VICTORIAI FARIERS UNION I
Spepch ro~-tvc ( 7Y I / P,
IN SEVEN WEEKS' TIME WE SHALL BRING DOWN MY GOVERNMENT'S
THIRD BUDGET. CLEARLY IT MUST BE REGARDED AS ONE
OF THE MOST CRUCIAL BUDGETS OF MODERi TIMES, FRAMED
AGAINST A BACKGROUND OF EXTRAORDINARY COMPLEXITY AT
HOME AND ABROAD, LET ME ACKNOWLEDGE AT THE OUTSET
THE GOVERNMENT'S RECOGNITION OF THE HIGH STAKES THAT
AUSTRALIAN AGRICULTURAL INDUSTRY HA\ E, NOT JUST IN
THE BUDGET ITSELF, BUT IN THE ECONOMIC CONDITIONS WHICH
IT PARTLY CREATES. I SAY " PARTLY" BECAUSE IT SHOULD
BE RECOGNISED THAT FEDERAL GOVERNMENT POLICIES,
MUCH LESS A SINGLE BUDGET, ARE NOT THE SOLE DETERMINING
FACTOR IN THE NATION'S ECONOMY.
THERE ARE FEW NATIONAL GOVERNMENTS WHOSE ECONOMIC POWERS
ARE MORE CIRCUMSCRIBED BY THE CONSTITUTION, BY THE
FEDERAL SYSTEM, BY THE NATURE OF THE ECONOMICS SYSTEM
OF A MIXED ECONOMY. AND BY INTERNATIONAL CONDITIONS
RESULTING FROM OUR POSITION AS ONE OF THE GREAT TRADING
NATIONS. I SAY THIS ONLY TO PUT MATTERS IN PERSPECTIVE,
NOT BY ANY MEANS TO DOWNGRADE OUR PRIMARY AND INESCAPABLE
RESPONSIBILITY AS THE AUSTRALIAN GOVERNMENT.
6~
WHILE ACKNOWLEGING YOUR SPECIAL INTEREST IN THE BUDGET,
YOU WILL UNDERSTAND HOWEVER THE CONSIDERABLE RESTRAINT
I AM UNDER AT A STAGE WHEN WE ARE STILL HAVING THE
PRELIMINARY DISCUSSIONS WITH INDUSTRY AND WHEN
THE CABINET DISCUSSIONS ARE ABOUT TO BEGIN.
THE SPECIAL INTEREST FARMERS NATURALLY HAVE IN THE
BUDGET AND ITS OUTCOME SPRINGS FROM TWO SOURCES, ONE
PARTICULAR,. ONE GENERAL. FIRST THERE IS THE
SPECIFIC BUDGETARY MATTER OF GOVERNMENT OUTLAYS TO AND
RECEIPTS FROM AGRICULTURE. THESE ARE A VERY GREAT
AND GROWING FACTOR IN THE BUDGET NOW GREAT ENOUGH
TO BE A VERY SIGNIFICANT FACTOR IN THE OVERALL STRATEGY
OF THE BUDGET ITSELF.
BUDGET OUTLAYS FOR ALL AGRICULTURAL INDUSTRY WERE
$ 329 MILLION IN 1972/ 73, $ 303 MILLION IN 1973/ 74
AND AN ESTIMATED $ 727 MILLION IN 1974/ 75 AN INCREASE
ON 1973/ 74 OF $ 424 MILLION. RECEIPTS IN THE SAME YEARS
WERE $ 45.6 MILLION, $ 82 MILLION AND $ 178 MILLION.
SO NET GOVERNMENT ASSISTANCE WAS $ 283 MILLION IN 1972/ 73,
$ 221 MILLION IN 1973/ 74, AND $ 548 MILLION ESTIMATED IN
1974/ 75. THAT IS, AN INCREASE OF $ 327 MILLION IN 1974/ 75
OVER THE PREVIOUS YEAR.
