Agricultural

Competitiveness

Submission Jeanine McRae

2

Jeanine McRaeApril 2014

Submission to the

Department of the Prime Minister and Cabinet

PO Box 6500

CANBERRA ACT 2600

Food Security 4 - The Elephants in the Room 5Improving Farm Gate Returns 6 - The Elephants in the Room 6Access to Finance 7Competitiveness 9Regional Communities 9Competitiveness of Inputs 11

12Policy Failure & the Free Trade Altar 13Levelled in Search of the Level Playing Field 14Bi-Polar Policies Fail Our People 14Means of Exchange Vs Commodity - Our Floating Currency 19Bank Policy and Discriminatory Terms of Trade 20Poem - 24Support and Strengthen our Nation 25Reconstruct, and Develop our Nation 25Ensure our Nation’s food Security 26Reconstruct our National Pride 26Develop Industry to Benefit Aussies 27Be a World Leader - Be Constructive 27

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There is already a very large demand for food in theworld, but not everyone can pay for it, and many peoplearound the globe are starving.

Australian farmers could meet much of the demandalready, IF they were remunerated with a price abovethe cost of production.

They live in a world dictated to by global monopolies........ monopolies which set world prices regardless ofwhat is done to outlaw the practice. In many cases,these global entities are much bigger than whole nationalgovernments and have the power to dictate terms.Hence, farmers plant a crop whilst “global markets” arepredicting excellent world prices. Yet nearly very year,the ever- predictable re-written book reveals low pricesat harvest time, when farmers are locked into deliveringgrain.

Here in Australia, insuring a good price by farmersmarketing collectively is frowned upon. We havedestroyed the Australian Wool Corporation, and morerecently, the Australian Wheat Board, because it’s aterrible thing for Australian farmers to look afterthemselves and their families, and put Australians first.

Rather, in our brave new global world, we must defer tomultinational corporations, who actually do set prices.They think nothing of moving product around the worldfor a loss in order to dominate a market, put familyfarmers out of business, take over their land, or reducethem to economic serfdom.

We’re currently spending $billions on defence aircraft,yet don’t consider as in our budget.

Australia is party to more and more world and regionaltrade agreements which ensure that Australian farmersare put out of business, can’t compete, and are forced totransfer technology to the third world, whilst payinghigher interest than the rest of the world. This is oftenthe deciding factor in driving them out of business withnothing to show for a lifetime of work. They are caughtin the pincers of Government Policy and Bank Interest!

Australian Farmershave long been recognised as the

in the WorldThere may well be a huge increase in for food, but

the is predicated on the assumption that our farmers will actuallybe paid for it,

Govt Policy

Bank InterestFarm Families Squeezed

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Food Security

While lip service is being given to the importance of food securitynow, policies have been in place for the last 30-40 years which havedecimated our food industries. Many industries have been forced toshut down in Australia and move overseas; many have beenbankrupted/liquidated in Australia, with overseas markets taking upthe slack; or, overseas buyers have bought out or into Australia’smarkets.

Agriculture doesn’t need a handout - it needs policies put in place that allowit to survive and thrive in the . To date, our

– that of relying of international treaties to provide policy,even to the detriment of our own industries – has delivered:

· Industries - imported juice concentrate ruinsfarmers in Australia; tree and vine-pulls (once done, market forthem returns and new plantings often “subsidised”)

· (South Aust. Fishermans Co-operative Ltd) - jobs lost,processing in Australia closed – now owned by Malaysia

· Board - control taken from Australia farmers - markets lostas a result; farm-gate returns less profitable; now Australia’s goodname compromised as quality product is sub-standard

· allowed to collapse at the time it was a MAJOR earner ofGDP; the national sheep flock decimated in a flock reductionscheme; other nations benefit from Australian promotion of wool– Australian industry still hasn’t fully recovered. At the same time,gave multinationals huge grants to set up processing in Australia

· – decimated – no policies to save it although it employedmore people than the coal industry just a few years ago – noethanol policy; no long-term finance to undergird

· - currently in a mess, particularly in Qld – many farmersbankrupted and small businesses affected by debt flow-on

· In the ‘90s many s were decimated, families broken andfarmer’s sons moved off into other industries where they couldmake a living and support a family. Whole districts were gutted

right across Australia

Agriculturedoesn’t needa handout.

It needspolicies put inplace thatallow it tosurvive andthrive in thenationalinterest.

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· Currently - horticultural farmers have pulled fruit trees; SPCgiven no federal government funding (unlike car industry), nor tailored long termloans – yet the policies bringing it about and also those where multinationals receivegovernment help have all been enabled and brought about by our being signatory to a plethora ofinternational agreements.

· The Murray Darling Basin Authority’s ( Plan caused untold misery to many families who were refusedbank support when property values fell due to the government’s handling of the issues and lack ofconsultation. There was no policy in place to handle the inevitable fallout; in fact, no policies in place exceptdestruction by . The eminent hydro-engineer Prof Briscoe (Harvard) when asked to submit apaper, said:

o(For full quote see Pgs 16-17, No 12 & 13 under Bi-Polar Policies Fail Our People)

o ....

(For full quote see Pgs 16-17, No 12 & 13 under Bi-Polar Policies Fail Our People)

· Clearly, Australia was once considered a world leader in water management, (See also

in this document)

The Elephants in the Room

Generally speaking Australia has had a policy that no policy was required except a flat earth free trade policywhich supposedly delivered a level playing field ……… in fact, it delivered

, flattening a lot of Australian ingenuity and efficiency.

