MacRAE, Ms Angela, Commissioner, Productivity Commission

SALERIAN, Dr John, Assistant Commissioner, Carbon Policy Analysis Branch, Productivity Commission

[13:56]

CHAIR: Welcome. I remind senators that the Senate has resolved that an officer of a department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted. Officers are also reminded that any claim that it would be contrary to the public interest to answer a question must be made by a minister and should be accompanied by a statement setting out the basis for the claim.

Is there anything you would like to add about the capacity in which you appear today?

Ms MacRae : I was one of the commissioners on the wheat export marketing arrangements inquiry.

Dr Salerian : I was the inquiry manager.

CHAIR: Do either of you wish to make a brief opening statement before we go to questions?

Ms MacRae : Yes, please. I might begin by outlining a little bit of background to the commission and its role and processes. The commission is an independent body that advises the Australian government on policy matters referred to it but does not involve itself in the government's policy-making processes after an inquiry is completed. It is in this context that the commission undertook the inquiry into wheat export marketing arrangements between October 2009 and June 2010. Over this period the commission invited submissions, produced a draft report for public comment and further submissions and held public forums and hearings before producing a final report to the government.

The inquiry commenced about 15 months after the introduction of the Wheat Export Marketing Act 2008 and the associated accreditation scheme. While some participants considered the timing of the inquiry premature, this was beyond the control of the commission because the inquiry dates were set out in the legislation. As is the case with all of its inquiries, the commission took a community-wide approach but in this case also recognised the importance of positioning the industry for a successful future in a highly competitive world market. From this perspective the commission was mindful that regulation should not impede incentives in the sector to adapt flexibly to changing market circumstances and opportunities as well as changes in technology all the way from the farm to the final customer. The commission's view was that the transition to competition in the marketing of bulk wheat exports had progressed remarkably smoothly, with 28 accredited exporters, some gaining sizable market share, exporting 12 million tonnes of wheat to 41 countries in the first year after deregulation. The industry performed well under the new arrangements, particularly given the difficult international trading conditions, including a pronounced commodity price cycle for wheat and other grains, the global financial crisis and an appreciation of the Australian dollar.

While the accreditation scheme was assessed as adding significant net benefit during the transition phase, it was considered to have virtually no benefits beyond that initial transition, while continuing to impose costs. Therefore, the commission recommended that the accreditation scheme be abolished, Wheat Exports Australia be wound up and the wheat export charge on all wheat exports be abolished. We were conscious of a range of views on this topic, but considered that if the industry wanted an accreditation framework—for example, to manage quality, international reputation and branding—it could administer and fund its own arrangements.

The commission considered that access to ports was the biggest issue arising from the inquiry. The focus of the access test in the WEMA was on promoting competition in the exporting of Australian wheat, and this was successfully achieved. As you will know, from 1 October 2009 most grain port terminal operators had to provide a formal access undertaking that was accepted by the ACCC and publish daily shipping stem and port access protocols. The commission considered that the access test had facilitated market entry by reducing uncertainty, made access easier, quicker and less expensive than might have been the case by relying solely on Part IIIA, facilitated a smooth transition and reduced the length of the transition period. However, the benefits of the access test diminish once a commercial and competitive environment becomes embedded. As well as the ongoing financial costs, the negative impacts on investment in the long term could be substantial, because of incentives for wasteful strategic behaviour, constraints on the scope to deliver price port terminal services efficiently, reducing incentives for operators to maintain and expand facilities and reducing incentives for third-party investment. As a result, the commission recommended that the access framework continue until 30 September 2014.

CHAIR: Ms MacRae, I am sorry to rudely interrupt: have you got much longer? I might get you to table your statement, because there are some members who are really bouncing to ask questions.

Ms MacRae : I will summarise. I will table the whole statement and give just a few key points on the couple of issues I have left. Is that acceptable?

CHAIR: Sure.

Ms MacRae : We regard this as a transitional market, still, and that there should be reliance on the National Access Regime from 1 October 2014. However, we considered that port terminal operators should continue to be required to publish daily shipping stems and port access protocols. This would ideally be supplemented by a voluntary code of conduct to govern port access.

