and pastoralists in a
very real way right across Australia of a kind that I think
people had only dreamt about before this program was announced.
We believe very much that the Budget does form a basis for
Australians working together and does form a basis for wage
restraint. A single income family with dependent wife and say
two children is about $ 17 to $ 19 better off as a result of
our Budget. If they had to get that from employers, it would
be $ 26 to $ 30 and in many cases that additional wage might
be enough to send the employer bankrupt. Against that background
it has been reasonble to argue for and expect a level of wage
restraint that might otherwise have been difficult to achieve.
There has been some progress in this area. Public sector pay
increases have been from 5% to 7% compared to the 15% or
of last year. The maximum level of restraint is going to be
necessary if the competitive base of Australian industry is
to be restored, not just over the last few months, and not
just for the remainder of this year, but at least for a
couple of years ahead of us and it is going to be difficult.
We are going to need to argue as hard as we can and persuade
as hard as we can. It has not been made much easier when we
go around and say your family is significantly better off as
a result of our Budget and'then Eric Risstrom has demonstrated that
Mr Cain and his Budget ripped most of it back off again.
A family that might have been $ 18 better off as a result of the
Federal Budget is suddenly $ 12 worse off a week as a result of
Mr Cain's Budget. They are Mr Risstrom's figures not mine and
it shows how that Budget at least and the NSW Budget also,
are pulling in opposite directions and making it therefore
more difficult to achieve the level of wage restraint that is
so vital.
The consumer price increase of 3 in September quarter
comes from a variety of factors, but whatever factors we
ascribe it to, whether it is the drawing forward of some increases
that would have otherwise have been in the December quarter,
whether it is because of doing sums differently., whether it is
because of much greater increases in state taxes and charges
hospital charges have gone up in the states 60% over the last
year and some by 40% since June or July and electricity charges
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been up by about 42% over recent periods. These increases
have obviously had an impact on the Consumer Price Index of a
kind that would not have been present in other years.
Overwhelmingly, I believe the greatest part of the increase
has come about as a result of the wages and hours decisions
of last year which have done so much damage not only to
farming and pastoral communities, but to manufacturing industry
and indeed also damage to state and to Federal budgets because
if it had not been for those wage increases, if it had not
been for the shorter hours, state governments would not have
needed to put up their charges anything like as much as they
have. The services component of the CPI went up by a massive
18% and that is nearly all wages. Then a large part of the state
increases in their charges has to be attributed to the impact
of the wages and hours decisions on their budgets. I suspect
the impact of those decisions are not yet fully worked out through
the economy and we are obviously hoping for a better December
figure than we achieved last year, but how much better is going
to depend on the elements in wage increases still to work through
the Australian economy.
These matters are obviously of great concern to us and they would
be to you and they show that in no way can we relax in our
fight against inflation. We have had a very severe setback
in that fight as a result of what happened in the wages front through
last year. We have got to make sure that that kind of thing
does not happen again.
I have already mentioned something about the drought, but I do
not know that too many Australians apart from the farming
community understand that this drought is effecting about
110,000 farms, about 93 million sheep and 13 million beef
cattle. The wheat crop is estimated to be less than 9 million
tonnes compared to over 16 million tonnes in 1981-82. These
figures demonstrate in the starkest possible terms the impact
of the drought on some of Australia's major and most important
industries. It is catastrophic not just for the families directly
concerned, but the country towns, the rural cities and also
for those industries which are dependent and which supply
the rural community and this gets back into the major cities.
So the breaking of the drought, is something that we are all
going to be looking forward to. Unfortunately the weather
maps and the weather patterns do not seem to be particularly
favourable and have not been for many, many months.
Renewed growth in world trade is going to be vital for your
industries Mr President and also for economic recovery in the
OECD area as a whole. There are some things that Australia
can do on its own account and many of these were addressed
in our last Budget. Renewed growth in world trade is of vital
importance for the vigorous and growing Australia that we
want to see. It is worth noting that the in the 150s and 160s
world trade grew by volume by about 8% a year. It was an engine
for growth and progress for rising living standards in' many
countries of the world, developed and developing countries
alike, btt in 1981 world trade contracted for the first time
in over 20 years and it is no wonder that commodity prices
are down and that the situation is dif f4cult.