Rather than the international agreements setting policy by default,Australia needs to frame policies which support its industries – ie: costof finance; the AUD (trading commodity Vs means of exchange), and

tax policy. (See in this document)

We cannot realistically compete with the third world, to that of the third world – which has been happening consistently for

the last 20-30 years. If we want a high standard of living, then we need to do what

others are doing, and use tariffs and other instruments to protect ourindustries, and build wealth for Australians –

We are 1% of the world’s trade – we don’t makea difference despite the fact we have our leaders flying around the world tryingto convince other nations to squeeze their people and industries out the backdoor in the name of “free trade”.

Food Security needs to be approached from an acknowledgment of the true statusof our export home consumption ratio. We are continually told weexport 60%, but this is probably more likely to be 25-30%, as agreedby the ABS in the Customs House Agreement1. Will the

1 May 2000 - exports were about 25%

We cannotcompeteunless wedrop our

LivingStandard

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Improving Farm Gate Returns

The Elephants in the Room

Farmers can’t really make decisions to improve their returns,because most of the components of the decision-making processare out of their control.

For example, the AUD: despite the fact that the government hasa policy not to interfere, when it decides that the dollar is toohigh, it can make an “announcement” which brings the dollar

down! Therefore, it has an interfering policy not to interfereexcept by intervening! (See )

If the AUD goes down to what is considered an “acceptable”level for Agriculture to make a profit, the banks will putup, safely mopping up the “profitable” environment …… sofarmers will be no better off.

Farmers are utilising the AUD as a means of exchange, yet with a global traders using it as a commodity. The

AUD has a split personality. (See )

While ever the status-quo is maintained, farmers won’t makea consistent profit, having to be content with the occasional “exceptionallygood” year, almost entirely dependent on the seasons (and a “bad season”somewhere else in the world).

Australian farmers are the most efficient in the world, and recognised assuch – so they are only able to make decisions on-farm to improve localefficiencies – BUT, how long can they go on getting more and moreefficient? They have successfully done this for 20-30 years, and many havegone by the wayside, leaving with dashed dreams and nothing to show fora life-time of work.

More Squeezing doesn’t equal more efficiencies.

There are a plethora of laws embedded in international treaties (eganti-competition) making it difficult for farmers to co-operatively market,and those that were set up are always attacked (eg Wheat Board) withfull governmental support, generally throwing the baby out with the bath

water.

The decision-makingprocess is outof farmer’scontrol....

If the AUDdrops,Interest willrise

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Access to Finance

Until there is recognition of the banks real role in the community,and the difference between the true cost of credit to banks andthat which they charge out in their money lending activities, ruralAustralia, family businesses and SMEs will continue to be held toransom.

The Bank of England has recently confirmed the process.Banks have preferential terms of trade – they are allowed to

create the credit they lend out at interest, and the cost of“manufacture” is nil; i.e., unlike farmers and anyone else, there are noinput costs. Their profits have less to do with good managementpractices and more to do with control.

The difference is that farmers actually need to grow 100 tonnes in orderto sell 100 tonnes – and the input costs are great - one of the greatestbeing INTEREST charged by banks! Banks can create $100,000, or $1min credit, which is not tangible, loan it to farmers who “deposit” it, sayinto another bank on the exchange of contract for the purchase of land.Banks then charge interest, and in a drought, demand it back when it’simpossible to pay.

The farm is sold – the farmer loses everything he’s workedfor, including his “equity”, because the “value” of the landhas likely dropped. The banks want their equity, which isALWAYS recovered, even if the debt is worth more than the

land value at the time of sale. (This is because it cost the bank nothingto create the loan, and they have already received interest, which is farin excess of their “cost” to create.)

The banks collect from the sale thus creating a new “deposit”, ready toleverage another 10-100 times to loan out again. The banks get thefarm for nothing, for it cost nought to create the credit which theyloaned.

Nations allow banks to do this, and the global greed caused the GFCfallout. Australian Banks are private institutions and holdfarms, businesses and families to ransom for the mighty dollar.They enjoy preferential terms of trade and are far lessefficient than those businesses to which they lend.

There is no true competition between banks in Australia, and thecost to move between banks means that it is not really a

proposition for SME debt levels. The big banksand big supermarkets have similar

The Bankof Englandjust cameclean .....

Banks havepreferentialterms oftrade .....

This is thecrux ofmanyproblems,& needsaddressingurgently

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monopolies, and both groups hold Agriculture to ransom in their own ways.

The Bank of England has just come clean:

reported in the Guardian1 18/3/14:

·

In the Bank of England’s article it clearly enunciated that lending created deposits: “…. Broad money is madeup of bank deposits — which are essentially IOUs from commercial banks to households and companies —and currency — mostly IOUs from the central bank. …….

¹ David Graeber, The Guardian 18/3/14 www.theguardian.com² The Bank of England – Quarterly Bulletin 2014 Q1: “Money Creation in the Modern Economy”, by

Michael McLeay, Amar Radia and Ryland Thomas of the Bank’s Monetary Analysis Directorate

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Competitiveness

Basically, this issue is dealt with throughout - unless the very basic, underlying issues are seriously considered andacted upon, Agriculture will never be able to be competitive. Australia needs to look at what the free tradeagreements have done to its’ economy, and take action to rectify this; then we need to look at our banking system,and make it our servant, rather than our Master.

See

Regional Communities

The question outlined in the Issues Paper1

is TOTALLYUPSIDE DOWN!

Generally speaking, Rural and regional townsare there of agriculture; the towns owe their existence to Agriculture!

