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Wednesday, 21 March 2012
Page: 3697

Mr SIDEBOTTOM (BraddonParliamentary Secretary for Agriculture, Fisheries and Forestry) (09:46): I move:

That this bill be now read a second time.

On 1 July 2008, the Australian government reformed wheat export marketing arrangements with the abolition of the single desk and the establishment of the Wheat Export Accreditation Scheme, known as the scheme, administered by Wheat Exports Australia (WEA). Previously, Australian farmers could not choose who would export their wheat.

The abolition of the single desk has led to improved productivity and created new global export markets for Australian growers. This has led to improved job opportunities in rural and regional centres. There are now 26 accredited exporters, with 19 of these being active in the last marketing year.

As promised by the government when the reforms were introduced, an independent review of the arrangements was undertaken by the Productivity Commission in 2010. The commission found that the scheme had served industry and the nation well, but that the industry was now mature enough to move to a deregulated model.

The government agrees in principle with the commission's recommendations. However, after carefully considering the views put forward by industry, it has decided to introduce the next set of changes through a staged approach which will provide a more efficient transition to full market deregulation in the longer term.

The first stage was the introduction of a 'lighter touch' accreditation scheme to be applied until 30 September 2012. This change has reduced the level of 'red tape' for exporters while still meeting grower concerns about 'fit and proper issues' and maintaining the link with the access test for port operators that many exporters believe is critical. It is, however, not a 'softer touch' as the WEA still has the capacity to respond to any issues that may relate to the accreditation of an exporter.

Passage of the Wheat Export Marketing Amendment Bill 2012 will implement the next stages of the government's response and complete the transition to a fully deregulated bulk wheat export market.

The bill will abolish the scheme and the wheat export charge (WEC) on 30 September 2012. The WEA will continue in operation until 31 December 2012 to complete outstanding tasks such as preparation of its final annual report and also the Report for Growers.

Abolishing the scheme will ensure that the benefits to industry provided by accreditation during the transition to deregulation are not undermined in the longer term by the direct and indirect costs of continuing with a scheme that has served its purpose. These costs include the WEC and the administrative and regulatory burden of accreditation, as well as the negative impact of unnecessary regulation on efficiency and competition in the wheat industry over time.

The recent strong export performance has led to the WEA special account holding more funds than are required to fund the operation of the WEA. As this represents an overpayment of industry funds, the government will look to amend the regulations and set the WEC rate at zero as soon as possible.

However, the account will still hold surplus funds when the WEA is abolished. The Department of Agriculture, Fisheries and Forestry will be repaid $500,000 owing from a previous funds transfer that was not used. The remainder will be reinvested in the wheat industry after consultation with relevant stakeholders.

The government agrees with the commission's recommendation to retain the access test until 30 September 2014. The link between the access test and the ability to export bulk wheat will remain during this period. This action responds to concerns among some growers and traders about possible anticompetitive behaviour with respect to grain port terminal access.

Retaining the access test until 2014 will give the industry sufficient time, and appropriate incentives, to adjust to the new trading environment. It will also allow for some new features of the competitive environment to be institutionalised while minimising the chances of damaging future investments or undermining reasonable returns to existing asset holders. The bill will facilitate the removal of the access test requirements for grain port terminal operators on 30 September 2014. The market will then move to full deregulation, with all aspects of the industry subject to general competition law administered by the Australian Competition and Consumer Commission. This will bring the wheat export market into line with other agricultural commodity markets and promote further competition in the wheat export industry, leading to increased productivity and profitability.

To provide certainty for growers and bulk wheat exporters about security of access to grain port terminal services in the longer term, the access test will only be abolished if the industry has a non-prescribed voluntary code of conduct covering grain export terminal operations in place. The code must include continuous disclosure rules and be consistent with ACCC guidelines for voluntary codes of conduct. The Minister for Agriculture, Fisheries and Forestry will determine if the code of conduct is of a standard that will allow the abolition of the access test.

The implementation of an industry code of conduct will give growers certainty that, irrespective of which exporter they sell to, their product will gain access to grain port terminal services. It will reinforce Australia's international reputation as a reliable wheat supplier and give overseas customers certainty that all Australian exporters will be able to meet supply commitments. It will also help ensure that these facilities have the necessary throughput to attract the level of return on investment required to keep them viable.

The government is aware of some concerns from parts of the wheat industry that a lack of access to market information on stocks and flows of grains is impacting on competitiveness. The government is willing to help industry find a solution, potentially through the voluntary code of conduct. It is already working with Grain Trade Australia and the wider industry to develop the code and strongly encourages all industry sectors to engage in this process.

If an acceptable code is not approved, the requirement for bulk wheat exporters that are grain port terminal service providers to pass the access test in order to be able to export will continue.

The bill reflects the government's commitment to promoting competition within the wheat export industry. Australian producers are the most innovative and efficient in the world. Passage of the bill will further develop a wheat-marketing system that rewards this and provides benefits to all industry sectors. I commend the bill.

Debate adjourned.