We thought that, even in the short time since deregulation, there had been a lot of developments that competitive pressures had put on the transport, storage and handling system. We saw things like greater on-farm storage, rationalisation of receival sites and rival receival sites emerging. All of these things, and there are a number of others in my statement, said to us that up-country storage facilities did not require access regulation, that it was crucial that parties should be able to bypass the bulk-handling system in order to foster competition in the supply chain. We supported the ACCC review of the exclusive notification in relation to Grain Express in Western Australia as it was one area that we saw was impeded or could possibly be impeded by bypass. We understand the notification has since been revoked.

We have heard a lot of discussion today on market information. We agree that information is critical to an efficient market for wheat. Historical information is useful for long-term policy purposes, but we also heard a lot about the need for more detailed, frequent, and up-to-date information. We saw merit in continuing to provide stocks information monthly, by state, but we felt that it was necessary for the industry to come together to decide whether it did really want that information and, if it did, it could through a compulsory payment mechanism, such as an industry levy, have that information provided. We are aware, and we heard earlier, that many want even more detailed information on stocks, such as by grade or by port zone. We do not propose that this information be compulsorily made available, but recognise the value of this information for the efficient operation of domestic and export wheat markets. Finally, in relation to industry goods—and it is a term used to describe functions that support trade and industry development for the sector as a whole—we could see good reason why the industry has an interest in promoting these things. But we really felt that it was essential that the industry come together, decide what they want and progress on those matters as they decided and as they wished rather than having government come in and decide for them. So we concluded that an industry-led body could handle the provision of these industry good functions including things like quality and brand reputation and export markets through industry self-accreditation mechanisms and the use of logos by accredited members. That is all, thank you.

Senator SIEWERT: Why do you think that it is better if an industry-led body does the things that you have articulated? Why is it better for an industry-led body to do that? How would they then ensure access to information continues, the port access issues that you have been through?

Ms MacRae : One of the things that I would say is that we were very conscious of separating out each of these issues. In some of the discussion we just heard there was quite a lot of confusion, I think, around what the access test should require, what information is required, and what should happen with industry goods. So in our report and our analysis we were careful to separate out each of those. For example, with the access tests the government obviously has to be involved.

In the course of our inquiry though, in relation to things like industry goods, we were very much aware that the industry itself is quite divided in terms of how much resource they should put into some of the things and what the areas of focus should be. We felt in that instance that it was unhelpful even for government to be trying to dictate to the industry what it should be requiring in those areas, that it was important that industry come together and determine what they wanted and how they wanted that to be done and what sort of resource they wanted to put into that function. In our assessment of Wheat Exports Australia we looked at their current function and there is nothing within their current function that asks them to perform any of the sorts of industry good functions that a lot of the industry people are now saying they would like that body to do. But we still feel quite strongly that an industry-led body would perform that function better because there are divisions within the industry and they need to be settled and it is better that the industry do that themselves than have the government trying to dictate to them what needs to be done.

Senator SIEWERT: Following on two issues there, when you said that there is nothing in WEA's current function, did you look at the possibility of changing WEA's current function?

Ms MacRae : We looked at their current function and assessed them on that basis, and then when we came to look at the industry good functions in the other areas our conclusion was that it was better to have an industry-led body so we did not then, I guess, have to come to that second question of whether a revamped or a rechartered Wheat Exports Australia would be the best body to do that.

Senator SIEWERT: In terms of the other examples that have been put up both in the written submissions and this morning with the US and Canadian Grain Commission where, clearly, government still has a role in both of those areas, in your opinion would an industry-led body put Australia at a disadvantage compared to two of our major competitors who have government-led bodies?

Ms MacRae : I guess it depends how much credibility that industry-led body would have. I am sure that if it had all the support of the entire industry in Australia, there is no reason that it could not be at least as well regarded as a government organisation. That is not to say—and we do not recommend in our report—that the current advocacy role and things that DFAT and Austrade have would not continue, so there would be some continuing role for government. But I think that really the credible voices in this space are the participants and, if they can come together with a united voice, then that voice has got to be at least as strong as a government voice.

