4 P~ 76/ 14 56.
FOR PRESS 6 July 1976
VICTORIAN FARMERS UNION
Thank you for inviting me here to open the Victorian Farmers
Union Conference. As both a Victorian and a farmer I have
long been concerned with the problems of Victoria's rural industries.
The economic hardship many farming families are being subjected to
is all too obvious in the following figures: in the grazing
industry for 1974/ 75, 45% had net incomes of $ 4,000 of below.
In the dairying industry for 1974/ 75,. 30% had incomes of
$ 51,000 or below. In the multi-purpose grape growing industry,
42% had incomes of $ 4,000 or below. In the apple and pear industry,
41% had incomes of $ 4,000 or below. This shows that large
sections of primary producers are getting a new income
despite their capital involved of half or less than half of
average weekly earnings.
on top of this we have had drought and a disastrous situation in
the dairy industry which will make the position infinitely worse
in this industry. There is no doubt that there are very major
problems facing a number of rural industries. Problems that
are having an exceedingly severe impact on many communities.
Problems that will not be solved easily or quickly. A
neglect of rural industry was one of the major problems
the Government had to face on coming to office.
For too long rural industry in Australia was ignored.
Policies were adopted without any concern for the effects they
might have on the rural community. There was a neg , lect of
the fundamental fact that all sections of the Australian
people are interdependent.
Australia cannot be a prosperous country providing jobs for
all and high quality products if one m-iajor scctor ) f the
economy is depressed.
One of the great problems has been that to m,. ost AustraliLans
the condition of the rural industry remains invisible.
When costs go up, not enough account is taken of their effect
on farmers.
These problems have been compounded by severe drought
conditions which have left their mark on many communities. ./ 2
It is self-evident that national prosperity cannot be built on a
declining rural sector.
All sections of Australian community are interdependent and policy
has to recognise that fact.
The economic problems which affect Australians in the cities affect
farmers also.
Foremost amongst these problems has been inflation as in
manufacturing industry, inflation has destroyed Profitability in many
businesses through rising costs and the workings of tax system.
In primary as in secondary industry the priority is to restore
profitability, only when business is, or has a prospect of
being profitable, is new investment likely to take place, will jobS
opportunities be expanded.
This is why it is the Government's absolute determination to
bring inflation and rising costs under cont_-rol.
Only in this way can we start Australia moving forward again.
The Government's strategy was developed in opposition and has
been constantly reiterated since.
The main elements of this strategy have been to bring Government
spending under control, to free resources to the private sector and
to individuals, to pursue a responsible monetary policy with
clearly announced goals, and to generate a climate of: n atonal
responsibility in which wage and salary restraint will be
possible and in which both business and unions will act with a
principal regard for the national interest.
Immediately after coming to office we took steps to begin
implementing this strategy administrative and spending economieshalted
public service growth number of steps to help investment
and ease the cash cris for many businesses. Among these has been
the 40% investment allowance. The allowance applies to new plant
purchased or leased between 1st January, 1976 and 30th June 1978 and
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first used or installed by 30th June, 1979.
The allowance will be available in respect of purchases of most
new farm machinery, such as tractors, harvesters, etc., and for new
structural improvements such as for on-farm. storage of hay,
grain and fodder, for the cost of damns and earth tanks, bores, tanks
wells and sub-divisional fencing.
On 20th May the Treasurer announced a further series of measures
in this strategy. These included: savings to the Budget amounting
to almost $ 2600 million, full personal income tax indexation, a new
scheme of family allowances. This will be of particular benefit to
a number of farming families. Large proportions of farmers
in dairying, fruitgrowing and othe rural industries have incomes
below the taxable level. These derive no benefit from the tax
rebates. They will derive great beneit from the family
allowance scheme.
The expenditure restraints mean that for the first time in several
years there can be a soundly based confidence in the community
that Government spending has at last been brought under control.
In recent years, excessive Government spending has been the
principal force fuelling excessive inflation and unemployment.
When we came to Government we found public spending rising
out of control.
Reimposing responsibility on the public sector means that
resources can be freed to the private sector and to individuals.
The various measures we have taken to assist business, and full
personal income tax indexation, are only possible in the context
of restraint in public sector spending.
Solving our problems is not just a job for the Commonwealth
Government. There are a numtber of matters, for example, some
affecting the dairying industry where the States have responsibility,
and I shall touch on this later.
But this is a time when responsibilities extend far beyond
Government, to industry groups, to union members, to all
Australians. In our policy making we have emphasised consultation with
representatives of all major sections of the economy.