Why do we always ignore the vital question of is actually producing REAL productivity-generating income??!!!

In fact, most of the future job growth is in (ranked) :1. Health care and social assistance2. Education and Training, and3. Public Administration and Safety

None of these industries actually produce food or fibre, or indeed anything tangible that“builds” the economy. In our current system, they all require someone to be

1 Agricultural Competitiveness Issues Paper - Box 2, point 5 (p6)

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paying tax (which assumes they’re making money) in order to pay for theseservices.

Interestingly, in NSW, Agriculture’s contribution to the State outranks everything else by about 400%.

The following two graphs show that Agriculture was the largest employer in 2006, but by 2008, that employmenthad halved, dropping agriculture to the 4th largest employer, yet, as shown by the second graph, its contribution tothe State (2006) is on average,

(Source: RDA – RiverinaProfile; Sub-Source: ABSLabour Force Australia –

Employed Persons byRegion, Sex, MajorOccupation Group)

(Source: RDA – Riverina Profile; Sub-Source: 2006ABS Census [EGW =Electricity, Gas, Water &Waster Services])

Well drawn-out by these illustrations is the fact that Agriculture is actually producing something which undergirds theeconomy yet (leaving out which is a conglomeration), next is

all services which don’tgenerate anything tangible in themselves, but exist to service the population involved with,

and/or directly or indirectly, servicing Agriculture. All come in before

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, which are true flow-on industries.

Consequently, we need to look at the and understandthat unless we look at radically changing the economic compass, it is impossible to enhance Agriculture’scontribution to regional communities - or vice-versa. We need people who understand Agriculture’s role tolook at these issues - not ask questions which are upside down, and expecting to change the outcome bydoing/addressing something other than monetary or economic policies that truly develop competitiveness anda long-term future.

Competitiveness of inputs

Unless Agricultural industries are healthy and seen to have a future, this is not going to happen. Farmerswith a huge debt load can’t see a way for their upcoming generation to survive, and while there aremany jobs in “Agriculture” at present, they are the “flow-on” jobs - those which depend on a successfulagricultural sector in order to exist.

Again, the are:

● the way the banking system is allowed to run the economy

● the world trade arrangements

● calculating the true Agricultural exports as a % of GDP - (probably 22%1)

These are dealt with in the section .

1 Customs House Agreement, 9/5/2000.

HealthyAgriculture

= Equals =

HealthyFuture

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Dealing with theElephants in the Room

By far, the biggest is the question of financing our Nation’s economic activities and socialprograms (pensions, hospitals, disability, defence etc). Interestingly, the Bank of England1 has just released a paperreported on in the UK2, giving an up to date version of the old, but current process, albeit embellished with newer,greedier instruments of leverage. It is knowledge generally available, and many Australians have writtenauthoritative and well-researched books on the subject. The importance of dealing with the issue of finance, ie,do we continue to allow banks to “issue” the credit the nation runs on, as opposed to issuing it as a nation

is crucial to this issue, and underscores all other issues. Do wecontinue to give banks, which are , the right to charge interest on something that costs themnothing, and take the hard-earned equity of those who have actually been producing something tangible?We need a radical rethink when it comes to financing the nation.

Rural and Regional Australia are once more being battered, not just bydrought, but by Government and Bank policies. Nothing has changedmuch in the last 30-40 years, but when a drought or flood, coupledwith bureaucratic decisions, bank interest and tax policy impacts onregional communities, they are gutted.

hard-earned equity is lost; banks foreclose; families are

decimated, invariably broken, and often left to cope with the suicide ofa loved one; rural businesses collapse in the wake of the primaryfactors; people move from regional Australia; schools lose teachers,and several years later, the flow-on, by now attributed to theprimary cause, sees the cities affected.

Other nations value their farmers, and the economic flow-on benefitscreated from primary production.

because to date, there has been nothing much to suggest that either theLiberal/National or Labor governments value their contribution.

We need to take stock of the effects of being locked into the global system where the banking system is so aligned,or locked into the world economic order where rationalisation of our farmers, SME’s and industries favour theglobal monopolistic trading conglomerates who could buy and sell Australia in an instant.

1 The Bank of England – Quarterly Bulletin 2014 Q1: “Money Creation in the Modern Economy”, by Michael McLeay, Amar Radia andRyland Thomas of the Bank’s Monetary Analysis Directorate

2 David Graeber, The Guardian 18/3/14 www.theguardian.com

OtherNations

value theirfarmers

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Since adopting the Lima Declaration and Plan of Action on IndustrialDevelopment and Co-operation (Lima Declaration, 1975)1, and manysubsequent trade agreements, Australia, although only about 1% of worldtrade, has adopted the pious position of leading the world into trade“reform”. This has, in reality, only seen Australia’s industries “restructured”,at the expense of lost jobs, innovation, industry and expertise acrossAustralia’s primary and manufacturing industries.

We should not forget that even as far back as the Lima Declaration, which set theparameters, Australia in effect agreed to establishing this , oras it was put then,

. A plethora of UN and regional instruments (eg GATT,UNCTAD, UNIDO) has locked us into global rationalism, umpired by the WTO,ruling as ultimate arbiter. Our right as a supposedly sovereign nation to saywhether, for example, produce exposed to a disease we don’t want in Australia,can come in, is usurped. We say ; WTO say . We capitulate under WTOrules. Our sovereignty has been over-ridden because we are party to a web ofinternational instruments!!

in late January this year, in his keynote speech at thein Davos, Switzerland called for

. This will be at our further expense, since the die wascast in Lima with:

▪ “...special attention should be given to the least developed countries, whichshould enjoy a from the developed countries in theform of technical and financial resources from the developed countries as wellas capital goods, to enable the least developed countries ….. to develop theirindustrialisation” 3

▪

▪▪▪ of

, and

▪

1 The Lima Declaration was adopted in 1975 by the Second General Conference of the United Nations IndustrialDevelopment Organisation - UNIDO - of which Australia is a member.

