Mr ANDERSON (Minister for Primary Industries and Energy)(9.30 a.m.) —I move:

That the bill be now read a second time.

The purpose of the Australian Meat and Livestock Industry Bill 1997 and associated bills is to provide a legislative framework to facilitate the move from statutory to new company structures and operational arrangements for the Australian red meat and livestock industry. The new arrangements are a major step forward, advancing industry towards management of its own affairs and, importantly, increasing efficiency and competitiveness in structuring this industry to continue as a world leader. This reform is focused on the future needs of industry.

Background

The government is committed to improving the overall international competitiveness of all Australian industry. We are particularly keen to do so in our important agricultural industries. Unless we continue to improve productivity and cost efficiency throughout the food supply chain, we will lose ground against our international competitors and will not be able to maximise our national wealth, export opportunities and value enhancing potential.

The meat and livestock industry earns Australia, on average, about three billion export dollars per year. We need to set our targets for achievement at a higher level. As a single agricultural commodity export earner for Australia, red meat and livestock ranks third after wheat and wool. The potential of the industry is considerable. However, to realise this potential, we need to deal with a range of inefficiencies, including high costs in the processing sector.

In 1994, the Industry Commission inquiry into the performance of the meat processing industry confirmed the importance of achieving and maintaining improvements and competitive efficiencies. No-one can contest these simple objectives. The commission found that Australia was not able to capitalise on its comparative production price advantage because the industry's processing sector was operating at significantly higher cost levels than the processing sectors of our major competitors.

The commission, at the time it put forward its report, found that Australia was losing market share in almost all its major export markets. It is not just these barriers in the processing sector which are impeding the meat industry's capacity to be competitive in world markets, but other costs associated with Australia's labour market, waterfront, quarantine and meat inspection processes are also being addressed.

Honourable members will no doubt agree that we must have a vision for the future and that reform in these key areas is vital to the long-term viability of Australia's meat and livestock industry. This government is tackling these necessary reforms, and significant initiatives are already under way. For example, in the key area of industrial relations, the government has put the Workplace Relations Act in place and, as a consequence, award simplification test cases have been formulated for examination by a full bench of the Australian Industrial Relations Commission. One of the test cases includes the red meat processing industry and the particular issue of the tally system. The outcome of these cases will have particular importance for the industry.

The response to the Industry Commission's 1994 report was the establishment of the Meat and Live-stock Industry Act 1995 which allowed for some institutional restructuring, particularly in relation to priorities and policy direction. The act was designed to commence the process of engaging industry to accept a greater role in self-determination. This bill, in effect, takes the major final steps towards em powerment by providing the industry with a structure which offers ownership and management of its own affairs.

Review of current arrangements

By the end of 1995, it was clear that beef producers were suffering from the effects of a major drought and other significant international market factors which forced saleyard prices down to very low levels with consequential reduced returns to producers. Furthermore, other red meat producers and other sectors of the industry were also facing problems.

The government instigated a review of the current institutional arrangements to determine whether early action might address at least some of the meat and livestock industry's problems. To that end, a joint industry and government meat and livestock industry reform task force was established in 1996. The task force reviewed the structural arrangements, the financial management and operational effectiveness of the present statutory bodies. It also pinpointed key industry policy and program issues for early action by government and industry.

The task force found that market and industry circumstances had changed since the establishment of the Meat and Live-stock Industry Act 1995. The task force found that the current statutory arrangements, which had worked well in the past, needed to be adjusted to deliver what industry required for the future. Prevailing and future commercial realities demand a structure which can deliver more flexible and focused commercial programs and operations. A sense of industry ownership and deeper involvement by levy-paying stakeholders is also required.

Working from these findings, the task force report offered a wide range of recommendations based on two underlying principles. The first was that the meat industry in Australia must move towards a more self-regulated, responsible and market driven operation. The second was that the role of government must move to one side, with a more clearly defined set of core functions for industry, while at the same time improving strategic alliances with and within industry for the delivery of these functions.