Senator SIEWERT: Did you look at any other examples overseas of industry-led bodies competing in that space?

Ms MacRae : We did. We certainly discussed it in the report—and I am just trying to remember exactly where. We do have a chapter on industry goods and we did have a look at what some of those international arrangements are. It is hard to compare apples with apples because we are different from those organisations. Although our bulk handlers are regarded as dominant in the wheat field here in Australia, they are even more dominant often in the US and, I think, the Canadian situation. We did definitely look at those international organisations and we took that information into account in coming to our conclusions.

Senator FISHER: Can you shed any light on the government seeming to be hell-bent on going down this path in the face of cries to the contrary from much of industry?

Ms MacRae : Taking the chair's direction at the beginning, that is probably a policy question.

Senator FISHER: Dash!

Ms MacRae : We are directed by our terms of reference in the nature of the inquiry that we undertook. We were not asked to look into the single desk. We were asked to look at the deregulated market and what might make it work more efficiently into the future. That is the nature of the task that we were given. I do not think we can comment any further than that.

Senator FISHER: I might ask the question another way: can you see any good reason for the bill?

CHAIR: If that is not asking for an opinion, I do not know what is. Good try, Senator Fisher!

Senator FISHER: Chair, you are usually so sporting!

Ms MacRae : The bill does follow very closely the recommendations that are in our report, and our report was set within the frame of reference that we were given. That is probably all I can say.

Senator FISHER: Thank you.

Senator BACK: Can you give us an example—as the question was asked earlier in the day—in the agriculture/agribusiness sector of where there is another industry that self-regulates in line with your recommendations, which have found their way into this draft legislation?

Ms MacRae : Wheat is a bit of an unusual grain in the sense that it is large and, in Western Australia in particular, exports are very dominant. We could not find anything directly comparable, I suppose. In terms of it being traded in an open market in a relatively free environment, we are bringing wheat more into line with other grains than further away; that is the point I would make. The access arrangements, for example, for wheat are not there for other grains. So, moving away from those arrangements—

Senator BACK: I am not so concerned about other grains. As you say, other grains all put together would not come within a percentage of wheat. Australia is a relatively small producer of wheat internationally. When you say to people that they produce more wheat in the United Kingdom than we do in Australia, people raise their eyebrows. But our two biggest competing markets—America and Canada—have a very strongly regulated export wheat market, including quality control et cetera. It is in that context that I am asking you the question with regard to the proposed further deregulation, especially in light of the likelihood that the grower sector of the commercial industry is unlikely to be able to access those mechanisms that are in place for most others—ACCC et cetera—to be able to represent their case.

Ms MacRae : In representing your case to the ACCC you would be looking at the access tests, and I think you have just said that is not really your main concern. Do I understand that or not?

Senator BACK: No, I did not say that at all.

Ms MacRae : Sorry, I thought you were saying you were more concerned with things like quality and—

Senator BACK: No, all I said was that the United States and the Canadian markets are very well regulated as pertaining to quality, variety accuracy and other areas which have come up in this inquiry and which would appear in the draft legislation to not be adequately serviced or adequately supplied.

Ms MacRae : Again, I am struggling a bit because I think we are mixing issues here. If I take the quality issues first, we have certainly heard a range of views in our inquiry about what had happened to the quality of the wheat being exported and how it had been delivered to end-point customers. We were very specific in asking for examples of where quality had proven to be a problem and whether people could give us some specifics. We did have one example, which we heard multiple times, of a container. We did have a lot of trouble eliciting anything more specific in terms of quality from traders, growers, bulk handlers, anybody in terms of quality and the relative quality compared to what had been the case prior to deregulation. So that is one thing.

Senator BACK: Without wanting to interrupt your train of thought, it is interesting that you say that, because you are quite right: all of the concerns that I have heard relate to containers, yet containers and bagged wheat are explicitly excluded from this legislation, which causes me enormous anxiety. If indeed it is wheat in containers that caused this query over quality, the legislation is not going to address that.

