Monday, 18 February 2019
Reserve Bank Amendment (Australian Reconstruction and Development Board) Bill 2019; Second Reading
That this bill be now read a second time.
I represent my homeland, where my family have lived for around 120 years. My son is living there now. We got hit with the TB eradication program. The area had about two million head of cattle. We lost 650,000 head of cattle in the TB eradication campaign, which was a decision of this place. The 1974 floods led to massive losses throughout the area—the biggest floods in the human history of settlement. In 1975 the fires that followed on from the floods made the international press and were tragic in the extreme—again, massive losses of cattle. Cyclone Ted wiped out some 127,000 head of cattle, although I saw figures the other day that 185,000 head of cattle were lost in Cyclone Ted. I myself was a very small owner of cattle, but I lost half my herd, which was a big blow to me, a young man in my 20s, early 30s. Then came wool deregulation, which was a shattering blow to the area, removing some 1,500 jobs. About 500 grazier families were wiped out in the wool deregulation. Then came the live cattle ban, which was absolutely disastrous for the area that I represent. Cattle prices dropped clean in half, and probably another 70 or 80 cattlemen went to the wall.
We've had the 2018 drought year, which has left the cattle in an appallingly weakened condition. Now we've hit the flooding and the rains and we have losses which people are conjecturing are between half-a-million and over a million head of cattle. That would be half of our entire herd and five per cent of the nation's beef industry that would vanish. Ron Camm, the most important person in the sugar industry for most of his life said, 'If you've got a five per cent undersupply, the price goes through the roof. If you've got an oversupply of five per cent, the price goes down, through the floor.' So we could be looking here at an extremely big rise in the price of beef.
When you look at providing government assistance, you have to say, 'Is the industry viable?' When I was the Queensland state minister designated by cabinet to have first responsibility for the state bank I had to ask myself, 'Is the sugar industry viable,' because the chairman of the state bank said, 'Thirty per cent of the industry has to go. It has to go. The industry's not viable.' Our cost structures were cheaper than southern Brazil, the benchmark for the world in the sugar industry. Our cost structures were lower, therefore it was viable and therefore we should not allow 30 per cent of the industry to vanish, or the jobs. As the honourable member for Indi said earlier, everyone thinks about the farmers, but for every farmer you've got maybe 10 employees and you've got maybe 20 follow-on businesses. We forget about all the other people in these situations. Anyway, we had a difference of opinion with the head of the bank, and he vanished two weeks later. The papers rather nastily said that I was looking after my rich cane-farmer mates that sacked him. I'll leave that for history to decide.
But we brought 25 per cent of that industry through. It didn't cost the taxpayers any money. It didn't cost the taxpayers one cent. We borrowed the money at 2.8 per cent. We bought the bad debt off the bank—at that stage, maybe 30 per cent of the industry was bad debt—at a discount of about 75 per cent. We then took over the loan and had the security of the mortgage for the public of Queensland. If they went broke, well, we'd still have to sell them up; we were a bank, same as any other bank. But it was our belief that they were viable and they would not go broke. A year and half later, the price of sugar doubled. We put up commercial interest rates, and I'm a bit embarrassed to tell you that we made about $250 million profit out of that situation. The banks were able to offload their bad debt; they were happy.
We were able to bring the sugar industry, which is about a quarter of the economy of Queensland and arguably a bigger employer than even the coal industry, through completely intact. Five per cent didn't come through, nor should they. The government is not in the business of propping up lazy people, stupid people, people who won't accept change. There has to be some people going broke for long-term viability in any industry.
We have a situation in which maybe five per cent of the Australian beef industry has been seriously wrecked and may be in jeopardy. It has been proposed by the Richmond Shire Council—and a lot of people dispute this—and I agree that there should be grants of $100 per ox lost. So if there are 700,000 ox gone then that would cost the people of Australia $70 million, which is a very small sum of money when the alternative would be to lose the tax revenue of $250 million per year for the next three years. I think that $70 million would be a very small price to pay.
The Queensland parliamentary inquiry into debt had some 40 meetings throughout Queensland. I attended four of those meetings. I was told by the chair of that committee, who happens to be my son, that every single person who came before that committee said, 'We don't want any more debt.' So if the government is thinking about giving cheap loans out, well, don't, because those people don't want more debt; they can't cope with more debt. They've still got to pay the bank their seven per, which is about average for bank charges and the other on-costs the banks put on. They've already got this huge debt they're carrying now. There have been six or seven extremely dry years. They can't carry any more debt and, arguably, they won't carry any more debt. Also, if you were to do that, the people you would help most would be the banks. The banks have bad debt at the present moment. If you gave that money out and imposed more debt upon the farmer then the banks would no longer have bad debt; the banks would have good debt, so the banks will write you a nice letter of thanks for what you've done for them. You won't have helped the farmers. You won't have helped the industry, you won't have helped the people of Australia but you will have helped the banks so I don't think that's a particularly good idea.
We have an obsession in this place with free markets. Go and tell those arguments of the free marketeers to China. Go and tell them to Europe. Go and tell them to Donald Trump. Go and tell them to Brazil. Go and tell them to any of the huge economies on earth. Brazil introduced ethanol—its biggest export industry is sugar—and now has a cost subsidy from petrol, ethanol, across the sugar industry. Is that a free market economy? Not likely. Is this industry viable? Yes. This industry has the VIP countries. Everyone talks about China. We are obsessed with China. The VIP countries are almost as big as China; 750 million people live in Vietnam, Indonesia and the Philippines. As their economies grow and their people become more prosperous then they will buy beef. Our exports to Japan of beef were negligible for 17 years after the war and then 17 years after that they were the biggest beef importing country on earth. That's what is going to happen in the VIP countries. It's also going to happen in China so this is an industry that has a very bright future and one of the few industries we have where we are the cheapest producers in the world. What happens in crisis? (Time expired)