Senator MARGETTS (4:48 PM) —The Greens are appalled at the lack of time the Senate has been given to properly consider this bill. It is one of a series of bills that the government has tried to rush through the Senate during the last fortnight. Senator Woodley mentioned the potential, or the threatened potential, for fragmentation, and of course some of that call has come from the Western Australian Farmers Federation. The responsibility for that kind of fragmentation will clearly lie with the minister.

Senator Woodley also is concerned or expresses doubt as to whether or not the extra 33 days will give an opportunity for some of the other models to be considered and for that potentially to be a problem. I ask whether or not the problem is the minister and whether or not he has shut his mind off, or has indicated that he has shut his mind off, to other models? If that is the problem, then it is a political issue we are dealing with in terms of rushing the bill through and trying to protect the minister from having to change his mind. That seems to me to be a concern, because it would be an extraordinary situation if the farmers of Western Australia were busy campaigning against the National Party in the Western Australia electorate.

I would also remind the Senate of situations that have occurred in the past in relation to industry groups like the Western Australian Fruit Growers Association, where they had a quite different view on where their funds should be put from the view of the national body. I am Western Australian. I understand the parochialism, but I also understand the importance of participatory democracy, and that is an important basis upon which the Greens stand. If we have a situation where people are forced into a situation by dint of numbers or by someone stamping their feet, including the minister, then that is not going to work. Industry bodies are not going to work or stick together under those circumstances.

The timetabling of this bill has been absolutely outrageous and it undermines the proper scrutiny of bills in the Senate. It has been mentioned that the minister only issued initial drafting instructions for the bill in early April. The first draft of the legislation was only available on 28 April. The bill was not even introduced to the House until 14 May this year and, of course, was passed by the House only on the first day of the last month.

The bill was referred to the Senate Rural and Regional Affairs and Transport Legislation Committee on 24 June, and that was just a measly two weeks ago. The process with the committee left a lot to be desired. The committee did not have the time to advertise the inquiry. Interested parties had a whopping three days to write and present written submissions. The written submissions were not even available to the committee members until after the hearings had started on 29 June. The single—one—committee hearing was held on 29 June, a day during a sitting week of the Senate, so it was really difficult for many senators, including me, who were interested, to participate.

The government gave the committee a reporting time to the Senate of just over a day and a half. That is a ridiculously short amount of time to properly consider all the written and oral evidence submitted. Indeed, the Hansard of the oral evidence was not officially available until a few hours before the report was due. How are the committee members supposed to be able to consider even a fraction of the evidence in a rigorous fashion under those conditions? This was a joke of a process—an insult to the concept of proper parliamentary process.

There is a reason that standing order 111 or the cut-off is in place. It is to try to circumvent this exact situation occurring. It is an express recognition by the Senate that this kind of fast-tracking is unacceptable. Indeed, the current government is on record as supporting that standing order, yet they are now pushing—

Senator Troeth —Mr Acting Deputy President, we have debated the cut-off motion, and I would ask Senator Margetts to confine her remarks to the actual legislation under consideration.

Senator MARGETTS —On Senator Troeth's point of order, the first part of my presentation is on the process leading up to this legislation. It is quite in order for me to talk about the lack of process in considering this bill.

The ACTING DEPUTY PRESIDENT (Senator Hogg) —Senator Margetts, I think that is fair, but I just remind you not to reflect on a vote of the Senate.

Senator MARGETTS —Thank you, Mr Acting Deputy President, I was not intending to do that. I believe it is demonstrably clear that this situation provides insufficient time for the Senate to properly assess this bill. As a result—and this is what I am getting to, and perhaps Senator Troeth might listen to why I was leading up to this—I will move a second reading amendment that postpones the consideration of this bill. That is what I have been trying to talk about for the last few minutes, but Senator Troeth might not understand that.

I will be seeking to postpone the committee stage of the bill until the first sitting day in November 1998. It will be the only sensible way to proceed with this bill. Far from reflecting on the Senate, I am asking that we consider what we have not considered properly so far. After the range of arguments presented in the debate on the exemption, I had hoped that that might happen, but I now hope that the amendment is supported.

I want to talk about the government's ideological push behind that. Some senators may have seen Monday's 7.30 Report, which put to Graeme Samuels from the National Competition Council that many people leaving the Queensland election polling booths expressed the view that competition policy was behind a lot of their concerns in the electorate. Graeme Samuels's reply was that that was ridiculous because competition policy had not yet affected rural and regional Australia, which probably just goes to prove how out of touch Graeme Samuels is with his own—

Senator Troeth —Mr Acting Deputy President, I raise a point of order. I point out to Senator Margetts that Mr Samuel's proper name is without the `s', and that perhaps she should check her authorities first. For the Hansard record, it is `Samuel'.

The ACTING DEPUTY PRESIDENT —It is not a point of order, and I am not sure of the person's correct name myself.