Last week we held our pre-Budget discussions with industry
representatives, including, of course, the primary industry
group. Several weeks ago we held an important series of consultations
with the trade union movement. Out of these discussions
camne a clear recogdtion of the contribution of the wages and
salary bill -to inflation.
One thing that worries me in the rural industry is that there
have been a good many industrial disputes which have prejudiced
selling opportunities beyond normal market accommodation
problems causc. d by decisions of other -countries.-
For example, in grains, although markets exist for all Australian
crops, larger carry overs than normal are expected because of
rolling strikes at seabord terminals and difficulties in transport.
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the meat industry there have been successive industrial
disputes at meatworks leading to higher costs against the
producers account and often frustrating market sales.
Union members involved in handling or processing
agricultural produce have the same interest in the survival
of agriculture as the members of the V. F. U. I wonder sometimes
whether the present precarious position of some sectors of
Australian primary industries are appreciated by union leaders.
I believe there is a widespread and growing recognition that
restraint in Government spending must be matched by restraint
S in wage and salary demands if costs are to be contained and growth
in the economy resumed.
With a national co-operative effort of which there are now signs,
this can be achieved.
In addition, of course, to the Government's general strategy
S on the economy, we have taken a number of specific steps to aid
particular rural industries, and have further measures under
consideration.
Dairying The dairy industry-has long been plagued with difficulties.
The problems which the industry was experiencing in
adjusting to changing -world markets and domestic inflation
have been greatly exaggerated by a collapse of the skim
milk powder market
This market collapse has its chief impact on the export oriented
secto; of the dairy industry. And this is concentrated in
Victoria and Tasmania.
In recognition of this situation we have continued assistance
through the dairy adjustment programme, and shared with the
States in underwriting skim milk powder prices at
at $ 300 per tonne up to 30th June. Also, we recently offered
to join with-*-the States on a cost-sharing basis the further
underwriting of skim milk powder at $ 300 per tonne and to also.
underwrite the price of casein to a similar level.
The Victorian Government has given some qualified agreement to
these proposals but we are still waiting on answers from several
other States.
This is a very important example o: E what i meant when I referred
to the need for all levels of Government and industry to cooperate
with one another.
But there is much the-State Governments could do. There is no
longer a justification for two classes of dairy farmers within
the dairy industry. People should be paid on the quality
and quantity of their production.
There is no reason why those in the imilk zones, purely
because they are in the milk zones, should get a much higher
return than those who are outside those Milk zones.
Many of the dairy farmers now in acute difficulties would be
in no difficulty if there was an appropriate equalisation
based on quantity and quality throughout the whole of the State..
The same applies to other States. This is a matter in which
the States have jurisdiction, and at the moment, the
Commonwealth none.
In Sydney whole mi, l k prices have moved with the consumer
price index. If this movement had occured in Mi'elbourne,
there would be at least an additional $ 40 million a year
to distribute to dairy farmers in Victoria. Since 1960/ 61
whole milk prices to farmers in Victoria have risen by
28% less than C. P. I. / 6
Fruit-Growing
The difficulties being faced by many fruitgrowerS are in essence
the same as those confronting dairymen They amount to inadequate
market outlets and High costs of production.
You all know that there is no quick and easy answers to these
problems. On the cost side combating of inflation is the top
priority. On the marketing side we have extended the apple and
pear and dried vine fruits stabilisation schemes. The " Tree-Pull"
has been extended to the end of 1976 and the means test provisions
have been liberalised.
The canned fruit industry is experiencing particular difficulties
and the answers are not easy to find. In co-operation with the
States concerned we provided about $ 5 million earlier this year
to fruit canneries to enable them to pay growers for fruit delivered
in the 1974/ 75 season.
We will, of course, continue to assist where necessary and will
consider further funds for tree-pull if this seems warranted.
In. its process of readjustment to market opportunities the industry
can be assured of the sympathetic co-operation of my Government.
I have-no doubt that both the dairying and the fruitgrowing industries
despite their present severe problems have a future in Australia.
Fruitgrowing and dairying are industries which Australia should be
well placed to undertake.
The problems these industries are now facing do not challenge their
suriva asindustries. Tough questions have to be faced, but survival!
as industries is not amongst them. I
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at
The depressed condition of the beef
of great concern to the Government.
The market for beef continues to be
and uncertainties.
The depressed condition of the beef
of great concern to the Government.
The market for beef continues to be
uncertainties. industry has, of course, been
fraught with difficulties
industry has, of course, been
fraught with difficulties and
There is a differential in prices paid by the overseas consumer
and the price paid to the Australian producer wees-beyond the actual
cost of handling and processing. In Canada for example, in
recent months sales have been made at levels of 25 cents below
the price in the U. S. for comparable cuts of meat yet the cost of
transhipping this meat into the U. S. is no more than 6 cents a lb.
