APPENDIX NO. 1.

EXTRACT FROM STATEMENT BY MR, THOMSON.

PART 1.

Comparative Increase in Population and Production: The following table indicated the comparative growth of population, increase in land cropped, or prepared for cropping, and the increase in the wheat harvest during the last decade:—

YEAR - POPULATION - LAND FOR CROPING. - WHEAT YIELD.

                                                                                acres.                              bushels.

1921 335,715 - 7,583,000 - 12,248,000 1931 *420,148 - 13,803,000 - 50,313,000 Percentage Increase 25% - 82% - 310%

• Latest figure available for 1930. There has probably been little variation since then.

Comparative Cash Return: From this it will be seen that while the population has increased by only 25 per cent., the area in use for agricultural purposes has increased by 82 per cent., while wheat production has increased by an enormous percentage, namely, 310 per cent. Unfortunately, the cash return does not indicate such satisfactory results. The value of production in the State has increased since 1921 from £23,000,000 to £28,000,000 (estimated), equal to a reduction per head of population from £68 in 1921 to £66 in 1931. During that period, however manufacturing production has increased, and if that increase be eliminated, it will be found that the decrease in primary production per head of the population amounts to approximately £7.3 or in the neighbourhood of 10 per cent.

Cost of Production: The cost of production per head of the population has increased disproportionately with the value of production. New and better roads, railways, and other facilities have had to be provided, and the State public debt has increased in the period from £124.1 per head to £167.6 per head, necessitating an increase in interest from £5 per head to £7.7 per head. Thus the community as a whole, as compared with 1921, is losing approximately £2 in lessened power of total production, and £2.7 per head on account of the State public debt interest. Commonwealth debt interest has been reduced by about £0.67 per head, so that the total reduction in production per head is roughly £2 + £2.7 - £0.67 = £4.03 per annum. This is equal to a reduction of 7 per cent. of the production of 1921.

Influence of Exchange Rates: It would appear, therefore, that from a community point of view, an increase of only 7 per cent., or if we exclude manufacturing production, 10 per cent., in present value of our production would bring us back to the position of 1921. Unfortunately, these values are dependent to a considerable extent upon the exchange rate. Taking the present rate at 30 per cent. for telegraphic transfer I estimate that production has benefited this year to the extent of about 12 per cent. (This is based upon an average 20 per cent. rate of exchange on the proportion of the sale price which actually comes to Australia.) As only some costs incurred beyond Australia would be likely to increase with the increased price of our products, I estimate that if exchange went to par, it would take an increase in overseas prices of about 9 per cent. to maintain this year's values. There does not appear to be any immediate prospect of a return to par, and from the above figures it will be seen that a reduction in exchange to 20 per cent. would leave production values on an equivalent with this year's average.

You make take it, therefore, that for the immediate future, to say next year, an increased value overseas for our primary products of somewhat less than 10 per cent. would place our community in such a position that if faced with the necessity, it could continue its primary production with the help of internal re-organisation, and receive thereby an equal benefit to that obtained in 1921.

Under these circumstances, we, as a State, have no cause for pessimism, but rather optimism. This, of course, is a very general analysis, and can only serve as a rough guide. It does not, nor need it, take into consideration other factors affecting us as a community, and bringing about what is known as a depression. Any optimism we may feel must be based, however, upon a determination to face the position as a community, and not leave the burden upon the shoulders of individual sections. If the latter course is adopted, those sections must inevitably crash, and thereby bring disaster to the whole State.

Cost and Return to Primary Producers: The primary producer has suffered in two directions. His costs have increased, and his own returns have been reduced. Costs have been increased in particular by the capital cost incurred in clearing and cropping an additional 82 per cent. of land, the cost of developing our pastoral, forest, fishing and mining resources. Returns have decreased by £7.3 per head of the population since 1921. Unfortunately, the reduction is not, nor can it be, equally borne by each person in the State.

Comparative Wheat Production: The wheat-grower in particular are in an unhappy position. In 1921 they produced £14 11s. per head of population, and in 1931 £15 2s. 6d. per head of population, so that whereas the value of production as a whole has decreased since 1921, wheat production has actually improved to the extent of 11s. 6d. per head of the population, in spite of a fall in price from 8s. 1d. f.o.b. approximately in 1921 to 2s. 6d. approximately in 1931. the grower's misfortune lies in the division of the wheat realisations.

Allocation of Proceeds: the following table is an estimate of the allocation of the return from the wheat crop between the grower and the community:— Year. - Total Value. - Growers - Percentage - Community - Percentage - Sent out for "C" - Percentage

                                                                   Received:                                        Received:                               Sacks, Phosphate,
                                                                                                                                                                                     etc.
                                                                          £                                                     £                                                   £

1921 - 12,000,000 at 8/1—£4,850,000 - 3,938,000 - 81 - 572,000 - 11.8 - 420,000 - 8.6 1931 - 49,500,000 at 2/6—£6,187,500 - 3,469,500 - 56 - 2,174,000 - 35 - 872,000 - 14

(In the revenue to the community is included a proportion of the cost of super, representing money expended within the State for labour, etc. An amount has been allowed as the proportion sent out of the State, and similar estimates have been made for cornsacks. The community also received directly 7d. per bushel for railage and handling wheat. The amount and percentage under the community heading is increased to raise the total of the three columns above 100 per cent. This is accounted for by the fact that after wheat is placed f.o.b. some ship's disbursement are made to the community in return for service.)