Jj. Australia,

I  A  ^

PRIME MINISTER

FOR PRESS 6 AUGUST 1978

ELECTORATE TALK

The strength and health of our great rural industries affects  the lives of every Australian. One of the most important  messages your Government is .trying to make clear is that  there can be no permanent prosperity in the great cities

of Australia, unless there is prosperity in the countryside.

City and country are interdependent. If farmers are not  producing, are not selling, then they' are not adding to  their farms, not making improvements, they are not investing.

This has direct impact on companies in the cities producing  farm machinery, equipment,fencing —  and even affects the  local general store trade. On the other hand, if factories

and industries are not going well in the cities, the whole  country is adversely affected. That is why the Government  determined from the very first days to seek to work in the  interests of all Australians —  irrespective of where

they live. ,

We have given considerable assistance to our great rural  industries. We make no bones about it. For too long, farming  communities bore the brunt of inflation and operated in very  depressed markets with low prices and rising costs.

Slowly, the farmer's lot has improved. For the first time in  maybe a decade, the men and women on the farms and the great  pastoral areas of Australia are looking ahead with confidence.  They are optimistic about the future.

There are a number of reasons, but the key is the fall in  the inflation rates. No group feels the effects of raging  inflation harder than farmers. Costs take off, prices  remain low and farmers were caught in the squeeze —  their  incomes weren't indexed like most of the community.

Inflation is now down to 7.9 percent and it is falling, and  that has given farmers new incentive, and new ability, to  compete again. There is confidence in the great rural  communities for other reasons. Sheep prices are reasonable,  wheat and wool prices are good, and the beef industry is now  moving out of its trough. A bonus for farmers is that the

damaging drought of recent years has broken for most of Australia.

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One of the real strengths of the Australian rural economy  is that the wool marketing operation is working extraordinarily  well. It has put a floor in the industry —  and that floor

has been steadily increased by the Government. The stabilisation  scheme has given the industry real backbone and protection  during difficult times.

Overseas, great markets are opening up for our beef industry -  the industry that has probably been hardest hit in  recent years. The renewed United States interest in our  beef, for a variety of reasons, including a desire to keep

domestic prices down, is a boon for cattlemen and the cattle  industry generally.

The additional 200 million p'ounds weight that the United  States wants imported before Christmas is a first step. I believe that quota will have to be increased, otherwise  meat prices will rise again to unreasonable levels in the

United States and add to inflation and inflationary expectations.

At the same time, we are vigorously seeking increased access  to the great markets of Japan, the European Community, the  Middle East and other markets. Beyond that, we have been  pressing for a more, general liberalisation of international

trade.

Our attempt to gain increased access for agricultural goods  has been recognised as fair and reasonable by other world  leaders, and by the world press. President Carter has recently  written to me about international trade negotiations and

in his letter he said: "I will not consider these negotiations a success unless they lead us towards a significant  liberalisation of world trade in agricultural products". The British Prime Minister, Mr. Callaghan, and the Foreign  Minister, Dr. Owen, have also recognised the cost to the  European consumer of the European Economic Community's .

total protection of agriculture.

We do not intend to desist from trying to get a fair go for  Australia in the world's largest and richest market. I am  sure that no-one in the rural community - or people in the  cities - want us to stop trying. Farmers know, better than  most, that greater access for our agricultural goods would  bring benefits to all Australians.

All of these factors combined - better prices, markets opening  up, increased beef exports, a strong wool marketing scheme,  and drought breaking - mean a greatly improved farm outlook  for Australia.

It is estimated that average farm income will increase  substantially this year, although from a low base, and this presents  a better outlook for families in rural Australia than for almost  a decade.

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Farmers traditionally have shown they will spend their  incomes on investment and property improvement. That has  impact on confidence, impact on jobs, right across Australia.

Of course, one of the key factors that will help the great  rural industries, and all industry, is a continuing fall  in interest rates. The level of interest rates is important  to farming communities. Farmers require considerable cash sums

to buy expensive machinery, equipment, and for stock. Next week's Budget will show we are determined to keep on  the path to lower inflation, because this is the way interest  rates will keep coming down.

The Government is mindful of the special cash flow problems of  the farming community. ThatÂ· is one reason the Government  recently asked the Commonwealth Development Bank to give  special attention to the financial needs of purchasers of  rural machinery and equipment. Legislation already passed  enables the Bank to finance the purchase of replacement as  well as additional items of rural plant and equipment.

The new Primary Industry Bank of Australia is close to  opening and beginning operations. The Bank will aim to  commence lending as soon as possible.

I am most optimistic about the prospects for rural Australia.  With inflation falling, interest rates Coming down, prices  improving and markets opening up, the signs are good. A strong rural community will benefit all Australians.

City and country people need no reminding that, above all  else, we are all Australians with great interests in common.

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