Ms MacRae : No, although, being a relatively small part of the market and being able to trace it back to where it came from, I guess we would expect the market to ultimately sort that out. So, if you are continually providing wheat that is of a bad quality, presumably the customers are not going to come back to you. I agree with you that you do not want that to become a widespread perception that containers out of Australia cannot be trusted—

Senator BACK: Or wheat out of Australia.

Ms MacRae : Or that wheat out of Australia cannot be trusted. But we certainly were not getting evidence of the fact that that looked like it was going to be systemic. It did not look like a systemic problem, as I say. We had one or two examples. We had one major one and another couple of possibles, and that was the most that we could elicit at the time. There may have been more evidence since then, but that was certainly our take. Now I am not sure where I am up to.

Senator BACK: The other question related specifically to growers and the power that growers would appear to lack in the overall logistics supply chain. Dr Salerian, you obviously have a view.

Dr Salerian : I guess what we were flagging was that you can have a grower body, and they may want to have growers accredited. I think we talked about this: if a trader got accredited and then were found to be bringing the Australian brand into disrepute then they could be ejected from having that accreditation by the grower body. So there are other mechanisms by which I think you can deal with those things.

Senator BACK: My last question is: given that the draft legislation has been largely framed around your recommendations, are you satisfied that the current information available to all sectors of the industry, particularly from the bulk handling companies, is adequate for all sectors to be able to make their decisions?

Ms MacRae : The information issue was definitely one of the more complex ones for us to deal with in terms of what we felt was reasonable. We agree, as I said, that information is critical to a well-functioning market. Again, it seemed that, in response to our draft report where we had some comments around information, when we were eliciting from people specifically what sort of information they needed it seemed to fall into three categories. I think everyone agreed that the current ABS collection is not all that helpful for the industry, but why not keep it? But it is not relevant in terms of what growers really want. State information—stocks by state monthly—seemed to be very useful information, and on the whole I think everyone agreed that would be useful, but then there was the question of who would pay for it. So we recommended that, because the benefits of that information primarily fall to the industry, it would be up to the industry to fund that. But we could see great benefit to the industry in having that information. So there is the question of how you get that levy going, but that seemed to be the second tier. I think we had broad industry agreement around that. Whether or not they would want to fund it was a slightly separate issue, but I think that was agreed.

The next layer on the industry question, though, was much more complex and contentious, and that was breaking it down by grade and by port. It was difficult. While we can see that there are benefits in having that information available and we certainly would encourage the bulk handlers to make as much of that available as possible, there are a couple of big concerns with that. One was that there was an argument that, 'If you're going to insist on us providing this information, we'd like information back.' There were bulk handlers saying, 'We'd like some information back on what's sitting out there that we don't have access to, so we'd like more information to come back the other way.' There was great resistance to that.

The other thing is that the international angle is that if we make all this information available domestically then all our international competitors are going to have that information as well. We know that some of these guys who are operating out of the US or Canada have the sort of information for their markets that we have for ours and if we had that all their information as well that would help us work out what the best time is to sell. But if we make all that is information available on the Australian stocks and the international people then have all that available as well then that is—

Senator HEFFERNAN: But they already know. You are not trying to tell me that the international traders do not know what is in the system in Australia? Have you actually been and seen how they blend? Have you had a look?

Ms Macrae : I have seen it in the Australian context. I have not been to see it internationally.

Senator HEFFERNAN: Where did you go in the Australian context?

Ms Macrae : I went to one of the CBH terminals in Kwinana. I went to—

Senator HEFFERNAN: So you have seen the blended situation. If I deliver wheat for a week into the Junee sub terminal all I have to do is go to the computer, press a button and see what I have put in. What I do not know is what the blend is in the system. I know what my contribution to the blend is. But the world knows what is in the system in Australia. They might not know what the blend is, but neither does anyone down the road in Australia. So it is no advantage—

Ms Macrae : What I am saying is if they let that information out to the people down the road in Australia, then the people internationally know.

