Mr ZAHRA (4:43 PM) —The Agriculture, Fisheries and Forestry Legislation Amendment Bill (No. 1) 2000 is an important bill, and I welcome the opportunity to participate in this debate. As has been mentioned by the member for Corio, if we get the provisions of AQIS wrong it has huge repercussions for areas such as the McMillan electorate and other regional seats right across Australia. We do not want to see an outbreak of Newcastle disease, which would damage the chicken industry. We do not want to see foot-and-mouth disease in Australia, which would damage the beef industry. We do not want to see any disease introduced into Australia which has the potential to undermine the good work being done by the many rural industries which people in regional communities so heavily depend upon.

In considering the performance of AQIS, I urge members to at all times run the rule of commonsense over decisions. I have had conversations about AQIS with abattoirs in my electorate and about some of the hardness AQIS applies to circumstances the abattoirs often face. We do need AQIS to be a thorough, strong and accountable authority, but I do not think anyone in this chamber or in Australia more generally would want to see the compliance requirements of AQIS so rigidly enforced that companies in rural areas such as my electorate are forced to go to the wall as a result of complying with its requirements. I make that point whilst we are talking about AQIS and its performance because I do not think it is something which we should allow ourselves to lose sight of.

I want to talk a little bit today about an industry which is particularly important to my constituency, the seed potato industry. It is an important employer in West Gippsland generally and across the entire Gippsland region, but in particular it is an important employer in the town of Thorpdale in the south of my constituency. To give you an idea of how important an employer the potato industry is in Thorpdale, I can recount to you a time when I went to the Thorpdale Primary School for the first time as a member of parliament. I asked the children in the group that I was addressing, which was made up of grade 5 and grade 6 students, how many of them had parents who worked in the potato industry. Every kid except one in the class put their hand up, and it turned out that that one student was the son of one of the schoolteachers. We should not understate the importance of the potato industry to small towns like Thorpdale which have depended, and still depend, very heavily on the potato industry for their livelihood.

Over the years there have been substantial efforts made by people in the seed potato industry in particular to value add and to export. These are all things which we, as parliamentarians, encourage, and what people universally agree need to be done in terms of Australia's rural industries. We want to see more value adding. We want to see more export of our primary produce. That is what they have done and the success they have had is a tribute to them.

I would point to some statistics which have been provided to me by Seed Potatoes Victoria, the peak body representing seed potato growers right across the state of Victoria. They have kindly provided me with this graph which shows that in 1993 some $223,000 worth of seed potato was exported compared with, in 1999, $2.9 million worth of seed potato exports. You can see very clearly from this graph that the industry has been experiencing some success in its efforts to export its product, namely, the seed potato.

That is the sort of thing we need to encourage. That is the sort of thing we need to get behind, because towns like Thorpdale need to have an industry which it is dependent on, which is not stagnating, which is not going backwards and which is not harking back to the golden days of the 1940s or the 1950s but which is actually growing its product, value adding to its product and exporting its product, in particular to Asia. This is the sort of thing we need to get behind.

It is worth noting the percentage of seed potato exports as a proportion of total potato exports for the industry over that period. Once again Seed Potatoes Victoria has kindly provided me with two graphs which demonstrate this information. The graphs illustrate that, in 1993, $223,000 worth of seed potatoes were exported compared with $4.2 million worth of total potato exports. In 1999 that had grown to $2.9 million worth of seed potatoes exported compared with $13.189 million of normal potato exports, I guess we would call them. So you can see that not only has the amount of seed potato exported grown but as a proportion of all potato exports over that period it has grown as well.

The reason that I mention this information is not only to inform the House of a great success story in terms of the value adding and export of an Australian primary product but also to highlight the risk to the seed potato industry which has been created by, of all things, the goods and services tax. I have here a letter which I will read out in part to the House. This is a letter from Seed Potatoes Victoria and written by the executive officer, Tony Pitt. The imposition of GST on seed potatoes but not on normal potatoes has the potential to be a significant problem for the industry and to substantially undermine the industry and the good work which they have been doing. This is a letter which he has written to the Australian Taxation Office. His letter was prompted by a decision of the Australian Taxation Office to reverse the goods and services tax status of seed potatoes to be no longer GST free. He says in his letter:

He goes on:

This is the value adding that I was talking about, not just putting them in the ground and then flogging them off without any sort of thinking in terms of value adding going on. They are actually working to a management plan which is so strict that it is accredited, and that allows them to charge a premium price for their product. As I said before, this is something which we need to encourage, not discourage.

Mr Pitt's letter is quite long. I do not want to read it all out—I do not think I will have time—but he does go on in his letter to say:

He also states what he sees as being some of the likely repercussions of this action taken by the federal government. He says:

He then made quite a few dot points in his letter. I might just get to those which most poignantly illustrate the point: `the certification system collapses due to financial constraints', `private certification schemes will probably develop to replace the current scheme'—although there is some concern as to the effectiveness of those and whether or not there will be the same trust associated with them as is the case with the current scheme—`export trade and certified seed collapses because importing countries will not recognise the integrity of privately run schemes' and `the work done in developing a certification scheme in potatoes for the past 60 years is lost as personnel and expertise leave to find other areas of employment'. The last point he makes is `consumers suffer in the long term as disease levels rise again in potato districts and quality and farm productivity decline'. They are the points made by Seed Potatoes Victoria—the peak authority for seed potato growers in the state of Victoria—about the imposition of the GST on their industry.