THE BIG INCREASE IN OUTLAYS CAME OF COURSE THROUGH
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LOANS TO THE AUSTRALIAN taft CORPORATION TO OPERATE
THE FLOOR PRICE PLAN. IT'S NOT MY INTENTION IN
GIVING THESE FIGURES TO SUGGEST THAT FARMERS ARE THE
* RECIPIENTS OF HUGE AMOUNTS OF GOVERN4MENT LARGESSE,
YOUR PRESIDENT, iR HEFFERNAN, RECENTLY EXPRESSED CONCERN
THAT THE AUSTRALIAN PUBLIC WAS BEING MISLED INTO
BELIEVIN'G THAT PRIMARY INDUSTRY WAS RECEIVING MASSIVE
HANDOUTS AT THE TAXPAYERS IEXPENSE AND HE RIGHTLY SAID
THAT IN THIS REGARD, THE DISTINCTION SHOULD BE MADE
BETWEEN LOANS AND DIRECT SUBSIDIES. THE POINT I WISH
TO MAKE HOWEVER, IS THAT IN A BUDGET CONTEXT, THE
OUTLAYS AND RECEIPTS ARE OF A MAGNITUDE TO BE A
SIGNIFICANT FACTOR IN OVERALL PLANNING.
iHE SECOND, MORE GENERAL INTEREST TO FARMERS, LIES AT
THE VERY HEART OF THE NATURE OF OUR CURRENT ECONOMIC
PROBLEMS. WE ARE ALL DAMAGED BY INFLATION NONE MORE
THAN FARMERS. AND OF COURSE THE INTER-REACTION BETWEEN
COSTS AND PRICES IS MOST ACUTE IN THE CASE OF FARM
PROiJUCI'S PARTICULARLY PRICES FOR FOOD.
IN THE PAST EIGHTEEN MON'THS THE rI: AJOR ECONOMIES OF THE
WOtkLD SEVERELY AFFECT11) BY 14W. OIL P'RICE RISE AND THE
DESTA31LISIN1G L! FFECTS OF THAT ON WORLD TRADE HAV/ E BFEN
STRUGGLING WITH. THE TWIN PROBLEMS OF RISING UNEMPLOYMENT
AND RISING INFLATION. AUSTRALIA HAS NOT BEEN ABLE TO
INSULATE ITSELF FROM THAT WORLD SITUATIONS
BUT IN AUSTRALIA AS IN OTHER COUNTRIES THE BATTLE IS
NOW ON TO RESTORE A MORE BALANCED ECONOMIC ORDER.
WE ARE SEEING ECONOMIC GROWTH BEGINNING AGAIN.
THE RISE IN UNEMPLOYMENT SEEMS TO HAVE COME TO AN END
AND 1975/ 76 PROMISES TO SEE EMPLOYMENT OPPORTUNITIES
ON THE INCREASE AGAIN. BUT INFLATION REMAINS DEEP-SEATED.
FIRM AND RESPONSIBLE POLICIES WILL HAVE TO BE FOLLOWED
IF IT IS TO BE BROUGHT UNDER CONTROL.
SOME OF THE UNCERTAINTIES THAT SURROUNDED THE OUTLOOK
FOR INFLATION EARLIER THIS YEAR HAVE BEEN CLEARED BY THE
DECISIONS OF THE CONCILIATION AND ARBITRATION COMMISSION
IN THE NATIONAL WAGE AND METAL INDUSTRIES CASES.
THOSE WERE RESPONSIBLE DECISIONS, GOVERNMENTS MUST ALSO
DO ALL THEY CAN TO CREATE AN ECONOMIC CLIMATE IN WHICH
THE SUGGESTED WAGE DETERMINATION GUIDELINES HAVE THE
PROSPECT OF BEING ADHERED TO.
WE AIM TO ENSURE THAT THE RECOVERY IN THE ECONOMY
STRENGTHENS AND CONTINUES BUT DOES NOT REACH A PACE THAT
ONCE AGAIN LEADS TO A SCRAMBLE FOR RESOURCES.
AN ORDERLY RECOVERY WILL HELP ACHIEVE A CLIMATE CONDUCIVE
TO THE EXPANSION OF INVESTMENT THAT IS NECESSARY TO ENSURE
CONTINUED PROSPERITY AND GROWTH OF EMPLOYMENT OPPORTUNITIES,
ONE THING IS CLEAR THEE HAS * i OI L. E ABATcET THE
RATE OF INCREASE ? iJ GOV! ER:. T sPENDING IF WE ARE TO GET OULi
OF OUR PRESENT TROUBLES.