Senator HEFFERNAN: But they already bloody well know what is in the system.

Ms Macrae : The blends.

Senator HEFFERNAN: They know. They know what is in the system. They know. You advise the Australian government on policy matters referred to it and you do not involve yourself in policy. In advising the government, you say that you think we should do away with a range of things: the accreditation system for wheat exporters to be wound up and the wheat export charge to be abolished. Given the evidence we have had today, what consideration did you give to the potential for insider trading? The ASX says what we are about to do will proliferate that. You do not believe that? You disagree with the ASX?

Ms Macrae : ASX did not put any information to us when we were—

Senator HEFFERNAN: That is a dumb answer, with great respect.

Ms Macrae : No, I am sorry—it was that beginning of my answer if you can let me complete it.

Senator HEFFERNAN: The excuse ought not to be, 'They didn't tell us, therefore we didn't deal with it.' Did you deal with it?

Ms Macrae : I did not finish my answer.

Senator HEFFERNAN: Righto. Away you go.

Ms Macrae : We did not hear anything to that effect in relation to any of our reports. It certainly was not raised by anybody in relation to the submissions we received. We did consider—

Senator HEFFERNAN: So the advice you gave to the government did not—

CHAIR: Senator, we will take the time and if we have to we will come back after the break. I might just urge you to let Ms Macrae finish her answer before you throw the next question at her.

Senator HEFFERNAN: Have you given a fulsome answer? You did not include—

CHAIR: Ms Macrae, have you finished your answer before we go to Senator Heffernan's next one?

Ms Macrae : No, you go ahead. Finish the question and then I will be allowed to finish my answer.

CHAIR: Do not be too kind, because he will not reciprocate.

Senator HEFFERNAN: No, I will not be kind. You should not be.

Ms Macrae : No, that is fine.

Senator HEFFERNAN: Did you include in your consideration, then, any proposal, any thinking that the future system might deliver insider trading? Did you think about that?

Ms Macrae : We did a lot of analysis of the pricing issues and what might happen in relation to spreads and all of those things.

Senator HEFFERNAN: Did you consider the potential for insider trading with the knowledge?

Mr Salerian : I think the issue around information is not just about the bulk handlers releasing it or not. There are actually information systems in place, I think, that would enable that information to be produced very quickly and readily. They have got computer systems. I understand that.

Senator NASH: But that is not the question.

Senator HEFFERNAN: Just answer the question.

Mr Salerian : Then the question becomes—

Senator HEFFERNAN: No, you have got the question. The question is not some bureaucratic bypass. Did you give consideration to insider trading in giving advice to the government, yes or no?

Mr Salerian : The answer is no, we did not.

Senator HEFFERNAN: Righto. That keeps it simple. Thank you very much for that. Alright, then, did you give consideration, in giving advice to the government, to the advantages and disadvantages it is going to have for the various foreign, offshore tax alleviations? You are the competition policy person. Are you aware of the advantage that a foreign trader, as opposed to a domestic trader, can have with tax?

Ms Macrae : No.

Senator HEFFERNAN: I have got to say your stuff is completely flawed. If you have not given consideration to that stuff it is completely flawed and it is just bureaucratic blubber.

CHAIR: Senator Heffernan, that is an opinion. You have asked the question and you have got the answer. You did not like it so I do not know what more you are trying to prove.

Senator HEFFERNAN: So, having said no to that, are you prepared to go back and revisit the proposition of the tax position of some of these companies in the market? We have already got a situation where we can have regional monopolies from global cartel type companies and now we have got, in trying to come to a competitive, level playing field, half the people that can have a serious tax advantage versus half that cannot. Would you be prepared to go back and revisit that? Could you provide to us on notice the advice that you provided to the government that made you arrive at the decision that you should scrub the accreditation scheme et cetera? Do you understand how many—

CHAIR: There are two questions there, Senator. Let Ms MacRae answer the first part and the second part.

Ms MacRae : We are not in a position to reopen the terms of reference once it is closed.

Senator HEFFERNAN: Righto. Can you provide the advice you provided to government?

