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Wednesday, 19 June 2002
Page: 3961

Mr TRUSS (Minister for Agriculture, Fisheries and Forestry) (4:50 PM) —In relation to calls for regulating the quota, you could probably go back to when it was first increased in around 1998 and some suggested that we should have put in place a regulation scheme even though we were only delivering a relatively small proportion of the total quota. With the benefit of hindsight, that might have been a good time to do it, when there was no pressure on the quota and it could have been allocated at a time when the issues could have been considered in a perhaps more rational environment than now. But we let that opportunity go in those days. It was not considered to be a pressing issue and so it was left. Certainly, looking at the statistics for deliveries, by April 2001 there would have been only a small proportion of the industry, if any, who would have believed we were going to fill the quota. If you look at the graph, the deliveries increased very substantially in the second half of the year.

There have always been calls to manage quotas, but there are other views in the industry. In fact one of the great old fathers of the industry said to me only a week or two ago that the government should never get involved in the management of quotas because whatever we do is worse than what would happen if the market is just left to run according to its own forces. I think in this particular case the industry is right: the effect of not managing the quota would have resulted in this instance in a gold rush as everybody, particularly the big meatworks, dumped as much meat as they could into the US in a hurry. By September or October this year, people who had monthly contracts year in, year out would have turned up and not been able to get into the market without paying a 26 per cent duty. If this regime falls over, one of the impacts will be that we will no doubt have this gold rush over a couple of months and then we will have a period of several months at the end of the year when people will be unable to enter the market. That would give us a boom-bust situation, which is the very worst possible outcome for anyone. Many of the critics of my distribution scheme have said that whilst they do not like the scheme at least they would prefer it to having nothing, because it does provide some degree of regulation in the market.

In relation to the query concerning 60-40, RMAC recommended a 60-40 distribution. I have accepted a 60-40 distribution. The distribution that we are proposing is on the basis of 60-40. However, I have capped the maximum gains at 140 per cent and the maximum losses at essentially 15 per cent or 85 per cent of quota. I have made that an overriding criterion above the 60-40. So instead of some people getting 1,000 or 2,000 per cent they only get 140 per cent, but others who might have only got 50 or 60 per cent will get this minimum of 85 per cent. The 60-40 rule is still there; I have just capped the losses and the gains.