Bert Kelly, The Bulletin, May 1, 1984, p. 128.

We will grimly continue down the morbid path of trying to understand the general principles that are common to so many of our highly protected rural industries. The first heading this week is a queer one, “Remember Canberra taxis.” This sounds a bit odd, I suppose, but there are good reasons for including it. Many years ago the government allocated Canberra taxi plates free (or almost free) to owners of Canberra taxis. As Canberra grew, more taxi plates were given away with the same generosity. But the number of plates issued was limited by the government, thus creating an artificial shortage and making plates artificially valuable.

Recently my taxi-driver told me that the going price for a plate was $56,000 if an owner was foolish enough to put his on the market. Every time I travel in a Canberra taxi I am acutely conscious that, besides paying for the wages of the driver, the petrol and all the upkeep costs of the taxi, I am also paying the interest on this $56,000, the price the taxi owner knew he could get for his if he sold it or hired it out. This saddens me; I now walk a lot when in Canberra.

The reason I inject this mournful subject into this series of articles is as follows: one problem of many of our sick rural industries is that there is a very weak export demand that is surplus to the local market, so it is necessary to try to limit local production so that it fits the local market and leaves little to be sold overseas. But if the market signals are distorted by high home consumption prices, there is a grave risk that we will produce too many eggs or dairy products or tobacco, which will have to be sold at sacrificial prices on the export market. If they are sold cheaply here, they destabilise the home market.

The solution is to give to selected producers the right to produce an allotted quota of eggs, whole milk or tobacco, the quantity being tailored to fit the estimate of the home market so there is little left to be sold cheaply overseas. The right to produce this quota is allocated to selected growers who are “in the know,” and is denied to others.

This way of doing things is known as “orderly marketing” which is an altar at which almost everyone worships. But the queer thing is that these quota schemes quickly become like tigers from whom it is hard to dismount. When I told a Canberra taxi-driver recently that, in London, taxi plates were given freely to anyone with a good presence, a good knowledge of the geography of London and with a suitable vehicle, he burst into tears. “Don’t tell me that you want to hand taxi plates around free to anyone when I had to pay $56,000 for mine,” he sobbed. “It just isn’t fair!”

Quotas are allotted freely to selected producers, particularly those in the know. Then the home consumption price creeps up, encouraged by the wise advice of those in the know — the quota holders. So the value of the quotas goes up also and soon they become valuable pieces of paper. And before long the purchaser of the quota goods has to pay for the interest on the value of the quota, as I have to pay for the interest on $56,000 when travelling in a Canberra taxi. And the longer quotas are in existence, the more valuable they become.

There are two powerful reasons why we should hesitate before introducing quota schemes. First, it is dangerous for a government to give to selected people rights that they deny to others. Second, once you are on the back of a quota tiger, it is hard to get off without being eaten. They have been trying to disentangle the Canberra taxi mess for years.

The second heading is, “It is indeed a lousy climate.” One day during the drought I complained to Fred that Australia had a lousy climate. I expected that this statesmanlike utterance would be received with respect and admiration but Fred put me in my place by saying, “Yes, Bert, we do indeed have a lousy climate. And if we didn’t, the place would be lousy with farmers.”

The reason our farms are as big as they are is that we are drought prone. Most government drought relief measures discourage farmers from looking after themselves next time or else encourage us to hold our stock when, for the sake of our soils, we ought to sell them. And I know that farmers pretend to be paragons of virtue but there are always queer goings-on if the government cow is in the drought bail.

The problem is that it is difficult for governments to be compassionate and wise as well, particularly if an election looms. The Federal Government did not worry about the WA wheat-belt drought that ran for two years preceding the drought in eastern Australia. But when the election trumpet sounded, the panic button was pressed. Generally speaking, ministers would be better in bed if there is a drought.