The report also suggested that significant savings could be achieved by changing the current structures and levy- funded functions and making the provision of services fully contestable and transparent to the industry stakeholders. Finally, the report advanced proposals for government on joint industry-government policy and program actions. These proposals cover a broad range of joint actions that, in large part, cross state-Commonwealth responsibilities and those of industry. Many aspects of these proposals are already being addressed by Commonwealth and state agencies in direct consultations with industry.

A number of recommendations were made on the need for uniformity in regulatory legislation and administration across Australia. A whole of government approach is essential to ensure an integrated and consistent basis for meat safety and other regulations and to provide a national regulatory underpinning for industry driven quality assurance and self-regulation schemes. I intend to continue to advance these issues with my colleagues on the Agriculture and Resource Management Council of Australia and New Zealand, ARMCANZ.

New arrangements

The government decided on new arrangements following extensive consultations with all parts of Australia's vast and divergent meat and livestock industry. Full consensus has not been possible and is not possible. In an industry as diverse as this one, this is not surprising. I am pleased to say, however, there is broad agreement on major issues and each sector is in the process of implementing the changes sought. These included the need for a non-government, commercially based organisation; the necessity for industry to manage its own affairs; a more hard-headed approach to how levy-payer moneys are spent; and separately accountable beef and sheepmeat marketing and promotion divisions and separately accountable research and development divisions, within a commercially based organisation.

Another key area of agreement is that joint industry functions, such as research and development, food safety and quality, market intelligence and market access issues, animal health and welfare, crisis management, eating quality standards, and Ausmeat should be dealt with cooperatively and collectively, and be adequately funded and serviced. The industry is now focused on their collective responsibility in scoping projects and programs within each of the joint function areas. This is fundamental and very important.

The new structures will consist of a new producer-owned service delivery company, limited by guarantee under the Corporations Law, to provide a range of services to the industry, including professional guidance. The role of the company needs to be recognised, more so than the fact that it will be producer owned. The company will replace the statutory authorities of the Australian Meat and Live-stock Corporation (AMLC) and the Meat Research Corporation (MRC).

The company will be accessible to all sectors within the industry in every sense, including service delivery, professional guidance and advice. All sectors will independently enter into contracts with the company for specific services. Importantly, the company will be a fully professional organisation which will be able to develop initiatives and proposals and advise industry and government on key issues. There will be separate companies, limited by guarantee, for the meat processors, livestock exporters and for the red meat advisory council, which I will discuss shortly.

There will be a memorandum of understanding between industry sectors and government to ensure cooperation in the overall interests of the red meat industry. There will be a commitment to the principles of a meat industry strategic plan and collective activities under genuine partnership arrangements.

This bill is designed to free the industry from the legislative constraints imposed upon statutory bodies. The new, privately owned structure will allow industry to take appropriate steps towards:

1.   Increasing industry's role in self-determination and self-regulation, in a commercially oriented environment;

2.   Enhancing industry's capacity to determine and address areas of market failure;

3.   Progressive implementation and facilitation of future industry agreed structural and other reforms;

4.   Encouraging inclusion of all parties through willing partnerships, as well as separate contractual arrangements;

5.   Improving industry cooperation, principally through empowering industry leadership, with rapid development of sound policy decisions and cooperative mechanisms;

6.   Minimising government intervention while at the same time ensuring continuing and appropriate representation, governance, accountability and crises management arrangements; together with,

7.   Providing clear ownership by levy payers and non-statutory contributors, and appropriate participation in decision making processes and resultant benefits.

The new arrangements will empower the industry peak councils to take leadership roles. The peak councils are expected to be as broadly representative of their sectors' interests as possible, bearing in mind that there will always be dissenters and detractors of any systems put in place.

Under voluntary systems, it is rarely possible to have full representation. Members of each sector should seek to make their views and concerns known to the peak councils. It is the responsibility of each and every participant of the industry to make their views known and seek to influence industry representation where appropriate. A requirement of what we are doing is that the relevant representative bodies be open to all views and embrace genuine representative responsibility.

