Mr BLACK (Murray-Darling) [4.07 p.m.]: Milk is important to everybody in the New South Wales community, indeed nationally. Milk subsidies have been with us for approximately 18 years. For all of that time the subsidy has gone towards the operation of trucks to deliver milk and groceries
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from Hay to Ivanhoe. The milk subsidy is applicable to a truck that operates between Nyngan and Bourke. On 11 June the operator of the truck between Nyngan and Bourke was bluntly informed that in two weeks time the subsidy would be withdrawn.

That truck is the only thing that the operator and his family owns and the consequence of withdrawing the subsidy to that operator will effectively make that truck redundant. I have no idea how the milk will be delivered from Nyngan to Bourke, suffice it to say that I anticipate an increase in costs by another method. The truck that delivers milk from Hay to Ivanhoe is operated by Mr Bill Baird, who has operated it for many years. Back in March Mr Baird was told that his truck, which supplies milk and fresh vegetables to the community of Ivanhoe, will no longer be subsidised. The truck is important to the community of Ivanhoe because it will be required to deliver milk and vegetables to the new low-security gaol to be built at Ivanhoe, as announced by the Government.

The competition policy that seems to dominate the thoughts of various parties has led to deregulation. There is one competition policy on one side of another Parliament and another competition policy on the other side of that Parliament. That has resulted in people telling farmers who have been in Wakool shire for five generations that they will receive 2¢ a litre less for their milk. Although we were told that consumers would benefit from deregulation of the industry, when we shop at Woolworths we find that there is no benefit at all. Woolworths simply gets a bigger profit and dairy farmers, who are already struggling, lose more.

In relation to the National Competition Council, the retail price of a carton of milk has increased by 5¢ a litre. The net result is that farm gate returns have fallen by 3¢ a litre and processor and retail profits have increased by at least $60 million a year. Processors and the large supermarkets have been the clear winners from deregulation; farmers and consumers have been the losers. Now some remote towns will have no fresh milk at all. The proposition that there will be no fresh milk in communities such as Bourke and Ivanhoe flies directly in the face of the principles of equity of essential services, which we all should support. Surely the supply of fresh milk is an essential service.

In the regulated market the Dairy Corporation was able to fund a special allowance for milk vendors and others who were responsible for transporting milk to remote areas. This enabled consumers in these areas to have fresh milk supplies at city prices. That is right, and it is how it should be. Young mothers of Bourke, Ivanhoe and other remote areas of New South Wales are entitled to a supply of fresh milk at a reasonable price, irrespective of where they live. They should not have to pay more for their milk. As a result of deregulation the fund used to pay these allowances will be exhausted in July this year.

This morning I learnt that those who supply fresh milk on the Cobar run have not yet been told about deregulation. I am informed that the contract for Cobar has only recently been renewed. We can talk about other communities as well. I shall put matters in a larger context. At the end of the day competition policy has meant that the big get bigger and the small get smaller, if not extinct. The dairy farmers of the Wakool shire are very efficient. Indeed, they claim - and I have no reason to doubt their claim - that during the winter they can supply milk to Victoria at cheaper prices.

The Kennett Government has taken absolutely no notice of the dairy industry organisations in Victoria. It has listened to the big end of Collins Street and determined to completely deregulate the industry. It is not simply a question of the survival of dairy farms. If dairy farmers do not survive we will have a problem with the Dairy Corporation. We must ensure that milk continues to be delivered in the bush at an affordable price, and I seek the support of honourable members on both sides of the House for that.

Mr SLACK-SMITH (Barwon) [4.15 p.m.]: The Opposition supports this matter of public importance. The New South Wales dairy industry is the fifth largest rural industry. It generates $450 million per year at the farm gate. More than 1,800 dairy farmers throughout New South Wales produce 1,245 million litres of milk annually; average production per farm is 700,000 litres. The Victorian Government has decided to deregulate its dairy industry from July next year. That means that Victoria will lose approximately 25 per cent of its farmers through deregulation, and New South Wales will lose approximately 23 per cent. The Victorian Government is totally misguided if it thinks that it will be able to undertake border raids of New South Wales farms and markets, drive our prices down and gain a larger market share.

Victoria is in for a big shock. The Victorians have not thought deregulation through, because New South Wales has a very efficient dairy industry. Indeed, it is one of the most efficient industries in Australia, and is doing very well. The New South
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Wales dairy industry leads the world in terms of technology, quality of product and food safety. Deregulation will result in more problems than people expect. The people of Sydney have come to expect basic rights which I believe many people in western New South Wales do not have. People in Sydney expect cheaper electricity. The people of western New South Wales do not have that; their electricity is expensive. People in Sydney expect cheap public transport; we do not have any public transport. People in Sydney expect all their roads to be in an ideal condition; we do not have decent roads at all.