2 Article 43 Article 35

Governmentpolicies aredestroying

farmers andregional

communitieswho derive

their incomefrom rural

and relatedsupport

industries

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We have been completely compliant, and have “led” the world in search of a “level playing field” that never existed,save for levelling our own industries, because after all, as 1% of world trade, we can’t seriously believe our influenceextends that far in international circles! First world countries value their own people more, and understand thatcertain industries are crucial to their national economy, and won’t comply. One may very well ask,

Despite this, Australian farmers and small business - the Small to Medium Enterprises (SMEs) have become lean andmean, if they still exist. They are forced into the either they pay tax they can’t afford, or borrowmore credit they can’t afford in order to upgrade and claim a tax deduction rather than pay tax, which is dead money.Either way, it’s , but they are caught in this deadly cycle. It is also very costly to comply with red tapeand tax laws.

The importance of dealing with the issue of finance, ie, do we continue to allow banks to “issue” the credit the nationruns on, is crucial to this issue, and underscores all other issues. Any old Cocky will tell you that if you get the baseof a haystack correct, then the top will not fall over. We need a radical rethink when it comes to financing the nation- it will make all the difference to the outcomes, and will allow not just farmers, but all Australian enterprise tostrengthen and flourish.

1. We throw a lot of money into Mental Health and yet do notaddress many of the basic problems. Farmers have a high suiciderate, furthermore, many deaths may not be attributable tosuicide, but are reported as accidents. Business people andhome owners who have lost equity and/or jobs have suicided orbeen highly stressed due to their financial dilemma. Childrenworry about their parents and their situation. It can’t really behidden. This is how our country treats its good citizens.

2. We considered it good to support the car industry - becausethere would have been massive fall-out in terms of jobs and

SME failure with supporting industries; yet we donot support SPC Ardmona in

Many policiesare bi-polar

in nature, anddevastatePEOPLE

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Shepparton. It is a matter of governmental policy (eg Lima, GATT,and now the upcoming and dangerous TPP - Trans Pacific Partnership)that has set the parameters enabling Governments to be held toransom by multi-national corporations. However in this instance,many more farmers will go to the wall; businesses depending on thespending patterns of those farmers will be bankrupted or left withnext to nothing, and people employed at SPC will lose their jobs, andmaybe their homes - all because we are bloody-minded aboutfollowing “free trade” principals, and rationalising industry. At thesame time as trees are being pulled, funding has been recently givento upgrade irrigation structures in the region, if I am not mistaken.Bi-polar?

3. At the time of the wool collapse, Australian processing plants closing,and millions of sheep being shot, I seem to recall that Germanmultinational BMK was given a grant of millions of dollars to set up awool processing plant. Bi-polar?

In 1991, we gave Russia credit lines at very low interest rates that ourproducers couldn’t possibly compete with. If we had set up value-adding wool processing plants here, we would have overcome manyof our labour problems …..

However, our bi-polar free-trade policy preferredto build processing plants in Russia and Chinaso they could process wool from Argentina that Australian growershad promoted through the IWS at the time.

5. Coca-Cola and Red Bull are terribly unhealthy products not vital toman’s needs, yet made glamorous by clever marketing. How muchmore clever would it have been to build up and market wool insteadof gutting the industry in one foul bi-polar sweep? is a wonderfulnatural product that the world can use gainfully in ways not eventhought of yet. But, we allowed the industry to be decimated,transferred our technology, and deployed it to places like China. Finereward for an industry when the country had “lived off the sheep’sback”, and still had a substantial flock, which was bloodily decimated.

and which took many,many years to recover from - although many never did.

6. when wool crashed, like farmers all over Australia. Imagine the thingswe could have done with wool if we’d set our minds to it! We could keep Aussies in jobs with it, and clothethem too. School uniforms, summer and winter, could be made from cool and warm wool. Work clotheswould be tough and resilient, would breathe, and keep wearers warm or cool. High fashion woolens wouldflow and float in the most unimaginable way, sparkling and uncrushable, providing a warm cocoon in winter’sbluest hour, or cool comfort on the hottest of dry Australian days ….. The exciting, cut-above-the-restbred-to-be-the-best, humble, wonderful WOOL. All that was

Instead, we shot sheep; yet gave $millions in overseas aid when we could have paid our farmersfor the sheep, our transport industry to take them to abattoirs, the abattoirs to kill and processors to can themeat, for despots to sideline for arms. We needed a

then, ; and we need politicians who are visionary enough to thinkabout DEVELOPING Australia, as opposed to pulling it down, as our bi-polar policies have ensured.

We imported orange juice, pork, rice, sugar, bananas, pineapples, fish, clothing etc and cruelled thoseindustries one way or another; many moved offshore to survive, and now we import just about anything

We insureeverythingthat moves,

but we

don’tinsure our

nation’sviability

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one can think of.

8. We have red tape imposed upon us, and must everything that moves - and for any likely risk - inorder to access finance etc., and yet, .

9. Why then,don’t we our ownindustries, instead of throwing them to the global free-trade wolves - which are usuallymulti-national conglomerates who gain control of our industries.