Peak councils will carry responsibility for decisions on levels of levies and non-statutory funding for the new service delivery company. They will be responsible, among other things, for the development of their sector's input into the meat industry strategic plan and for the implementation of that plan.

To be able to effectively carry out the new responsibilities which will be required of them, the peak councils will need to be adequately funded so that they can have access to the professional expertise they will require. A primary new source of funding for peak councils will be income earned from investment of industry reserves. We must approach this issue practically and sensibly, according to the needs and responsibilities of each sector or agency.

The `red meat advisory council', which may operate under another name, is primarily to provide advice to government on issues affecting the whole of industry. It is proposed that the advisory council be incorporated as a company limited by guarantee with directors being the chairs of each of the six peak councils who will be voting members, and representatives of the processor and livestock exporter companies who will be participants. It will also draw, as appropriate and when required, on advisers from government and other involved expert areas of the industry. The framework in which the advisory council will operate will be agreed in the MOU. Its functions will include:

advice to the minister;

custodianship of the MOU and the meat industry strategic plan (the MISP);

coordination and development of, and assessment of performance against, the industry strategic plan;

being the trustees (within a deed of trust) for industry reserves currently held by the statutory corporations, and ensure the investment of these moneys by a reputable and reliable trust fund manager;

administer arrangements to fund peak councils including the distribution of funds (from investment of reserves) to peak councils;

provide an interface for resolving sectoral differences or problems in a way which does not adversely affect industry but in a way which promotes the image and purpose of the industry.

The terms of the council's custodianship of the industry reserves will be determined jointly by industry and government. The principal requirements will be that the funds be used for the benefit of industry as a whole, be managed transparently in a manner consistent with an industry developed strategic plan, and be based on accepted commercial prac tice. It is envisaged the returns on investments would be used primarily to fund peak councils and, in a small part, to defray the costs of running the council.

Levies, charges and other funding

Under present arrangements, industry levies and charges primarily go towards funding the industry's three statutory bodies—the ALMC, the MRC, and the meat industry council. Other agencies which receive funding from industry levies and charges include the National Residue Survey (NRS), the Rural Industries Research and Development Corporation (RIRDC), the National Cattle Disease Eradication (NCDE) program and the Australian Animal Health Council (AAHC).

Under the new arrangements, contributions will be sourced from various industry sectors, either on a statutory or a non-statutory basis. The collection of statutory levies will still be based on the present system but with changes allowing for a transaction levy on sheep, lambs and goats to replace the livestock slaughter levy previously paid by processors, and a separate transaction levy component on grain fed cattle.

The transaction levy approach for sheep, lambs and goats was adopted at the request of a clear majority of industry whose submission met all of the requirements of the government's levy principles. A similar request was also submitted by the grain fed cattle industry sector for a separate cattle transaction levy. Again this submission met each of the government's levy principles.

The existing levy and charge imposition acts have been modified to provide for clear sectoral ownership. Processors and livestock exporters will contribute on a non-statutory basis. To accommodate the non-statutory nature of the funding, the now separate processor and exporter levies will be set at zero, provided these sectors meet their share of whole of industry obligations under the new arrangements. There will be no changes to current levy rates until the new arrangements, including formal agreement on the nature and extent of processor and livestock exporter contributions, are fully in place and contractually deliverable.

Should the non-statutory contributions by processors and livestock exporters fail to meet agreed funding levels for joint industry functions, and as specifically agreed by these two sectors, the government has their prior agreement to maintain levies at a required level to ensure that there is adequate funding.

The buffalo industry sector has chosen to use RIRDC to meet its collective research and development programs and will not be contributing to the new service delivery company. Separate levy legislation will provide for direct buffalo industry sector contributions to RIRDC and continued contribution by this sector to the NRS and NCDE.