It is important to note that in May of this year Seed Potatoes Victoria had a ruling from the Australian Taxation Office saying that seed potatoes would be GST free. In June there was a reversal of that decision. That meant that the previous advice was no longer current, and they had prepared on the basis of that previous advice. Many people in the industry—as has been illustrated by this letter—have some very grave concerns about the impact of the GST on seed potatoes and what it will mean for their certification process, which they have worked long and hard for some 50 or 60 years to get up and running and to have as a real success story. And it is a real success story. They are exporting more than ever and they have been able to get into some of those tough markets in Asia as well, and it is really to their credit.

I note that the Minister for Agriculture, Fisheries and Forestry is at the table, and I appreciate him being a part of this debate. I would again urge the minister to use whatever power he has to overturn that decision in relation to the GST status of seed potatoes, so that the industry can continue its success, continue to build on its export successes and actually develop the potential that so many of us have seen in the potato industry for quite a few years. I urge the minister, in the best bipartisan tradition of this place, to please take that consideration seriously and perhaps, if he sees fit, report back to the House at some point in the future.

The reason I mention the seed potato industry in particular in relation to this bill is that people in the seed potato industry have raised with me a concern that they have in relation to potato cyst nematode—PCN. I have written to the Minister for Agriculture, Fisheries and Forestry in relation to this matter. I have his correspondence here which I will mention at least in part. The minister responded on 29 June to my correspondence which I sent on 30 May, and I appreciate the considered letter that he wrote in response. I advise the minister that, to the best of my knowledge—even though this was a considered response from him to me in relation to a serious issue—there has still been precious little progress made in relation to the concerns which seed potato growers in Victoria have about artificial trade barriers between Victoria and other states being created by state administrations refusing to admit that PCN in Victoria is now completely eradicated and no longer a problem. This is a serious issue. The Constitution of Australia does require that there be no trade barriers between states. I fear that we have state administrations in Australia using PCN as a reason to basically stop competition from the very efficient and very productive seed potato growers in Victoria, in particular in Thorpdale.

Mr Truss —Talk to your mate David Lewellyn in Tasmania.

Mr ZAHRA —The minister tells me to speak to my colleagues. I can assure him that I have done and will do. But I would make the point that the intervention of the minister on behalf of these people would be gratefully welcomed. If the minister were interested in coming to my constituency to meet with these people, I would be very pleased to organise that for him. This is a serious issue. When you are talking about towns like Thorpdale where, as I mentioned before, all the mums and dads are employed in the potato industry, you cannot afford to let an issue like this go without the government attention it deserves.

There are two government issues affecting the industry. The first issue is the imposition of the GST, which is going to, in my view and in the view of Seed Potatoes Victoria, drive people away from the certified product to the non-certified product, which will lead to the destruction of all the good work they have done. The second issue is the establishment of the artificial trade barriers, as I described them, on the very flimsy basis of a PCN problem in Victoria. I think we owe it to the people of Thorpdale and of West Gippsland generally, who depend on this industry, to come up with an appropriate public policy response to the very serious problem which confronts their towns.

I would point out again—and I do not think we should ever lose sight of this—that, if left to their own devices, the seed potato industry in Victoria would be going great guns. It really seems that it is only government regulation that is standing in their way. I do not think it is a good thing for us to lose sight of that or to be flippant about it. The two things which stand in their way are the establishment by government of these artificial trade barriers and the GST imposed by government. We really owe it to them to not shackle them or stand in the way of their progress in terms of developing export markets, particularly those in Asia. They have done good work. They have been productive. They have been forward thinking. We really need to reward that work rather than punish them by forcing them to endure all sorts of government red tape and bureaucratisation of their industry. As I said, we need to be always conscious of the need to free up these industries rather than restrict them through unnecessary administration costs and charges and all the rest of those things which stand in the way of their progress.

I conclude by thanking my colleague the member for Corio for his interest in this issue. The member for Corio has been down to my constituency on a number of occasions to meet with potato growers on this issue, and he has been able to provide good advice and be an effective voice for their concerns. I place on record my thanks to the member for Corio for his interest in this area, and I know that it is ongoing. Again I extend a sincere invitation to the Minister for Agriculture, Fisheries and Forestry, who is at the table, to come and meet with potato growers in my district so that he might see and hear at first-hand the concerns which they have in relation to this industry. If his timetable does not allow that, he might consider requesting a response from his department on some of the concerns which I have addressed in my remarks today in relation to both PCN and the establishment of the artificial trade barriers, which I do not think anyone in this House thinks are appropriate. In Australia we need to do something in a bipartisan way to fix them.

We also need to look at the imposition of the GST on seed potatoes but not on normal potatoes, which I think is an anomaly. I do not think it was a situation that could ever have been imagined when the GST legislation was drafted. I challenge anyone to point out the difference between a sack of spuds that are seed potatoes and another sack of spuds that are not seed potatoes. To avoid the cost, the additional 10 per cent GST which they will have to apply, people will start saying that seed potatoes are not seed potatoes, so all the good work in terms of certification will actually be for nothing because there is an additional 10 per cent fee attached to them. So the market will be distorted, if you like, by the impact of the GST, and that is not a good thing. We do not want to see that. That is the sort of product that we want to encourage because it is a certified product and a certified product leads to less risk of PCN in the future. These are the types of things we want to encourage.

In the last few seconds I have left, I invite the minister to ask a senior officer in his department or an adviser to review some of the comments I have made today and perhaps undertake to write back to me in due course so that I can provide that information to my constituents.