Senator MARGETTS —I thank the parliamentary secretary for that very helpful interjection. This bill exemplifies the ideological zealotry of the government and the farce that is their national competition policy. Perhaps the parliamentary secretary will jump up and say, `This is not a bill about national competition policy,' but let me explain a little further so it might become clear. The government announced that a review of the wheat industry under national competition policy will be conducted in 1999-2000. The NCC have criticised this timing and have expressly cited this decision as `an example of failure to schedule an early review of important legislation'.

With the commencement of the review still over a year away—honourable senators will know I am not a great fan of the National Competition Council—the government has clearly laid its expectations for the outcome of the review on the table. Would the government be prepared to admit that the National Competition Council's legislative reviews are such a foregone conclusion that they can, or should, alter legislation before the review even happens? If so, I wonder if the government sees any problems with this kind of process. Is Graeme Samuel saying that national competition policy is not happening because he is not pulling the strings, or is he saying that if state governments or federal governments are using national competition policy as a reason for making major changes in the bush, without reviewing it, then that is not national competition policy?

The emphasis seems to be on deregulation and the disciplines of the market, regardless of the reality of the outcomes on the ground. The Prime Minister (Mr Howard) claims that all mums and dads in Australia will benefit from being shareholders—that is, being involved with the private market and, largely, the private speculative market. He has a vision of a nation of shareholders, and the emphasis of that is on the profit maximising aspect of a corporate structure. There do not seem to be any other values considered important except profit maximisation. A very clear example of that can been seen in the conflict and tension we had between the public interest and the bottom line considerations of the shareholders with the Telstra sale bill—and we know how concerned many people in Australia are about that tension between profit maximisation and public interest.

But here we have the same problem presented again in this bill—the strong conflict between the bottom line emphasis on profit maximisation of the shareholders and the needs of the growers in the industry who would potentially like to have some say in what happens to their own money in their own corporation. This is the same kind of focus we see in competition policy and in the outcomes of the Uruguay Round of GATT—that is, the emphasis on narrow goals at the expense of real evidence and concerns on the ground. The impact is on pursuing a narrow line, the bottom line, without looking at the wider impacts on real people.

This bill is of considerable significance. It will determine the future structure of one of Australia's major export industries with sales worth billions of dollars each year. This bill provides for the establishment of the Wheat Export Authority, WEA, on 1 July 1999, which replaces the Australian Wheat Board and will have the function of controlling the export of wheat from Australia and monitoring nominated country B's performance in relation to the export of wheat. It has already been mentioned how large a player Western Australia is; it is bizarre to suggest that you can cut those growers out and suggest that you are going to have a board or an entity that will function harmoniously.

The bill also provides for B class shares in nominated company A to be issued to Wheat Industry Fund equity holders, and for such shares to be issued at the rate of one B class share for each WIF unit. It also provides nominated company B with the power to export wheat under the Wheat Export Authority until 1 July 2004. The support by the industry and the Australian Wheat Board for this bill was significantly qualified. The time frame that the Senate has to work with does not provide time to adequately attempt to address or reconcile these concerns.

It has been mentioned that Western Australia is the largest wheat export state in Australia. The Western Australian Farmers Federation has 5,550 members. With 5,000 of them growing grain, it is the most representative body in Australia. The Western Australian Farmers Federation has major concerns with many tenets of this bill, especially the huge conflict between the growers' and the shareholders' concerns.

The entire industry, as we have heard, has major concerns about the sunset clause of 1 July 2004 on the single desk export monopoly of wheat. The industry wants this to be deleted from the bill. This issue is seen as of the utmost importance by a range of organisations around Australia, including the New South Wales Farmers Association, which argues that if this issue is not resolved it will not support the passage of this bill. I understand that the government and Democrats may be coming up with an amendment to potentially address this issue. I will assess that during the debate.

On top of the major concerns by the industry, there is a significant number of legal uncertainties associated with the bill. The Grains Council has expressed concern about the possible consequences of the new company law review legislation passed by the Senate this sitting period. The Minister for Primary Industries and Energy, John Anderson, has expressly stated that he is unsure of the potential impacts of the recent Company Law Review Bill 1997 that may impact on the use of the AWB of proxy voting. He has stated:

The new Company Law Review Legislation requires very close examination and detailed legal opinion before legislative amendments can be introduced.

Have we seen those opinions? Going back to some of the major concerns expressed by the Western Australian Farmers Federation and many other growers at grassroots level, the grower corporate model as facilitated by this bill has been criticised significantly. There is immense uncertainty as to whether this model will adequately address the concerns of growers and the wheat industry as a whole. The WA Farmers Federation has suggested an alternative grower cooperative model to address its concerns. Its concerns have had no sounding board. There is a strong conflict between maximising returns to pool deliverers and providing a commercial rate of return to financial shareholders. This clear conflict of interest has been recognised and there has been an attempt to address concerns by a number of measures: firstly, the majority of directors elected by growers; secondly, the pooling subsidiary; and, thirdly, the directors' obligations.