Ms MacRae : Sorry, in relation to what specifically?

Senator HEFFERNAN: Your decision to recommend the accreditation of this scheme be abolished, that wheat exports be wound up and that the wheat exports charge be abolished.

Ms MacRae : We provided our final report, so—

Senator HEFFERNAN: No, the advice.

Ms MacRae : We did not provide anything additional; that is what I say. Once we have provided our inquiry report we do not provide additional information other than briefings on what the report said. We did not provide any additional facts or information beyond what was in our final report.

Senator HEFFERNAN: All right, fair enough. In giving consideration to what you have recommended, did you look at things like the punt on the Chicago exchange a few years ago that spiked the market? What commentary did you make on that? What are we doing to avoid the market being determined by punters rather than supply and demand?

Ms MacRae : We did look at that in detail and we did provide information within the report, in chapter 3. There is a fair bit of discussion in there. This goes to what I was trying to say in the time I was answering your first question, which was to make that point that we did look at the operation of those financial markets and we did assess those spikes and we did look at the evidence and the differences of view that were around about what had caused those and whether they were likely to be ongoing.

Senator HEFFERNAN: Was your conclusion that we needed a remedy?

Mr Salerian : There were a lot of issues raised at the time around things like the basis, the technical term used in contract markets. All we were pointing out was that if there are other factors driving the Chicago exchange they can have implications in how you interpret that data back into Australia.

Senator HEFFERNAN: You are the competition adviser to the government. Did you advise that we required a remedy?

Ms MacRae : No. The conclusion was that there had to be careful interpretation of that data as it came back but you did not need a remedy.

Senator HEFFERNAN: Forget it. What a bloody nonsense.

Senator NASH: Thanks, Ms MacRae. Earlier, and I do not think it was in your opening statement, you were talking about the remit and what you had been asked to do not as to the single desk but as to the deregulated market and how it could work more efficiently. Am I correct?

Ms MacRae : Yes. I am paraphrasing, but yes.

Senator NASH: That is fine. When you say 'work more efficiently', work more efficiently for whom and what was the measure of the efficiency?

Ms MacRae : It was really looking at—and I think I did say this in my opening comments—how we could have a successful wheat export market in Australia. So that was as broad as the terms were, and I am just trying to refresh my memory on specifically what the terms of reference said.

Senator NASH: No, that is okay. I do not necessarily need the terms of reference. I am asking in the context of 'efficiently' and a successful wheat export market—and that is all a fine goal to have. But when there are competing interests within the sector how did you determine what was 'efficient' and what was 'success'? What might be efficient for one part of the sector might be inefficient for another; what might be a success for one part of the sector might be not a success for another. So how did you define it?

Ms MacRae : It comes back to the prime aim we have in all our inquiries, that we are looking at it from a public or national interest perspective. So we are looking to have the most successful or the most productive wheat market that we can have in Australia and we were particularly looking at the export wheat market and what that would mean in terms of the productivity of the Australian economy in the broad.

Senator NASH: I am mindful of the time. To me that is still just words. Would you mind just taking on notice to give us perhaps a more detailed response to that. In terms of productivity, are you talking grain volumes, are you talking dollars, are you talking about individual success of growers, are you talking about the bulk handlers? Could you just take that on notice, because I think it is really important that we drill down into more than just a phrase and try and understand what you meant. What I am trying to get at is, as I said earlier, that success or efficiency for one part of the sector might affect the other negatively. So, overall, when you talk about 'the national interest', could you give us a definition of what the national interest was in this case? If you could take that on notice, that would be great.

I have just one quick question more: I do not know if you have read the Grain Producers Australia submission?

Ms MacRae : Possibly not. We had less than a week's notice that we were coming here, and neither of us have worked on this topic for a couple of years now, so my apologies that we have not properly done all the background reading; we would have done if we had had more time.