The government will continue to match industry R&D commitments. Matching funds will continue on a dollar for dollar basis on eligible expenditure up to the maximum matching of 0.5 per cent of the industry's gross value of production. However, to qualify for matching funding for levy monies, contributing groups will need to meet specific eligibility criteria.

MOU and deed of grants

The bill recognises that much of the prescriptive detail for flow of levy funds and management of reserves will be set out in a deed of grant. The deed of grant will be implemented between the government and the producer owned service delivery company. The deed will set out the conditions upon which levy monies and matching funds are passed to the company and how those funds may be applied. It will also set out the minimal accountability requirements that enable me to meet my responsibilities under the Audit Act 1901.

The MOU will primarily be between industry peak bodies and also the government. Where appropriate and where they have identified responsibility, the service delivery company and other entities will be required to be signatories. The document will consist of a statement of principles and supporting schedules clearly outlining the new arrangements to which industry sectors have agreed. It will also outline intended joint function areas, core function areas and set out the guiding principles for the operation of the red meat advisory council.

Assets and liabilities

In consultation with industry and appropriate central commonwealth agencies I will determine the most appropriate placement of the assets and liabilities of the ALMC and the MRC. The legislative provisions to effect the transfer of such assets and liabilities to private companies is provided for in the Australian Meat and Live-stock Industry (Repeals and Consequential Provisions) Bill 1997 .

Some of the industry reserves will be transferred to the new service delivery company to offset liabilities which exist at the time of transfer and to meet start-up capital requirements. A full due diligence exercise will be conducted for accountability purposes to ensure all assets and liabilities are identified prior to transfer. Start-up capital will also be provided to the processor and livestock exporter companies. I will, in consultation with industry, determine how the balance of reserves will be used to benefit the industry as a whole.

Role of government, ministerial powers and accountability

The role of government in the new arrangements will be minimal, but will remain necessary while taxpayer monies are involved. Ministerial powers of intervention and mechanisms to guarantee appropriate standards of governance and accountability to parliament and levy payers will be retained through the combination of legislation—including the Corporations Law—regulation, appropriation, deeds of grant and the industry MOU.

The Commonwealth will not be a member of any of the new companies, nor will it have board representation or carry any liability in relation to their operations. The government will, however, continue to fulfil its responsibility. The government will also continue to assist industry through working to ensure the economic framework provides for a genuinely competitive environment and that the global trading environment does not disadvantage our competitive advantages. The government will continue to maintain a strong presence in areas of food safety and hygiene, research and development, industry adjustment processes, training and education delivery, market access negotiations, competition and contestability, workplace reform, and infrastructure.

Legislative provisions

The legislative package consists of this, the principal bill, and sixteen associated bills. The principal bill makes provision for some staging by proclamation of implementation. This is critical because many of the mechanisms which will underpin effective and efficient industry management, the creation of representative corporations, the development of industry contractual arrangements and negotiations by industry leaders, must be completed before the current legislation is repealed and levies adjusted. These activities are well advanced.

The legislation provides for the continued management of existing export licences, export quotas and enforcement powers. At present these functions are managed by the ALMC and paid for by levy payers. They will now transfer to the Department of Primary Industries and Energy, including the provision for full cost recovery for the administration of licences and quotas.

Provision is made in the bill for the secretary of DPIE to have regard to policies formulated by prescribed industry bodies when exercising licensing and quota powers. Provision is also made for levy funds for marketing and promotion activities and R&D functions to flow to the new service delivery company. There is also provision for the government to identify those organisations which, after meeting prescribed conditions, will be recognised as eligible donors for the purpose of Commonwealth matching funding on eligible R&D expenditure within the service delivery company.

The principal legislation makes provision for ministerial direction, but only in situations of emergency and where the national interest is involved. The power of direction is limited to matters for which the Commonwealth has authority under the constitution.