NFF
I know everyone has been looking for economic recovery in the
United States and we do have to be encouraged by a fall in their
inflation and a fall in their interest rates, but at the same
time Americans you speak to seem to be in two categories. One
is saying right, the recovery has started and seems to be
trying to talk the economy up and others are saying the
economy is bumping along on the bottom. Until the recovery
is evident, until we can see in a hard-headed fashion that
there is real movement in the United States economy, I think
it is wiser not to bank too much on that. The professional
predicters have been saying there will be recovery in-the United
States in six months time, but they have been saying that
now for about 2 years and at sometime if they go on saying it
long enough, they are going to have to be right. I am
not going to join the ranks of those predicters, but I think
we need to watch with a little caution what is happening in
the United States.
I had a discussion with Mr Dalsager yesterday also, I think he
is in no doubt at all about what the Government feels about
the trading policies of the European community. We were talking
about the importance of the GATT ministerial meeting and the
importance of achieving agreement that agricultural trade
should be subject to fair rules of trade in the same way that
manufactured exports are. There was a great betrayal of
agricultural industries outside of Europe when the world
trading arrangements, when the GATT was first developed, because
it was orginally intended that the rules for fair -trade could
cover all trade. But a deal was done because of the demands
of Europe that excluded agriculture and those deals have been
done again and again and again.
We know how much what has happened has affected us. We have
had to find new additional, expanded markets for a whole range
of our products because if you go back to the days when we still
had access to Europe in a reasonable way, beef and veal in
1965 we had 31% of our exports going to the community, now it
is about We had about 58% of our dairy products, it is now
about We had 47% of our sugar and now it is nothing.
We had 12% of our wheat and now that is nothing. That shows
the extent to which their own domestic policies and discriminatory
trading policies have diminished opportunities for Australian
farmers. If it had not been for the new markets in the Pacific
area, in the western Pacific in the newly industrialising
countries, and if it had not been for the capacity and energy
of Australian industries in getting out and selling around the
world, our industries would have been in much greater
difficulty than has in fact been the case.
Those figures demonstrate the need for Australian governments
and Australian ministers for trade, to-continue to press for
fair and reasonable rules of trade. You will know the trade
initiative that we have put forward, it i's multilateral in
its consequences, a holding of levels of protection and no
increasing levels of protection and then a general winding back
of other forms of protection or of export subsidies.. There has
been a good deal of support for Australia from a large number
of countries, from local communities, from ASEAN, from the
Commonwealth Regional Meeting in Fiji and from the United States.
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There is one thing I would like to say in relation to the role of the
USA at the GATT ministerial meeting. I know there are sometimes
discussions between the United States and Europe, and there has
been very vigorous discussion going on over whether or not a
pipeline should be built. That in one sense might be an academic
discussion because it seems to me the Europeans are going ahead
and building it no matter what the United States does. I also
believe that if the United States is absolutely committed and
determined to make sure that agriculture shares in the benefits
of any trade negotiations, to make sure that agriculture is not
allowed to be pushed aside by the European Community as it has
been for decades, then I believe that the United States has the
strength, has the capacity to achieve that kind of result.
They have been working very closely with us. They have been
supporting us and we them in relation to these negotiations.
I know quite well that in the earlier MTN round that there
were agreements with the United States Special Trade Negotiator,
but in the end, the United States believed that it was not
worth pressing Europe as hard as the United States could have.
I suppose I am saying that the United States should have enormous
confidence in its own capacity to achieve an appropriate result.
It should have enormous confidence in its own negotiating strength
if it is supported by other countries such as Australia, and many
others. It should have enormous confidence in its ability to
achieve fair rules for trade and reasonable access in relation
to agricultural products. But unless the United States has its
own inbuilt conviction, unless it is totally determined to
achieve this kind of result, then we will find agriculture
pushed aside once again as it has been ever since the GATT
was formed.