Senator NASH: No, no—not at all; I just wasn't going to reinvent the wheel if you had nodded and said, 'Yes, we've read it.' So that it is absolutely fine. But the grain producers, in talking about the rationale and justification for the bill being based on the work that the Productivity Commission had done—and this is just to give you an opportunity to respond—say:

GPA asserts that the Commission findings are not a suitable base to make recommendation for further deregulation of the wheat export market because …

and then they list three points. The first is:

The Commission was held only one year after the Wheat Export Marketing Act 2008 (the Act) was enacted. In hindsight this was too soon to effectively review the performance of the market and the Act under deregulation.

The second is:

The post farm gate sector of the wheat export supply chain has evolved considerably since the Commission—

obviously, 'did its report'—

and is likely to continue to change dramatically over the next five years at least, undermining the relevance and reliability of the Commission’s findings around market performance.

What do you say to that?

Ms MacRae : I think it was only two points, wasn't it?

Senator NASH: Yes, there was a third one but I am a bit short of time.

Ms MacRae : I would certainly agree that the supply chain has—what was the word they said?—changed considerably—

Senator NASH: 'Evolved'.

Ms MacRae : Evolved, sorry; that is the word. But, from my point of view, at least, the evolution that we saw was more dramatic than we had expected, but was all one way. So it looked to us that the changes that were happening in the supply chain were that there was more competition happening, that there was increasing competitive pressure within that, so better price signals, and the things that we were seeing were things like rivalry—

Senator NASH: Sorry—can I just stop you there. When you say that it was a more competitive measure and there were better price signals, what do you mean by that?

Ms MacRae : There was a more competitive supply chain. There were better price signals within the supply chain—

Senator NASH: Are you saying that grain was worth more along the way? I do not understand.

Ms MacRae : No, sorry. There were alternative prices being offered where there would not have been previously under the single desk. So there were more revealed prices. I am not putting this very well. Andrew Weidemann made the point as well that grain growers, for the first time, were seeing things that were hidden under the previous arrangements. So there was a lot more transparency in terms of what growers were able to see in terms of costs in the system where previously they had not been able to identify some of those things. And in response to those prices and costs that they could see, that they were not able to see previously, we were seeing things like super sites being formed but then rival sites also opening up.

Senator NASH: Where did that happen? Where did the rival sites open up? I am happy for you to take that on notice, but could tell us where those rival sites opened up?

Ms MacRae : I cannot tell you now.

Mr Salerian : They were starting to happen while we were there. They were being contemplated.

Senator NASH: I know that is not something you would have with you but I am very interested in, since deregulation, where those rival sites have opened up.

Mr Salerian : The point I would add is that quite a lot of the discussion around the access regime we have got in the report. If you read through the chapter on the access itself and into the chapter on transport and storage, you will see that the concerns we identified very early on when we were doing the inquiry were about: there was significant scope to achieve efficiencies in the supply chain. Indeed, if I could just paraphrase it, it is a supply chain based on a different time, and, now, the nature of the exporter to wheat crop—it wants to go out in a hurry; it does not always want to go out evenly; there are opportunities as technology is changing the transport, so you can actually start to bypass. So you will see we put a fair bit of effort into trying to articulate how we set the access regime up and have it working, and the recommendations we have made, particularly around the CBH one, were designed to actually facilitate that competition and make it easier for people to either actually bypass or threaten to bypass.

Senator HEFFERNAN: Could I just throw in a question on notice?

CHAIR: Yes, of course.

Senator HEFFERNAN: The assumptions behind the advice you gave to the government—could you provide them to the committee?

Ms MacRae : I do not know that that is a reasonable question.

CHAIR: You can take it on notice.

Ms MacRae : Well, we can try.

CHAIR: Your words, not mine.

Senator HEFFERNAN: I mean, there would have had to have been some assumptions.

Ms MacRae : I am not disagreeing with you that there were assumptions.

Senator NASH: Perhaps you can limit what you are asking.

CHAIR: Perhaps we just pull it in here. The question has been asked. There has been an acknowledgement to take it on notice. We will now go to a break. I will ask committee members to stay behind for a private meeting. I thank officers from the Productivity Commission. I will throw the rest of you out of the room nicely.

Proceedings suspended from 14:35 to 14:49