The new structural arrangements impact directly on other legislation, including the meat industry's present levies and charges acts. The Australian Meat and Live-stock Industry (Repeals and Consequential Provi sions) Bill 1997 makes provision to repeal or amend relevant parts of the affected acts. In addition, a new set of levy and charge bills has been drafted to accommodate the change to the nature of future contributions. The changes are as follows:

the Cattle Export Charges Act 1990 will be replaced by two new cattle export charge acts which deal separately with producers and exporters. This allows for subsequent reduction of the export sector levy components to zero when that sector delivers on its funding commitments under the new partnership arrangements.

the Live-stock Export Charge Act 1977 will be replaced by two new livestock export charges acts which deal separately with producers and exporters. This will also allow for subsequent reduction of the export sector components to zero.

the Live-stock Slaughter Levy Act 1964 will be replaced by a Live-stock Transactions Levy Act and a Live-stock Slaughter (Processors) Levy Act to allow for the separation of producers' and processors' funding and for the processors' funding to move to zero levy rates.

the particular requirements of the buffalo industry will be met by new buffalo export charge and slaughter levy acts. Separate levy acts are needed because the buffalo industry will retain slaughter levy and export charge arrangements. Contributions from the buffalo industry will continue to go to RIRDC, the NRS and the NCDE as at present.

the Beef Production Levy Act 1990 will be amended to allow for the processors' funding to move to zero levy rates.

the new act replacing the Cattle Transaction Levy Act 1995 will provide for the imposition of separate levy components for grass fed and grain fed cattle producers to support their individual contributions to the new service delivery company, as well as continued funding to the NCDE and AAHC.

a revised set of national residue survey bills has been included in this package to allow for continuation of the provision of produc er linked payments on cattle, buffalo, sheep, lambs and goats.

In all cases, the promotion, marketing, R&D and program specific components will be specifically identified. Provisions will ensure collections of levies and voluntary contributions relating to any particular sector will be clearly and transparently identifiable.

Collection arrangements and cost recovery for these levies will remain as they are at present.

National eating quality standards scheme

I have long promoted the need for a proper meat grading system in this country. I expect the new service delivery company to maintain the high priority being given to the early introduction of the proposed national eating quality standards scheme and further expects funding for this initiative to be of a high priority for the industry sectors. As they say, if you like to eat, you are involved in agriculture. One thing that we really can do that will benefit the consumers of this nation and beef producers—or meat producers of all persuasions—at the same time is to ensure that we have in place a mechanism which means that the consumer can be reassured as to the eating quality of whatever it is that they are purchasing.

Support for producers' marketing initiatives

I have asked the new service delivery company to give careful consideration to ways to assist groups of producers who wish to pursue various marketing initiatives. Such initiatives would include the development of brands and the development of niche markets and a means by which innovation and initiatives can reap rewards.

Finally, I would like to repeat that the legislation package I have just outlined will facilitate the reshaping and refocusing of the Australian red meat and livestock industry. The new statutory arrangements will:

empower industry;

reduce government involvement;

achieve a more focused and cost efficient service delivery;

provide a more responsive structure capable of adapting to rapidly evolving competition and customer needs; and

encourage the development of systems and structures which promote the culture of industry cooperation and a sense of corporate behaviour in developing and ensuring the future prosperity of the Australian red meat industry.

These new arrangements represent a radical move to industry self-determination. The changes will be carefully implemented to ensure that structures, relationships and operations are corporate in their nature and have proper and workable settings and control measures.

Since the announcement of the government's decision, industry has had time to appreciate the historic opportunities being offered to it and acknowledged that the package will accommodate most, if not all, of what the various sectors have been seeking. All sectors have assured me that they accept the decisions taken and that they will get behind them to ensure their effective implementation. Above all, industry has recognised that the new arrangements are offering a necessary opportunity to bring about a fundamental cultural change. Rather than relying on government involvement and legislated instruments, the package offers industry control and ownership of its own destiny. I commend the bill to honourable members and present the explanatory memorandum.

Debate (on motion by Mr McMullan) adjourned.