10. In the name of we had the Murray DarlingBasin Authority (MDBA) impose the Murray Darling BasinPlan (MDBP) upon us. Again, this refers to many

, and some not even thought of yet, which willimpact us appallingly in the future. It was set in motion by aLiberal/National Government and horrifically carried throughby a Labor Government. In the name of WATER REFORM,

- NOT just farmers in their farms, buttownspeople, in their homes and businesses. People have leftregional towns in search of work, unable to sell their homes;schools have lost students, businesses have closed, and thebanks have cleaned up. Some families have lost more thantheir assets - they’ve lost family members to suicide. Total,bloody-minded, bi-polar economic rationalism in the name offree trade.

Consequently, the way has been paved formultinational buyers to control our most vitalresource,

11. Despite the MDBA continually telling people in the MDB thatthey had “consulted”, it was quite evident by the huge ralliesand representations, that people didn’t feel very consulted.They failed to speak to people who understood the waterissues, and had lived with it all their lives. They ran roughshodover the PEOPLE, because for some reason, it seemed they had to dance to another agenda - and dance theydid!

12. This is a classic example of a government imposing legislation by deception, and this didn’t escape the�eminent Professor Briscoe who wasinvited by the MDBA to submit a paper. I believe the MDBA was fishing for compliments from a highlyqualified and respected hydro-engineer, as it were, but hiscommentary was stunning:

Anyone whobelieves in

InsuranceBelieves in

Protection

TheWater

Act of 2007was founded

on a POLITICALDECEPTION

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13. Note that with all his experience, and that we now would not be -

14. Many because ofthe UNCERTAINTY created by the MDBA’s actions. Banks would nolonger support them because land wasn’t able to be sold, and valueswere uncertain. Businesses which depended on these people fortrade were squeezed, and many closed, or put people off. This isgovernment policy gone mad, but which affects ordinary, hardworking people, YET the BLAME isn’t taken by government, orfactored into any of the reasons why regional Australia should be giventhe opportunity to RECONSTRUCT by the establishment of an

and lookat some of the causing the nation’sinability to be competitive with the rest of the world.

15. Having barely escaped Archer Daniels Midland’s (ADM) grain take-over, it appears that the FIRB has approved the purchase of EmeraldAgribusiness Group/Emerald Grain to Sumitomo Corp. ……….

- meaning the purchase price is below that which FIRB needapprove - a ridiculously high threshold of $248m. A sale madebecause apparently it

There is nothought of protecting our future food security in this madness - thelatest in a long line of sell-outs to international concerns or sovereigncountries, that will not hesitate to export whole crops “back home” at the expense of feeding Australiashould the necessary conditions arise.

16. Australian meat processors will never be able to compete with the biggest processor in Australia, Brazilianfamily company JB Swift (JBS), because it is not financed by any Australian bank, but by it’s home country’sBrazilian Development Bank.

When there are earthquakes, floods, Tsunami’s and natural disasters around theworld, the very next day our Government announces immediate and considerable help. When we havedroughts, we leave our farmers parched and dehydrated on the cracked ground, drying out with as muchhope and assistance as their dying stock. Bi-polar? I think so.

18. Depending on who calculates it, it costs Australia between$180,000 to $550,000 to process our “boatpeople”. each (2001-2007). Wehave many pensioners and returned servicemen who have puttheir lives on the line for our country living below the poverty line,and in need of medical attention or equipment, yet unable to get itbecause of the cost. Once again, bi-polar policy fails our ownpeople.

19. Farmers and small business who are actually EARNING somethingtangible for the country are denigrated, and whipped with soul-

destroying anti-farmer sentiment, when in many ways, theyare actually subsidising the rest of Australia. Even

though they are making losses, they are

No blame is takenby Government for

bad policies, orfactored into any of

the reasonsRegional Australia

should be

and

ADrought

is aTSUNAMI

18

still producing (often for less than the cost of productionThey are price-takers, at the mercy of

multinational price-setting mechanisms, and a floating $AUD. They are still payinginterest and earning export dollars, and still supporting their local communities. The “loss”is borne by the farmer in increased debt and/or lessened equity in their farms, because we don’t seefit to insure against this by having policies in place to deal with the fall-out of government decisions.Ill-conceived or not, often decisions made to prop something else up, or manipulate the $AUD, have aneffect on other areas which are never compensated for such effect.

20. An example is the Australia Institute’s report (14/11/2012) asserting the mining boom had been poorlymanaged and cost the rural sector “a staggering $43.5 billion”1 in export income losses. This was due tothe mining boom pushing the $AUD up. Again, see in this document.

It’s the Family Farmers andBusinesses who are footing this bill, through increased spending, increased debt, and a drought to boot!

Once again, the bi-polarity of policy and bureaucracy is blinding. Ourunwillingness to “insure” against this is ridiculous, since we insure for everything else.

21.22. Interest is a huge “input” for farmers, but any manufacturing industry can purchase inputs at a “wholesale”

rate. Farmers used to have a wholesale rate of interest pre-deregulation, but since, farm rates have beendouble that of housing (often more). The NFF (and State farm organisations) contributed to this madness,claiming farmers didn’t need any special terms, disregarding seasonal vagaries, and deserving of the

label as they collected their massive “fighting fund”, and put a banker in charge of it, whilstthey rationalised their “30% must go” and “no gain without pain” mantras.

23. As previously alluded, this Taskforce could, and should, investigate the true value of exports. It isimportant to predicate policy on actual figures, not figures which can be worked out to fit. We need tocorrectly identify whether our farm-gate exports are 25%, 60% or closer to 80% of our Agriculturalproduction, and this process needs to be TRANSPARENT.

