Mr ANDERSON (Minister for Primary Industries and Energy)(12.09 p.m.) —in reply—Thank you, Mr Deputy Speaker. That is the title you assume in this place as well as in the other, I understand.

Mr DEPUTY SPEAKER —It certainly is.

Mr ANDERSON —Thank you. I would like to begin by thanking all who have participated in this debate. There is obviously strong support across the political spectrum for Australia's dairy industry and a recognition that this debate is centred on some straightforward administrative amendments which in no way represent significant policy change and are a further tidying up—if I can use that sort of terminology—of the reinstrumentation of the old all-milk levy arrangements.

They were, in my view, a very clever industry funded and industry driven set of export enhancement arrangements which played a significant part in boosting the export performance of the dairy industry. Over the last couple of decades, it has turned from being a rather parochial and inward looking industry with quite a few deep-rooted structural problems—very low levels of farm profitability, low levels of efficiency, and supplying essentially the domestic market—into one which is now aggressively outward looking and is really setting the pace in terms of export performance.

The amendments bring us into line with our international obligations as a nation which is not only a signatory to the WTO but an originator and driver of the whole push for trade reform in the agricultural area. So I do place on record my appreciation for the contributions made to this debate by people from both sides of politics.

I would like to recap briefly on some of the remarks that have been made about the performance of the dairy industry. We can be genuinely proud of it. It is generally assumed now that we can wear the cap as the world's second most efficient dairy producer—only New Zealand is generally perceived to still have a bit of an edge on us.

At the outer edges of our capacity—and I note that the member for Murray (Mrs Stone) is here—what you are seeing in the Goulburn Valley today would equal the world's best performance, really. The explosion in value adding, innovation and performance in every way in that area is something to behold. It is part and parcel—

Mr Broadbent —Can you give us five minutes on Gippsland?

Mr ANDERSON —On Gippsland? I have been there, too, and I have seen that substantial investment is on the way in your part of the world—which we again welcome because that is part and parcel of what—

Mr McArthur —And on western Victoria?

Mr ANDERSON —No; they are all woollies in western Victoria. I will tell you something. Somebody from the wool industry said to me the other day, `You know, we have to do in this industry what the dairy industry did, and turn ourselves around.' That is what you would begin with. What we need to do—

Mr McArthur —But it is the dairy industry that is predominant in western Victoria, Minister.

Mr ANDERSON —Yes; but you are a woolly, and that is why I responded—

Mr DEPUTY SPEAKER —I assure the minister that I am not a woolly. Would you please address your remarks through the chair?

Mr ANDERSON —I am sorry, Mr Deputy Speaker; I will oblige and refer my remarks through you. The point ought to be made that the dairy industry has achieved much of what it has achieved through effective leadership. I have said publicly that I do have a concern that the wool industry could learn well from the model set before it, in as much as I note with some delight that the various sectors of the wool industry have recently begun to cooperate more and are not publicly criticising one another in the way that they had been in the past.

The wool industry is one that, in my view, needs to engage in a greater degree of fermentation, if you like, of leadership from within its own ranks, and to push that leadership up and then support it, get behind it and make it all happen. I say that with the best will in the world, because I have some concerns that we need to do for the wool industry what the dairy industry successfully managed to achieve for itself in recent years.

We have actually seen the dairy industry set a scorching pace in Asia. We hear a lot in this country about how our future lies in Asia and that is where the opportunities will be. Yet the reality is that, because we have been so reluctant to grapple with effective reform in this country, our market share in expanding Asian markets in many ways—and in a wide range of products—has been slipping. It has not been increasing, but slipping—an appalling indictment of economic, industrial relations and taxation policy under the regime that has in this country just been comprehensively booted out.

In contrast—and in a moment I will come to some of the historical reasons that the dairy industry has been able to achieve a few things that others have not—dairy has seen its share of the lucrative Asian markets increase over recent years from an already impressive 29 per cent to 34 per cent last year. Currently, it has over one billion dollars worth of exports on an annualised basis. That is a performance of which the rest of the Australian community ought to be very proud; but, at the same time, we ought to be enormously challenged by it. It is in fact a model of what we all ought to be doing but cannot do.

Look at the meat industry, where we are being pushed back out of Asia. Why? Largely because it is an industry based not on cooperation but on confrontation, particularly at the level of industrial relations. One reason that the dairy industry has made such great progress is that one of the great things that it had going for it—even though 20 years ago it was fragmented, small and rather inward-looking—was that it was built on a cooperative model. It was built on an understanding that there needed to be good linkages between all of the players: between the dairy farmers themselves and the cooperatives that they formed and the activities of the cooperatives, including those of an industrial relations nature.

They were largely decentralised, too, out in rural Australia, and sometimes I suspect it was a little difficult for the agitators and others who would have made trouble to get out there and organise. As a result of its cooperative approach, the dairy industry has made tremendous progress. You will be only too well aware, Mr Deputy Speaker—representing, as you do, a rural region in this country—that very many farm families enjoy extraordinarily low income levels or even negative income levels; but the dairy industry is one of the great exceptions. It varies a little from state to state, but the average farm operating surplus on Australia's dairy farms will be in the order of $60,000 to $65,000 this year, and that is a tremendous result.

Of course, players are always a little like that other great industry that is doing reasonably well at the moment: the sugar industry. When you talk to them and say, `Isn't it marvellous to see your industry doing well?' they all say, `Ah, yes! But, before you think of making any government changes that might impact on us, it won't be so good next year. Remember that these things are cyclical.' And that is probably a timely warning.