Let us look at how these measures are still inadequate. First of all, the majority of directors are elected by growers. Is this in the best interests of the company as a whole? The growers corporate model has seven A-class directors, four B-class directors—this may change to two B-class directors and two appointed for special expertise—plus the CEO. Growers elect seven of the 12. To change this requires a 75 per cent majority of A-class shareholders to vote in favour. The implication is that, because the company is grower controlled, the directors will always act in growers' best interests. However, the articles and Corporations Law clearly state that the obligations of all directors are to promote the best interests of the company as a whole and not to the people who elect them. Thus, the grower elected directors must always act in the best interest of the company as a whole. If they act in a partisan manner, they are acting illegally and are potentially liable to the shareholders. The reality is that the `best interests of the company' is equated to high profits and high share prices. This emphasis, however, will not necessarily result in outcomes that are in the growers' interests.

Let us look at comparisons with similar companies. How do other publicly listed grower controlled companies behave? Wesfarmers is still grower controlled. The cooperative has the governing shares in Wesfarmers Ltd. Only growers can vote for cooperative directors. However, Wesfarmers undoubtedly is totally investor driven. The grower elected directors always make decisions in the shareholders' best interests—at least that is what they appear to do. The consequences of doing otherwise for the company in terms of market capitalisation would be seen as disastrous.

What about GrainCorp, the privatised New South Wales grain handling authority? Growers have the governing share in this company as well as many of the ASX listed shares. Last year, they returned over 140 per cent on their capital. When faced with the best interests of the grain industry or the best interests of the shareholders, it is patently obvious who came first. Without a grain of doubt—sorry about that—AWB Ltd will face the same conflicts of interest. Is it reasonable to expect the grower elected directors of AWB Ltd to act any differently from the grower elected directors in Wesfarmers or GrainCorp? I do not think so. In time, I believe that they will act in exactly the same way and the next generation of wheat growers will pay the price.

In relation to the pooling subsidiary, the theory is that, by separating the function of the pooling into a separate pooling subsidiary, the profit driven parent company is kept at arms length from the grower focused pooling section. However, it is a wholly owned subsidiary. A quorum for a general meeting is only for the parent company to be present. Providing its actions do not conflict with the requirement of its own M and As, it can change the subsidiary M and As at will. For instance, the pooling subsidiary has a requirement to obtain permission in writing from the parent before it is allowed to borrow. It is conceivable that all major functions could have similar requirements if the parent so wanted.

The parent company appoints four of the seven directors. These include the chair of the parent board, the managing director of the parent, one A-class director and one other director. Is it really very likely that these four would go against the parent company directions? I hardly think so. We have to conclude that the pooling subsidiary will only be as independent as it is allowed to be by the parent. In any case, the major services of marketing the wheat as well as underwriting the first advance payment to growers are to be done by the parent. Therefore, the parent company will choose how much profit to include when it sends the bill to the pool subsidiary for services rendered.

What are the directors' obligations? The memorandum and articles of association are supposed to ameliorate the conflict in directors' obligations between shareholders and growers. The memorandum and articles of association contain the following requirements:

The business of the pool subsidiary is managed with the objective of maximising the net return for growers who sell wheat into the pools run by the Pool Subsidiary by securing, developing and maintaining markets for wheat and minimising costs as far as practicable.

And:

. . . the directors may have regard to the desirability of providing B class shareholders with a reasonable rate of return over time and the possibility that further capital may need to be raised but nothing in this clause removes the obligations of the directors to manage the business with an objective of providing services to the Pools Subsidiary efficiently and at competitive prices.

These are clearly motherhood, or parenthood, statements that we can make as little of or as much of as we like. Who is to define what `minimising costs as far as practicable' is? What is `a reasonable rate of return'? These are clearly expressions that are very nebulous and difficult to put your finger on. Basically, it would be possible to justify any position that the directors are likely to take as being within these parameters. Within the context of a publicly listed company whose success is measured by its profit, it is unlikely these obligations will be interpreted by the directors in the same manner as the wheat growers would always like.

The Australian Wheat Board management has share option schemes available under the memorandum and articles. Where is the incentive to act? It is effectively saying to management that, if you adopt as loose as possible an interpretation of these obligations, you will be rewarded by a lot of money in your pockets. Ultimately, the power of the dollar will emerge triumphant. It is patently clear that all the concerns surrounding the passage of this legislation have not been addressed in a satisfactory manner—that is hardly surprising considering the ridiculous fast tracking of this legislation.

The legislation should not have come up this quickly. I will certainly be attempting to ameliorate the legislation in the committee stage, but I do not think it can be fixed properly in the time frame that we have been given. I move:

Omit all words after "That", substitute "further consideration of the bill be postponed and be an order of the day for the first day of sitting in November 1998".