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BUT IT IS A GROSS OVERSIMPLIFICATION TO IMAGINE THAT
THE WHOLE SOLUTION TO THOSE TROUBLES LIES IN THAT
ONE AREA ALONE. GOVERNMENT SPENDING IS JUST ONE
OF THE THREE MAJOR INTERNAL FACTORS DETERMINING THE
PRESSURE ON RESOURCES AND INFLATION WHICH MAY RESULT
FROM IT. THE OTHER FACTORS ARE INCOMES AND CREDIT
WHICH ARE NOT DIRECTLY DETERMINED BY THE BUDGET.
IN THE BUDGET WE WILL BE STRIVING TO CREATE THE
CONDITIONS WHERE THE WAGE INDEXATION PROPOSALS CAN
HAVE A CHANCE TO WORK
IN PREVIOUS ADDRESSES TO FARM ORGANISATIONS I HAVE
ALWAYS STRESSED THE INTERDEPENDENCE BETWEEN THE RURAL
SECTOR AND THE REST OF THE ECONOMY. I HAVE NEVER
ACCEPTED THE FALSE DIVISION BETWEEN COUNTRY AND CITY.
IT IS A FALSE DISTINCTION ECONOMICALLY, SOCIALLY AND
POLITICALLY. THERE HAS NEVER BEEN A TIME WHEN THE
INTERDEPENDENCE WAS MADE MORE MANIFEST BY THE INTER-REACTION
OF ONE SECTION OF THE ECONOMY ON ANOTHER, WHEN THE
PROBLEMS OF ONE SECTION AFFECTED THE PROBLEMS OF EVERY
OTHER SO CLOSELY AND QUICKLY. WE ARE ALL AFFECTED BY
OUR DEPENDENCE ON EACH OTHER AND WE ARE ALL AFFECTED BY
OUR INTERDEPENDENCE WITH OUR TRADING PARTNERS.
INFLATION DEMONSTRATES THIS VERY CLEARLY, OFTEN VERY
IHAkSHLY. v. I.
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WE HAVE SEEN HOW EASY IT IS FOR EMPLOYEES TO PRICE
THEMSELVES OR THEIR FELLOWS OUT OF A JOB EQUALLY,
IT IS VERY EASY TO PRICE OURSELVES OUT OF MARKETS,
PARTICULARLY FOR A GREAT TRADING NATION LIKE AUSTRALIA
AND PRIMARY PRODUCTION STILL ACCOUNTS FOR THE
MAJOR PART OF OUR EXPORTS IN4FLATION IS THE COMMON
ENEMY WHATEVER SECTOR OF THE ECONO0MY 1~__ WE ARE
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INVOLVED.
ONE OF THE MOST CONSIDERABLE PROBLEMS OF COMMUNICATION
AT THE POLITICAL LEVEL IS TO GET ACROSS THE CONSEQUENCES
OF OUR ROLE AS A TRADING NATION, ON THE SURFACE IT
SEEMS SIMPLE ENOUGH. IT IS EASY ENOUGH TO SAY
" AUSTRALIA IS ONE OF THE WIORLD'S GREAT TRADIN4G NATIONS".
THE PRACTICAL IMPLICATIONJS ARE NOT SO EASILY, GRASPED OR
APPRECIATED. THERE ARE VERY VOCAL ELEME14TS IN THE
COMMUNITY WHO WOULD PRESSURE OOVERNMENTS VIRTUALLY TO
CUT OFF ALL IMPORTS, OR AT LEAST THOSE IMPORTS WHICH
AFFECT THEIR INDUSTRY. LESS BLATANTLY, IT TAKES THE
FORM OF DEMANDS FOR ALL SORTS OF TARIFFS AND QUOTAS
AND RESTRICTIONS, BUT WE HAVE TO LOOK BEYOND THE DEMANDS
OF ANY PARTICULAR INDUSTRY TO THE EFFECT OF A DECISION
ON THE ECONOMY A WHOLE AND IN PARTICULAR OF OUR OVERALL
POSITION AS A TRAD) ING NATION.
THE BASIS OF UNLIMITED PRODU. CTIOi.. O INDUSTRY CAN
THOSEP EOPLE WHO WANT UI N ASU STRALIA TO CUT OFF IMPORTSNMENT
HAS CAUSTRALIA SHOULD REMEMBER THAT WHEN WE DOCTUHET SF ACT
AND TO THE EXTENT WE DO IT WAE GSRPEOAITL THE CASE WE CAN
PRESENT TO COUNTRIES WHICH CUT OFF IMPORTS FROM AUSTRALIA.