Mr DEPUTY SPEAKER —Before the minister gets on to lambs and pork and other things, I would remind him that, while we have dealt with wool and now sugar, the dairy industry is the subject of the bill.

Mr ANDERSON —Yes, but these are all important points because they have to do with recognising the challenge set by this outstanding industry. We are reinforcing its capacity to continue to set a scorching pace and an example that the rest of us need to be following. Nonetheless, with all due deference to you, Mr Deputy Speaker, I will refer to the matter in hand.

One of the interesting things is recognising the potential for the industry in Australia and the ideal nature of our geographic position in relation to Asia. We are now seeing significant investment by companies such as Nestle—again in the Goulburn Valley in particular—and, interestingly enough, by the Japanese, with Snow brand, for example, producing skim milk powder and baby milk formula. That constitutes a recognition by the Japanese that, as the old protectionist policies are wound back in their homelands, competitive suppliers like Australia will have an ever greater potential for the future and that they ought to be in here on the ground floor.

I have been to the Goulburn Valley a few times now and I have seen what is happening there. It is very exciting and it is reflected in many, many other areas of Australia, even in north-western New South Wales, where there are now a significant number of dairy operators who are buying up country inland because they can extract a return there that other farmers cannot from their activities.

I noticed the previous speaker touched on the United States and their trading practices. We note, and I have had the good fortune to put this to the Americans in the last couple of days, that their farm bill does in fact make some very significant and worthwhile reforms. For the first time since the program was set up by Roosevelt in the 1930s, the income support programs will be decoupled from production. That is very welcome, but there are a couple of things we do not welcome. One is that both EEP and DIEP, the dairy industry export program, remain. They actually have not used EEP for grains since July of last year because grain prices are high and they have not needed them. But, as the previous speaker pointed out, they are quite aggressively, within the very clear boundaries of what they are allowed to do under WTO—as opposed to perhaps the spirit of WTO—using DIEP to the outer limits. It appears that that is the objective.

We are seeking assurances from the Americans that they will respect the undertakings that they have given us not to harm Australia, as a non-subsidising nation and one that is not supposedly in their sights in terms of their engagement with the Europeans, and that they will seek to protect our interests. We sincerely hope that they will be able to, in a comprehensive and integrated way, honour those broad commitments. We do not mind competing with the world's best—we think we can cream them in a lot of ways—but we do not want to do that in an environment where people have unfairly funded—taxpayer funded—advantages.

That brings me to a couple of closing remarks about the New Zealanders, who are also very aggressive, very powerful competitors and who have a very major dairy export industry—I think they export over 90 per cent of their dairy product. They are a major player on the world stage in this regard. They have progressed further and faster down the reform road than we have. This does raise some issues for us. I would put those in a couple of categories. One is that we would require of the New Zealanders that they do everything to honour the gentleman's agreement that we have with them in terms of access to our markets because we do not impose the levy that we are talking about here in this legislation—in terms of minor amendments to the legislation—on them when they sell their products on our shelves.

That, of course, does constitute something of an advantage for them. They have given us an undertaking that they will not take advantage of that situation and we would be very keen to see that gentlemen's agreement upheld. Again, I can confirm to you that I have taken that issue up personally with the New Zealanders. They have responded in good faith, in an appropriate way.

But, to build on that, it does indicate the need for us to get on with urgent reforms—and there are many of them on the government's agenda which are important to the dairy industry. I do not intend to talk at length now about appropriate structures, and so forth, for the dairy industry. Broadly speaking, a lot of that work has been done. The right economic environment is obviously important, fixing the big black hole so that we can ensure that interest rates are as globally competitive, if you like, as they can be. That is what you need when you are in an export industry in this country—interest rates that allow you to be globally competitive. We do not have them, largely because of past economic policy. Those sorts of things do need to be addressed.

There is one area I want to touch on finally. One of our great competitive advantages in Asia springs from our clean, green image. It is no secret that, whilst our product is clean and green, there are challenges before us in primary industry in this country if we are to maintain that clean and green image and to continue to produce sustainably. Again, many of those challenges are evident in southern New South Wales and northern Victoria as we attempt to battle such issues as salinity.

The coalition government has a very comprehensive landcare package which incorporates such things as tax rebates and credits for farmers. They are an ideal mechanism both to facilitate the farmer—who, in the end, spends the bulk of the money and does the work on landcare initiatives, be they salinity or whatever, to meet sustainable agricultural objectives—and to let the community, which has a great vested interest in sustainable production, make an investment as well. The community gets a great return from that investment, not just in terms of more jobs and more taxes paid to Treasury, but also in terms of being able to secure the resource base for future generations.

The tax credit rebate approach is an ideal part of that armoury. It is also part and parcel of our environment package and I again issue the challenge: if you want what is undoubtedly the best environment-landcare-environmentally sustainable production package ever put before the Australian people in this country, it needs to be recognised that the approach we have put up, with a $1 billion Natural Heritage Trust to be funded out of the partial privatisation of Telstra, is sound policy that cannot be legitimately resisted by anybody who has a proper, deep and sincere commitment to these issues of sound environmental management and sustainable agricultural production.

Thank you for your indulgence. I believe the issues that I have touched on are important. But, in particular, I again want to thank all who have participated in the debate very sincerely indeed, both for their contribution and for their agreement to the objectives sought here today.

Question resolved in the affirmative.

Bill read a second time.

Bill—by leave—reported without amendment.