Australia boils its producers and SMEs up in the hot-pot of economic rationalism

and gobbles up the hope, innovation, energy and capital of its people in a murky

bubble of interest, tax and debt. Throughout all this, we have been urged to

become the I haven’t quite decided what’s clever about

cannibalism yet, but I do know that the labyrinth of international agreements

needed to be more understood by the average Australian many years ago, for we

are well and truly entwined in it now, and one or more of them permeates nearly

everything we do.

Author Matt Grudnoff, Australia Institute - see report atwww.queenslandcountrylife.com.au/news/agriculture/agribusiness/general-

news/mining-boom-busts-ag-income/2634400.aspx

What sort of common-sense is itfor a Nation to allow theMining Industry to cost

Agriculture $43b?

I haven’t quitedecided what’sCLEVER about

Cannibalism yet

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There is a good argument for some protection for our industries, just as we our

property and vehicles. We are around 1% of the world system, barely enough to be of

major influence. Yet, we have a floating $AUD, and it has a split personality:

8 On the one hand, farmers, producers and exporters are using it as a

8 Traders, on the other hand, are using the

There is barely a relationship, and this polarised $AUD means that a tonne of wheat is in effect, a tonne one day, and

half a tonne the next.

The is in direct competition with the .

This to my mind, is and a very sound argument for setting our exchange rate so that

it’s not at the mercy of global traders - but working hard for our Nation and it’s people. It undergirds all other policy

decisions.

= ???

The

is indirect competition

with the

20

Government policy and legislation allow banks favourable trading termswhereby they make multi-million dollar annual profits out of ordinaryAustralians commercial operations, but banks are

atthe expense of the health of our economy.

The funds that would be required to establish and run aor the (current inquiry)

are a drop in the ocean compared to that which isunconscionably transferred to banks by way of interest, fees, and chargesattributed to “global pressures”.

It is known that banks are allowed by legislation to lend out credit whichthey don’t have, but which they can by way of

debited to a borrower. (See Australian Bankers comments confirming this

on the next page.) as it’s become an “art”for banks to lend to each other, lend overseas, lend to governments

and generally become embroiled in servicing debt that theyhave created in order to reel in more interest, foreclose on morebusinesses (which perpetuates their lending cycle), and generally live off thehard work of people with the ingenuity and drive to establish or expandbusinesses. The banks no longer provide a service to the community -

The fact banks are able to do this should be explained in simple terms: eg,banks can take a $100 deposit, and lend out $1,000, $10,000 or muchmore; whereas farmers who grow 100 tonnes of wheat, can only sell 100tonnes. Thinking about t in this manner illustrates theinefficiencies of banks compared to efficient farmers and small business people.

Put in such simple terms, it does explain the massive profits made by banks. Of course, banksand economists go to great lengths to cloud the whole process with smoke and

Banks are

PrivateInstitutions

given

benevolent

21

mirrors, and it’s been complicated with a range of financial instruments;but the fact remains that Australia, when operating under the original“Commonwealth Bank”, funded much infrastructure, WWI, and the economy,without borrowing or the imposition of massive interest. It was done for theof the Australian people, and our economy benefited greatly.

Aside from the previously referenced Bank of England’s paper, there have been many other comments, both inAustralia, and internationally, confirming the way credit is issued and controlled by PRIVATE INSTITUTIONS. I includetwo Australian quotes, and two historical quotes, which could easily be read to understand that the aims of so manyyears ago, have been achieved by private bankers. Particularly in light of the Global Financial Crisis (GFC), where manyof the larger banks have been “swallowed up” by larger banks, there is a pattern of more and more concentration ofbanking at a “global” level.

Capital must protect itself in every possible way, both by combinationand legislation. Debts must be collected, mortgages foreclosed asrapidly as possible.When, through process of law the common people lose their homes,they will become more docile and more easily governed through thestrong arm of government applied by a central power of wealth underleading financiers.These truths are well known among our principal men who are nowengaged in forming an imperialism to govern the world.By dividing the voter through the political party system we can get themto expend their energies in fighting for questions of no importance.It is thus by discrete action we can secure for ourselves thatwhich has been so well planned and so successfullyaccomplished.

Reprinted in the Idaho Leader, 26/8/1924, and read into Hansard twice - by JohnEvans MP (1926), and MD Cowan MP in the Session of 1930-1931).

The American Bankers Assnconfidential circular – 1891.

We authorise our loan agents in the western States to loan ourfunds on real estate, to fall due on September 1st 1894, andat no time thereafter.On September 1st 1894 we will demand our money - we willforeclose and become mortgagees in possession.We can take two-thirds of the farms west of the Mississippi andthousands of them east of the great Mississippi as well, at ourown price.We may as well own three-fourths of the farms of the west andthe money of the country. Then the farmers will becometenants, as in England.After September 1st, the interest we receive on coupons willbe accumulated - we will not lend any of our funds after thatdate, as we can make more money by withholding our

interest income.

“In various writings we have also suggestedthat a distinction has to be made betweencredit which is fully backed by savings, andcredit originating out of thin air, i.e. throughthe bank’s credit multiplier.

While credit fully backed by savingscontributes to the expansion of wealth, creditthrough the credit multiplier leads to thedilution of savings and living standards. Webelieve that it is highly unlikely that banks willquickly revert to the past practices of recklessexpansion of credit out of thin air.”

Dr Frank Shostak in the Westpac Bank’s Monthly Market Focus,April 1992.