For many Australian exporters and Canadian importers this has given
a clear 19 cents per lb. profit on a simple resale.
This 19 cents per lb. has frequently been well above the price
paid to the producer at . the original point of purchase.
The Government has been active in seeking to secure improved access
to beef markets overseas.
The beef market was an important aspect of my discussions
in Japan.
The way in which the access to Japan for Australian beef was
suddenly closed off was an example of how trading relations between
Australia and Japan should not be handled.
Where two nations are as closely lined as ours there must be sharing
of the burdens as well as the benefits of trade.
The way in which the access to Japan for Australian beef was
suddenly closed off w~ as an example of how trading relations between
Australia and Japan should not be handled.
Where two nations are as closiely linked as ours there must be
sharing of the burdens as well as the benf its of trade.
I pointed out to Japan that when difficulty arose in the car market
here in Australia Japanese manufacturers still had access through.
the quotas. But when there wer difficulties in Japan in the beef
market, our producers were absolutely excluded.
Wh ile in Japan I stressed t hat Austi~ alia intended to be a reliable
supplier to Japan. I also stressed that reliability was not a
one-way street. There has to be stability of trade in both
directions.
With regard to beef exports the Australian Government regards
continuing stable and reliable access to the Japanese market as
a matter of the highest impoitance. We welcome the fact that Japan
has decided to resume imports of beef and the more recent decision
to revert to six monthly import quota announcements. These will
inject more short-term stability into this trade.
With respect to our other markets, the Deputy Prime Minister,
Mr. Anthony, announced in March the outcome of lengthy negotiations
with the U. S. A. concerning allocations for meat imports by the U. S. A.
Our share of the U. S. A. Market for 1976 is 287,000 tonnes, which is
slightly higher than our initial allocation in 1975.
We are also of course in a position to supply any shortfally on
the U. S. A. market should they occur from cther beef exporting
countries. The U. S. A. economy is improving and their cattle numbers are falling.
It does not seem unreasonable to expect expansion of this most
important market in the years ahead.
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Since taking office we have suspended the meat export charge
at a cost of about $ 21 million'per year. We have also met the
$ 1.24 million meat export charge on the sale of mean to the
U. S. S. R. last year. Loan funds have been provided to the
Commonwealth Development Bank to assist in financing loans
to beef producers. Low interest rate carry-on finance is available
through reconstruction authorities for producers and we have asked
the States to indicate what further funds -they consider should be
provided. We will make available $ 18.5 million in 1976/ 77 for the
eradication and compensation for brucellosis and tuberculosis-infected
animals.
My colleague, the Minister for Primary Industry recently announced
that the powers, functions and composition of the Meat Board are to
be reviewed.
Australia, along with other beef exporting countries, has been
active in pressing the European Economic Community for a return to
a more liberal import system for beef.
It is our intention to upgrade the strength of our representation
to the European Economic Community. 0
For too long we have taken a largely passive approach to this
grouping, which supports free trade in the manufactured products whi* 0
raising immense and impenetrable barriers aginst farm products.
In concert with other like-minded countries we will be seeking
to break through these barriers.
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WOOL The government yesterday made a decision to lift the reserve price
for the Australian wool clip to 275 cents per kilogram, clean for
21 micron wool. This is an increase of 25 cents over the rate that
has prevailed f or the last three years. I might add that this action
also is in marked contrast from that taken by the former administration
when, in a strengthening market situation, it sought to reduce the
price to 209' cents from 250 cents per, kilogram, clean for 21 micron wool
this, for a period, shattering confidence in w~ ool trade.
The government has also taken the decision that this will prevail as
the minimum price for the next two years. The purpose of this is
to provide long term stability for the industry.
In a situation where processors of wool often have to pay many months
in advance, where it takes up to eighteen months or on occasions,
even longer for wool to get from a wool shed into a garment on
somebody's back it is clear that long'term stability is necessary.
This is what the government is seeking to achieve.
The government's decision is also based on the fact that it has
confidence in the future demand for wool; that demand has been
strengthening in recent weeks. The government wishes to reaffirm
its confidence and to reinforce present moves by this decision.
The government believes that considerable' quantities of the
corporation's stocks will be. sbld over the next twelve months,
0 as part of its normal trading operations. But even so, it is the
government's view that the corporation needs to retain considerable
stocks of wool., to enable wool to be supplied to major consumers in
particular circumstances that might arise, and to make sure that
disruptions to supply cannot interrupt the process of production.
This is a positive action that the government has taken to reinforce
one of Australia's most significant industries.