People in Sydney expect a decent health service; we do not have that either. If the people of Sydney do not receive fresh fruit and vegetables at a reasonable price they get upset. We consider fresh fruit and vegetables a luxury. In 1994 milk was introduced into schools in Newcastle and Wollongong. It is interesting that students in 87 per cent of New South Wales schools today are drinking milk. They drink milk that is promoted and subsidised by the dairy industry. The tremendous promotion campaign was subsidised not by the processors but by the farmers. Today school canteens are the third largest market for flavoured milk, averaging more than 600,000 cartons per day.

As the honourable member for Murray-Darling pointed out, three companies supply fresh milk to New South Wales. However, they have had their contracts cancelled simply because of a lack of money, due to the proposed deregulation, and lack of funding for promotion. Farmers have worked very hard for a long time to promote and subsidise the consumption of milk. An advertisement that sticks in my mind is the bachelor and spinster advertisement, and several dairy farmer advertisements have won world awards for the promotion of the generic industry.

However, processors are not interested in taking up the cudgel and promoting milk as milk but rather in promoting their brand products. Therefore, consumption will fall, demand will fall, incomes will fall and many dairy farmers will go broke. That is the thin edge of the wedge. Children in western New South Wales should have exactly the same rights to have affordable milk as children in Sydney. The Opposition supports this matter of public importance because it wants western New South Wales to have a fair go.

Mr W. D. SMITH (South Coast) [4.21 p.m.]: It is with great pleasure that I speak on this matter of public importance, which goes to the heart of living outside of the major population centres in New South Wales. At issue here is the sharing of basic rights. I would have thought it was beyond politics to ensure the delivery of fresh milk at the same price regardless of where one lives in New South Wales. Only two weeks ago I brought to the attention of this House moves by the Victorian co-operative dairy companies to undermine the New South Wales milk industry. Since then I have spoken to more local farmers in my electorate, who told me that deregulation could cost farmers between $50,000 and $70,000 a year. I am told that to compete they will have to increase the quantity of the milk they produce. That means more capital will be needed and large sums of money will have to be expended, involving more debt and more pressure, with no guarantee that the investment will benefit them.

Some farmers have told me that they may have to sell off parts of their farmland to make ends meet. Although Australia is a massive country, good farmland is certainly limited, definitely on the South Coast, and we cannot afford to let this happen. On the South Coast alone that has amounted to a virtual assault on about 30 dairy farms and will have a $5 million impact on our local economy. It gives me no joy to speak on the delayed impact of the 1992 regulation. It is unfortunate that in this case it has been the actions of the former Coalition Government. However, I remain committed to the dairy industry and will pursue in this House all matters that relate to its continued wellbeing. What was enacted in 1992 is now being felt and needs to be exposed. The seven-year time lapse does not lessen the blow for those who are affected.

It would seem that where the New South Wales milk industry is not under attack from cross-border raids, particularly from the south, former New South Wales Coalition governments fill the vacuum. Let us be very clear: The expiration of the Price Rationalisation Fund [PRF] at the end of this month will spell denial for many in remote areas - denial of the right to fresh milk at the same price as in the major centres. Close to 130 distribution points, whether vendors or retail outlets, will be affected by this change on 1 July. That will mean that in many areas consumers may well be restricted to suppliers of UHT, or long-life, milk, under the banner of competition policy.

Perhaps it would be palatable if it delivered something for the industry it is designed to make more competitive, let alone leave the consumer better off. In fact, the opposite has happened. Deregulation has delivered a $60 million windfall for processors and supermarkets. It has increased the price of milk at the retail level by 5 per cent and it
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has dropped farm gate margins. It must be pleasing some accountants somewhere because it is surely doing nothing for a vital industry - one that is crucial to my electorate. I urge the processors to reach agreement with the distribution outlets on arrangements to ensure the continued supply of fresh milk to all persons in New South Wales regardless of their location. It is essential to ensure the return of some commonsense to the mindless application of competition policy.

Mr BLACK (Murray-Darling) [4.25 p.m.], in reply: I welcome the support of the Opposition on this matter, which is of genuine concern not only to young mothers in western New South Wales but to the entire community. The matter should not be allowed to fester but should be resolved. Members of this House should unite to ensure that something is done to replace those lost subsidies. I reiterate that this matter clearly demonstrates the insanity of competition policy, what has gone wrong under competition policy, and the fact that it works against the best interests of many people who live in wonderful places throughout New South Wales. Whether people live in the bush or in Sydney, they should not have to suffer a lack of essential services. I thank the House for allowing me to raise this matter of public importance.

Discussion concluded.