“…Whilecurrency is still themost visible form of money,it represents only a fraction of thepurchasing power available within the economy.

This is shock number two: most of what weunderstand by “money” does not exist in any formother than as entries on bank statements or figuresin computer printouts. More than 90 percent ofwhat we know as money is

….

The monetary and financial system survivesbecause of the intangible factor of .Financial institutions are able to conduct theirmoney creating activities simply becausedepositors are confident they can recover theirfunds at any time, as with all personal and businessrelationships based on trust.

Published in an information paper prepared bythe Australian Bankers Assn., Melbourne. Information paper No 1titled produced for theAust Bankers Assn by Garry Bell, Institute of Education, Universityof Melbourne.

22

So, the Australian Bankers Assn notes that the system relies onCONFIDENCE to work, saying

in the GFC, which was created by banks greedy, creative, and extravagantlending practices in the first place. When banks look like becoming insolvent, we bail themout. That is, Government underwrote their “deposits” ……… but banksunderwrote nothing in return. Instead, they withdrewcredit from small business, squeezing many out and takingcontrol of their assets to sell, which perpetuated theirlending extravaganza, and increased profits.

This is because the bank only lent them“credit”, which was raised by way of a computer entry, andbrought into existence as a “loan” - all sanctioned bylegislation, and “hidden” behind a plethora of creativebanking instruments which has created untold confusion inthe USA as to who holds mortgages etc. European and USbanks have been massively fined, but still, the

of the world lost heavily to the global banksters’ GFC.

Government policies allow favourable terms to banks, which are, after all, It is actuallyunconscionable, an illegitimate transfer of equity, legalised theft, and very often leads to suicides and the ruinationof families and promising entrepreneurial activities. Yet, it is always blamed on outside forces and economistsrationalise and argue, but the fact banks have such favourable terms of trade is never taken into consideration.

(credit). It can create the required credit itself, and has done so in the past. The wholeworld is into now - but the QE is in control of private bankinginstitutions, as opposed to Sovereign nations issuing. The Commonwealthonce had no power to create the Nation’s credit. Stateshad it all, and every State had a State Bank, but eachgradually ceded that power to the Federal government -lobbied for heavily by banks, as it suited them very well.

Since banks acquired insurance companies, smallcommunities have had to do away with holding many eventsthat had traditionally been held, because the cost of therequired premiums was far too expensive. This is oftenoverlooked in any reckoning of banking influence - and justanother thing where blame can be attributed at arms length.A bi-polar failure of policy, nevertheless.

I was very close to all these issues as CEO of the Union ofFarmers in the 1990’s and early 2000’s. There was a lot ofbank fraud and questionable conduct against bank clients atthe time, coupled with bad government and bank policies.Deregulation took it’s toll on regional Australia, farmers andindustries were in the

and deployed offshore. The averageage of farmers increased due to the next generation having to leave to make a living. We had a recession

we had to have. We had a banking inquiry, where fraudulent banking practices were aired. - it was all put down to

23

That was no solace to those who had lost farms, businesses, and investment properties.There was no recompense to those who had lost farms, businesses and investment properties.

We have recently had the debacle, which proves banks are still trying to get away with fraudulentand greedy practices, and are not deserving of the favourable terms of trade they are given. It’s still the same tune,just a new generation or target group. We need to be mindful of these things, if we are serious and look toreconstruct, so that greed doesn’t feed a new ARDB. There needs to be true reconstruction, with bi-partisansupport.

There must be a reckoning. The Commonwealth needs to resume power of issue, (ie credit issue) although thatwould be fought tooth and nail by those at the top of the banking fraternity.

Australia needs, and deserves to be reconstructedvia an “Australian” bank which is purposed forgrowth, reconstruction, food and national security,and to BENEFIT Australians. Perhaps it will be the

It’s not anew idea. It’s been done before. I believe it needsto go further than that currently being looked at,because a bank of this nature could keep the greedof others in line, as the Commonwealth Bank usedto do when properly employed.

The credit needs to be made available for the,

NOT to benefit the PRIVATE BANKINGinstitutions. This would be a problem if say theARDB was set up under the Reserve Bank. Wewould haveonce more, so it is imperative that people who havethe national interest at heart, and understandAgriculture, are given responsibility forrestructuring.

Does a Coalition Government have the gumption, or political will, to do this, or do the bankers have something oneveryone in parliament? Let’s not forget Sen. Paul McLean who was bashed and left for dead after making a bignoise about banking corruption in Australia. He had to go and live with bikies for protection until the dust settled.

The pinnacle of corruption at the Commonwealth bank was the then Treasurer’s “deal” which gave he and hismates, or business partners, a preferential deal that millions of farmers and small business operators would haveloved then. From memory, it was executed under a law which allowed banks to “write off” a portion of a business’debt in order to assist it to remain profitable and grow after an event which was out of their control.

At the time the piggery group got their snouts into the trough, the banks continually said publicly that they “don’twrite off debt”. But, they did, however it appears that you needed to be very well connected in order to benefitfrom that legislation; or be the bank forcing someone out of the business/farm they’d worked hard at for many years.It cost the banks nothing, because the credit cost nothing, or very little in the first place, and they got their taxwrite-offs - so they scored a double-whammy! It’s better than winning Lotto, and banks get to do it daily.

Conversely, no farmer or small business could borrow nearly 20 times the value of the “asset” tendered assecurity, which was the piggery group’s case!!