THIS BIS VERY RELEVANT TO PRIMARY INDUSTRY. 0 INDUSTRY CAN
ASSUME IT HAS A RIGHT TO SURVIVE, NOBEEN MORE DIFFICULT
INFFOR ME TO ARGUE FORCEFULLY WITH THE COUTRIES MOAFT ESTERN
HOW COSTLY, SIMPLY BECAUSE IT EXISTS.
THOSE PEOPL WHO EW ANT US IN ABOUT THE STLOA SCHUINTG OFF IMPORTS
TBEE IMPORTS FROM AUSTRALIA, BECAUSE WE IN AUSTRALIA
HAVE HAD THEE XTENT WE IM PFORROTMS THOSE COUNTRIES. CAINWE
WE CUT OFF IMPORTS ANDWC HOIIUFCNH T ORTIHEESR CUT OFF FROM AUSOTURRA LEIXAPORTS
THIS ISOENVE EROYF US IS POORER, WHETHER WE LIVE IN CITIES ORINDUSTRY
IN THE COUNTRY VISITS REGION ON ACNAYN LPIAVRET ICULAR
INDUSTRY, IF TRADE OVER-ACEFULL STAGNATES OR DIES OF ESTERN
EUROPE OR JAPAN OR AMERICA ABOUT THE SLASHING OF THEIR
BEEF IMPORTS FROM AUSTRALIA, BECAUSE WE IN AUSTRALIA
HAVE HAD TO REDUCE IMPORTS FROM THOSE COUNTRIES, IF
WE CUT OFF IMPORTS AND IF OTHER COUNTRIES CUT OFF OUR EXPORTS,
EVERY ONE OF US IS POORER, WHETHER WE LIVE IN CITIES OR
IN THE COUNTRY. INI0 REGION CAN LIVE ON ANY PARTICULAR
INDUSTRY, IF TRADE OVER-ALL STAGNATES OR DIES.
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IN PURSUIT OF THE FUNDAMENTAL OBJECTIVE OF TRADE
PROMOTION;, MY GOVERNMENT HAS MADE MORE TRADE TREATIES
WITH OTHER COUNTRIES THAN ANY PREVIOUS GOVERNMENT.
WE HAVE RE-NEGOTIATED MANY OF THOSE WHICH EXISTED.
WE HAVE BEEN PARTICULARLY ACTIVE IN OUR OWN REGION$
FOR IT IS CLEAR THAT INDUSTRIES WHICH USED TO DEPEND
SOLELY ON THE MARKETS OF WESTERN EUROPE AND BRITAIN,
HAVE NOT AS GOOD A FUTURE AS THOSE INDUSTRIES
WHICH HAVE PROSPECTS IN THE MARKET IN OUR NEIGHBOURHOOD.
IN THE C. O. N EXT OF THES~ E GENEIRAL REMARK(
INOW ADDRESS MYSELF TO SOME QUESTIONS WHICH
YOUR EXECUTIVE DIRECTOR, ' IR FORSTER, HAS
INDICATED YOU WOULD LIK'E ME TO ANSWER.
I MUST SAY( THE QUESTION4S TEJD TO BE SHORT ON
SPECIFICS AND LON~ G 0: 1 ARGUMENT SO0 YOU W1LL
FORGIVE ME IF I TEND TO RESPOND IN KIND.
" QUESTION: As IT IS LIKELY THAT THE SECOND ALLOCATION OF
CARRY-ON FINANCE FROM THE AUSTRALIAN GOVERNMENT FOR THE
BEEF INDUSTRY WILL BE INSUFFICIENT TO MEET THE DEMAND
FROM ELIGIBLE PRODUCERS, WOULD THE AUSTRALIAN GOVERNMENT
CONSIDER MAKING THE BALANCE OF THE ORIGINAL ALLOCATION
AVAILABLE AT THE CONCESSIONAL INTEREST RATE OF 4% o AND
ADJUST THE LOANS OF THOSE PRODUCERS WHO HAVE ALREADY
BORROWED AT 11.5%?