The discussions that I and my colleagues had with Mr Dalsager
last night did not indicate in any sense that it was going to
be an easy discussion or that the Europeans would come around
and say that after decades they were prepared to promote fair
and reasonable rules for trade once again. I don't think it will
be easy at all, but the United States should not underestimate
her own enormous negotiating strength.
There is no doubt that the world trade system does need overhaul.
It is not only agricultural commodities that, are prejudiced.
Opportunities are often prejudiced for developing countries
and I think we in Australia know how well we can benefit from
expanded market opportunities in some countries that have been,
and still are, growing at a rate of about 10% a year, and they
are doing that because of their energy, because they haven't
had their economies put in straight jackets through the subsidisation
of a whole host of industries as has so often been the case in
Europe. There is a lesson in that, because if there can be
more developing countries getting to the stage of economic
takeoff, there are going to be greatly expanded markets for
the products of factories of the Western industrial world.
There will be greater opportunities also for Australia and
Australian exports.
I NFF ./ 7
N-E7--
The kind of trade initiatives that we have been talking about,
coupled with greater access, a freer flow of world trade, might
be one of the very few positive, forward looking things that can
be done to get the growth of the world economies mroving . in a non-inf lationary
way. I know, we all know, there can be some difficulty in the
immediate process of change and restructuring that would be
necessary in a number of countries, but the question is whether
we are prepared to take the longer view and establish a sound,
solid basis on which market opportunities can expand, and living
standards not only in Australia, but around the world, start to
rise again. There is not a future, as everyone here knows, in
shutting the doors, pulling down the blinds. Some of the arguments
that were put to us last night asked-why we let in Japanese and
Korean steel when it could all be produced by BHP. One of a number
of consequences of that would be that all the users down the
line would be paying a higher price for the end product, and their
costs would go up. They would come at us for more protection.
They would lose markets because they wouldn't be able to
compete as effectively as they now are.
From the same district these miners came from, there are about
eight million tons of coal that are exported to Japan and Korea
each year, used by those countries in the production of steel.
Now, if we are going to chop of their imports into this country,
would they sit idlely by and continue to buy that coal from
Australia, or would they buy that coal from some country that
is prepared to promote and continue with reasonable and fair
open market systems?
If you won that retaliation by just chopping off imports
as was advocated to us last night, you would then be in a
situation where many hundreds of other Australians could
directly be put at risk from the same part of Australia with
other countries taking retaliatory action against us.
Now, quite plainly, when the world is in difficulty, when
Australia is in difficulty, there is no solution to our
general problems by pulling down the blinds and pretending
we can live as an island to ourselves. We have got to fight
as hard as we possibly can with other middle ranking countries
for fair and open rules of trade. Australia has more to benefit
from that than almost any country because we have non-tariff
barriers of one kind or another against about 50% of our
total exports. I doubt if there is any other country that
can make that kind of claim. Everyone would benefit from the
kind of proposals that we have put to the GATT meeting.
Mr President, your industries are confronted by very real
problems of drought and because of the impact of a world
recession that is deeper and longer lasting than any of us
thought possible. Good, reasonable and sound policies are
of vital importance to all of us. The Government is committed
to doing what it can to assist in this process. It is also
committed to doing what it can to assist the farming and
pastoral community through the present difficult period,
and especially through the present drought. / 8
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This is important for the building of the kind of Australia
that we all want. We have enormous natural and human advantages
in this country -the skills of Australians, their capacity to
work, their initiative in doing things new in better and more
economic ways. We have to look to those advantages in a tough,
sometimes unpleasant, competitive world. Despite whatever the
present difficulties are, I remain an optimist about the future
of this country because I have enormous faith in you. and your
industries. I have enormous faith in all Australia.
I have great pleasure indeed in declaring your conference
officially open.