In case anyone wishes to report that this decision will involve a
cost on the taxpayer, let me immediately reassure taxpayers to the
contrary. Growers know they are building their own fund to support
these marketing arrangements, paying five percent of gross proceeds
of the sale of wool and in addition to that, funds that have been
advanced by the government over the past years at commercial interest
rates, it is expected will be repaid almost in their entirety in the
forthcoming twelve months.
I
The Minister for Primary Industry,, my colleague Ian Sinclair, who
is with me today will be releasing further details of the government's
decision which will indicate a more sophist. icated approach to pricifig
than has applied in the past.
WHEAT Unlike other producers wheat growers have benefited from good overseas
prices. Like other producers however, returns have been eroded by
rising costs. Here as in other industries, the crucial factor is
the success of the government's fight against inflation. Increased
import demand and a continuing low level of world stocks suggd~ t that
world prices for wheat will continue to remain attractive.,
INCOME STABILISATION
I want to comment briefly on the government's commitment to an income
stabilisation scheme. During the election campaign, the Liberal and
National Country Parties undertook to introduce an income ecualisatjn
de posit or farm income reserve fund scheme. This proposal is desiid
to meet a major problem that primary producers face the extremely
wide fluctuations in their incomes from one year to the next.
It also seeks to encourage more stability in farmers' annual
investment expenditures. Under the scheme, taxpayers would be permitted
to spread their income into the future by lodging deposits which
are deductible for taxation purposes from current income.
The amount deposited is deducted from this year's taxable income, and
when the deposit is later withdrawn, in part or whole, the amount is
added-to taxable income in that year. The Minister for Business i
and Consumer Affairs has lodged a Cabinet Submission on the I. A. C.
recommendation. Decisions will be made on this matter in the context
of this year's budget.
CARRY-ON ASSISTANCE
The serious situation affecting some industries has had, of course,
disastrous effects on some individual producers. During the last
election campaign, the Liberal and National Country Parties gave an
undertaking to examine the extension of unemployment benefits to
primary producers. On l0th May this year, the Minister for Primary
Industry announced that as an urgent interim measure the government
had decided to vary the conditions of eligibility for unemployment
benefits to include farmers who are suffering financial hardship and
who have registered for employment, but who under previous conditions
were ineligible for benefit.
To be eligible for unemployment benefits under these conditions,
primary producers have to satisfy the test of being available for
and actively seeking employment and their farm businesses have to
be assessed as returning a net income lower than the rate of
unemployment benefits. At 25 June, 1511 Victorian farmers were
receiving unemployment benefits. The vast majority of these farmers
were not eligible prior to the relaxation of eligibility conditions.
This interim relaxation of unemployment benefits has been made to
meet immediate needs and these arrangements are to be reviewed
together with . the I. A. C. recommendations on rural reconstruction.
Cabinet is shortly to consider recommendations on future assistance
for rural adjustment, including household support, to apply from
January 1977. These Cabinet Decisions will form the basis for
discussions with the States. Following discussions with the States,
a Decision will be taken qn the form of any household support to be
provided. LOCAL* GOVERNMENT
I said earlier that the problems we face require the cooperation of
all levels of government. One key aspect of our Federalism Policy
is to give a greater role to local government. In future a fixed
percentage of personal income tax will be earmarked for distribution.
through the* States to local government.
Municipalities and shires throughout Australia will be able to
calculate their annual revenue with greater certainty, and as a
result,. they will also have very much greater independence of action.
We have increased local Government entitlements under the new
tax sharing by 75% from $ 80M to $ 140 M. The Victorian Government
knows that its allocation is $ 35.4M. There is no reason why the
State should not advise all councils of their allocation.
Let us hope that this greater financial strength will be used to
hold rates down, and not merely as a further opportunity to expand
functions. 1%)
It is nonsense to say that governments at all levels should expect
to spend more in real terms each year. It is even more of a nonsense
when national production is falling rather than growing. Local
government can have a real and positive impact in the present situation
by helping to reduce costs. This is a direction for local government
which merits wide support.
Local government is certainly facing special problems. We' are mindful
of that. It is our intention that with respect to roads the additional
allocated should go almost solely to local government because
of the special problems it faces in this area. This government is
deterMined to ensure that its national policy decisions are taken w
full regard for the effect of these decisions on Australia's rural
industries.
It is also determined t o work towards' arrangements which willprovide
farmers with the greatest possible degree of predictability
for planning-purposes, given the nature of their occupation and
dependence on international markets.
Many farmers are now experiencing ve ry severe problems. I am.
confident that with appropriate government policies and with
determination, these problems can be overcome and that Australia's
rural industries will be an important element in the national return
to prosperity. 00000o000