THERE HAVE BEEN TWO SCHEMES ANNOUNCED BY THE AUSTRALIAN
GOVERNMENT FOR THE PROVISION OF CARRY ON FINANCE FOR
BEEF PRODUCERS. THE FIRST SCHEME, ANNOUNCED LATE LAST YEAR,
INVOLVED AN ALLOCATION OF $ 20 MILLION FOR LOANS THROUGH
THE COMMONWEALTH DEVELOPMENT BANK AT COMMERCIAL RATES
OF INTEREST THEN 11., BUT LATER CUT TO 11% IN LINE
WITH A GENERAL REDUCTION IN BANK RATES. AT THAT TIME
THE GOVERNMENT WAS RESPONDING TO A REQUEST BY THE
AUSTRALIAN I'IATIONAL CATTLEMEN'S COUNCIL FOR SPECIAL FUNDS
AT COMMERCIAL RATES. THE COUNCIL DID NOT SEEK CONCESSIONAL
INTEREST RATES. I UNDERSTAND THAT AT LEAST $ 13 MILLION
OF THE $ 20 MILLION ALLOCATION HAS BEEN LENT ALREADY AT
COMMERCIAL RATES OF INTEREST. , A2
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ON APRIL 23 THIS YEAR, SENATOR I'RIEDT ANNOUNCED THAT
THE GOVERNMENT WOULD MATCH A $ 19.6 MILLION OFFER BY THE
STATES FOR CARRY-ON FINANCE FOR BEEF PRODUCERS.
LOANS ARE AT 11 WITH NO INTEREST OR CAPITAL REPAYMENTS
IN THE FIRST 12 MONTHS. IT IS STILL TOO EARLY
TO. KNOW IF IT WILL BE SUFFICIENT. IUCH WILL DEPEND
ON THE BEEF MARKET AND HOW QUICKLY IT RECOVERS.
THE MOST HOPEFUL SIGN IS LAST WEEK S ANNOUNCEMENT BY
JAPAN THAT IT IS RE-OPENING ITS MARKET FOR AUSTRALIAN
BEEF. FURTHER, AS AT 31 SARCTHH, E AUSTRALIAN HERD
IS SMALLER BY ABOUT 1 MILLION HEAD. THAN HAD BEEN EXPECTED
ON THE BASIS OF PAST GROWTH.
ON APRIL 23 '. RIEDT SAID THAT THE PROGRESS OF THE SCHEME
WOULD BE REVIEWED AT THE END OF THREE MONTHS.
THE GOVERNMENT WILL CONSIDER THE RESULTS OF THAT REVIEW
AND ANY REQUESTS FOR CHANGES IN THE SCHEME OR
ADDITIONAL FUNDS THAT MAY EMERGE.
QUESTION: DOES THE AUSTRALIAN GOVERNMENT WISH THE DAIRY FARMERS
OF AUSTRALIA TO PRODUCE FOR THE EXPORT MARKET AT THE
SAME TIME ENSURING BY SUCH PRODUCTION THAT THERE WILL BE
SUFFICIENT SUPPLIES OF DAIRY PRODUCTS PRODUCED IN
AUSTRALIA TO MEET AUSTRALIA'S DOMESTIC NEEDS?
IF SO, WILL THE AUSTRALIAN GOVERNMENT PAY A BOUNTY ON
ALL EXPORTS OF DAIRY PRODUCTS EQUAL TO THE DIFFERENCE
BETWEEN THE ACTUAL EXPORT PRICE AND AN UNDERWRITTEN
PRICE WHICH WOULD APPROXIMATE THE HOME PRICE NOW
BEING FIXED BY THE PRICES JUSTIFICATION TRIBUNAL?
THE AUSTRALIAN GOVERNMENT'S WISH IS THAT AGRICULTURAL
PRODUCTION, INCLUDING DAIRYING, BE GEARED TO MARKET DEMANDS,
IT DOES NOT MAKE COMMERCIAL GOOD SENSE TO PRODUCE WITHOUT
REGARD TO MARKET TRENDS AND PRICES. ' IE WANT OUR POLICIES
TO BE FAIR TO PRODUCERS, CONSUIMERS AND TAXPAYERS.