There must be areckoning. TheCommonwealthneeds to resume

power of issue

24

History:

Paul Keating’s piggery group borrowed in excess of $17m from the Commonwealth Bank against anequity of only $860,000.1 In 1992, the Commonwealth Bank gave it a $4.5m debt write-off, with provisionfor a further $5m write-off. It was alleged in Hansard2 that the piggery group owed $4.5m to Mr John Brown “who is,among other things, a lobbyist seeking benefits from the government on behalf of various interest groups, particularlytourism”, which would appear to indicate a conflict of interest. Not only this, the group filed late and FALSE returns tothe Aust Securities Commission – the falsity being that Keating, by this time the Prime Minister, understated hisinvestment of $430,000 in the piggery at just $43,000. It was further alleged that “

After the $4.5m write-off,it was reported that the piggery had lodged plans for an extensive revamp, including a hi-tech pork processing plantcosting just $44 million. (Refs 1 and 2 are from Hansard of the day.)

The writer of this submission wrote a poem at the time of it being revealed in Parliament :

Paul Keating, P.M.Well, Easter is here and the pigs are getting fat,The PM’s sold his share, and says that’s that!Swill he make a profit? Did he pay the bank?A further write-off maybe? Or did he draw a blank?

He says he’s sold his share ….. What, just one?Or has a major company shuffle just begun?Is this just a clever play on words – a managed manoeuvre?Was it sold, swapped, or “swilled”, or vacuumed up the Hoover?

The PM’s very friendly Commonwealth financierLent him $17m – a generous amount, we hear,And less than $1m security …. Rates a far cryFrom interest for the rest of us which blew

What new adventure will the PM take on now?Will he keep it quiet, or will he show us how?If a business is insolvent, how one sell a share?The share would have no value – is this transaction rare?

Or is it something specialised, that just a PM can do?Is it specially arranged, so any critics can be sued?Will the bank write off a great big sliceTo keep our PM solvent? Wouldn’t that be nice?

Does his company show a profit or a loss?With a massive capital injection, it’s sure to be a toss!Just who will benefit from the expansion proposed?The recipient of a worthless share? Who knows?

No wonder all the Cabinet, and Opposition tooAspire to be PM ……. Well, wouldn’t you?But if you knew that “P.M.” really stood for ……

would you be so sure??

30/3/94

25

It follows that Not the sort of“clever” we’ve been in the immediate past, because we certainly can’t lay claim tobeing the “clever country” for at least the last 30 years ……..

We need to support our own industries, strengthen and encourage

them. Australian farmers are world-renown as being the most efficient

farmers. They have to be. All protection has been taken from them

as our leaders determinedly show the world how to be

.

We must develop policies that support our industries, and don’t leave

them trying to compete with third world countries, who pay third

world wages. We must decide, as a nation, whether we want the

standard of living we are used to, or whether we want to be forced to

drop our wages/returns and living standards, and become another

third world country.

Why are we expected to “compete” and yet still maintain our standard

of living? It is NOT logical, and we have been pulled down trying.

Australians are innovative and efficient - but you simply can’t pay good

wages and compete with wages the equivalent of $2/day.

We need to PROTECT, or INSURE our way of life, if we decide, as a

nation, we don’t want to become a third-world country as well. We

are fast heading there, but we don’t need to. We already have many

homeless and dispossessed people, and we ought to be thankful that

.

We are better to reconstruct and develop a strong, economically viable nation, able to give help to third

world countries because we ARE strong - not allow ourselves to be reduced to the lowest common

Why are weexpected to“compete”and yet still

maintain ourstandard of

living?

It is

NOT

logical

26

denominator, as the WTO would have in accordance with the

plethora of international trade agreements we are entwined in.

We simply can’t be competitive under these platforms.

We desperately need to re-think this.

We need to ensure our future food security, because we’ve already given

a whole lot away. Sovereign Nations who take food security seriously

have purchased our good productive land, cropping, livestock, grain and

dairy enterprises, and continue to do so. We need to ensure Australians

have food to eat, and that it doesn’t get exported when we need it most.

We should be thinking of food as part of our The

amount we are spending on aircraft could be applied to reconstructing

Agriculture, which would have the added benefit of actually returning

something to the nation.

We need to reverse our bi-polarity on these issues.

We can choose tolead the world in

&

OR

we can choose to leadthe world down the

27

We aren’t big enough, and while our politicians are

tripping the light fantastic on the stages of the world, selling

free trade, our people back here in Australia are being

rationalised and restructured in order to conform to our free

trade masters who, after all, only want global monopolies - or

should I say, . Too many of our industries have

already been gobbled up by gobbleopolies, and then we pay

through the nose, because they love to monopolise!

We can CHOOSE to lead the world in RECONSTRUCTION and

DEVELOPMENT; or we can choose to down

the

Are we afraid to put policy to work for our people?

Are we afraid to resume some of the powers of issue from the banking system?

Are we afraid of having a stable economy, the envy of the rest of the world

Are we afraid of keeping our skills and knowledge to pass down to future generations?

Are we afraid to build more dams? To save water in times of plenty for the drought years?

We need toReconstruct

&Develop

We need theskills,

knowledge,innovation andrisk-takers to

propelAustralia into

the future

28

Are we afraid to produce good, clean food for our people to eat, and beproud of it?

Are we afraid of true food security for our nation, and having a truly strong economy?

Why don’t we know whether we export or consume most of our Agricultural production?

Are we afraid to allow communities some social stability?

1. Creation of Money Bank of England The Guardian 1803142. Money Creation in the Modern Economy Bank of England 210214

We don’t need tobe first down the

in this, the