BOUNTY PAYMENTS CAN ONLY BE PROVIDED BY TAXPAYERS INCLUDING
THOSE WHO, AS CONSUMERS, ALREADY PROVIDE FOR SOME
PRODUCTS HIGHER DOMESTIC PRICES THAN ARE AVAILABLE OVERSEAS,
EXPERIENCE HAS SHOW: I THAT BOUNTY PAYMENTS RELATED TO
PRODUCTION LEAD TO PROBLEMS OF DISPOSAL ON WORLD MARKETS
AT UNECONOMIC PRICES. A BOUNTY ON EXPORTS WOULD HAVE
A SIMILAR EFFECT IF THERE IS NO INCENTIVE TO RELATE
PRODUCTION TO AVAILABLE ECONOMIC IMARKETS THE REAL
OBJECTIVE THW IINDUSTRY SdOULD SET FOR ITSELF, Ig uaI
CI~-C-r 4-
OWING TO THE ENORMOUS. AND CONTINUING INCREASE IN THE COST
OF TRANSPORT, SUPERPHOSPHATE AND OTHER FARM REQUIREMEjNTS
NARROWING THE GAP BETW.-EEJ. FARN COSTS AND INCOME, CAN
YOU GIVE FARMERS ANY INSURANCE AT ALL OR EVEN HOPETHAT
THEIR INVESTMENTS IN PRODUCTION WILL YIELD A RETURN?
FARMING IS3 A BUSINESS AI1D PREDOMINANTLY IT IS UP TO
THE FARMER TO ESTIMATE WHETHER A DECISIONJ TO PRODUCE
A CERTAIN COMHODITY WI1LL YI'ELD A RETURNE i N T
THE 6OVERNMENT HAS SUPPORTED THE RECONSTRUCTION SCHEME
AIND IHAS INTRODUCED SPECIAL INDUSTRY SCHEMES TO HELP
IN THE PROCESS. IT' S NOT POSSIB3LE OR DESIRABLE FOR ANY
oOVER~ IIHEN'T TO GUARAI T'LE A RETURN IF THIS FLIES IiN THE
FACE OF MARKET FORCES. IN SO FAR AS PEOPLE MUST EAT
AND BE CLOTHED THERE WILL ALWAYS BE A RETURN ON INVESTME11T
IN AN EFFICIENT AND SELF RELIA* JT AGRICULTURAL INDUSTRY.
IBELIEVE THE AGRICULTURAL SECTOR WILL IREMAIN ANl AVENUE
FOR PROFITABLE RESOURCE USE.
A. NL. j VII
WOULD NOT A MAJOR. PROPORTION OF THE MONEY WHICH
THE 6JOVER1NMEI-IT SPENDS ON WELFARE A14D UNEMPLOYMENT SCHEMES
BE PUT TO BETTER USE IN SUBSIDISING CON4SUMER PRICE
INDEX ITEMS AT RAW MATERIAL LEVEL THEREBY HOLDING PRICES
AND GIVING INDUSTRY A CHNCE TO STABILISE AND PLAN?
AgswER: FUNDS FOR PENSIONS, U!' JEMPLOYME; IT RELIEF,
THE R. E. D. SCHEME ETC., ADD TO CONSUIMER DEMAND FOR
GD:, TAKING FUNDS AWAY FR01* 1 A'IREAS WOULD
REDUCE DEMAND.
14HAT WOULD BE THE COST OF CONSUAER SUBSIDIES?
1.1HAT PRODUCTS WOULD BE SUBSIDISED? HOW WOULD
A SUBSIDY Oil ONE PRODUCT EFFECT DEIMAND FOR AND THEI
PROFITABILITY OF ANiOTHER? WOULD YOU END
SUCH A SYSTEM IN1 THE FUTURE WITHOUT GREAT DISRUPTION'?
IWOULD INSTAN4CE THlE WAR-TINE DAIRY BOUJNTY THAT WAS
CONTINUED AND BECAME L; UILT IN4TO THE PRICE OF LAND
AND WAS OF NO LASTING B3ENEFIT TO PRODUCERS AND
DISTURBEDT THE ALLOCATION OF RSESOURCES IN DAIRYING.
IN SHORT, TH4E GOVFRNMNT PRLFERS PEOPLE TO HAVE FUNDS
TO MAKE THEIP OWN CONSUMPTION CHOICES AND NOT BE
SUBSIDISED AT THE OTHER END EXCEPT IN SPECIAL CIRCUMSTANCES,