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Monday, 19 June 2000
Page: 15180


Senator O'BRIEN (9:50 PM) —There was a story that popped up on the AAP wire service last Friday in the afternoon entitled `We're doing a great job: PM'. Mr Howard, commenting on economic data showing the Australian economy continued to grow in the March quarter, claimed the figures indicated `the country is being well-managed economically'. There are hundreds of thousands of families living in rural and regional Australia that would not agree. It is becoming increasingly difficult for them to identify the benefits of an annual growth in Australia's gross domestic product of four per cent, if it was indeed ever possible. There are certainly 13,500 dairy farming families throughout the country who are aggressively of the opposite view—that the GDP numbers are not providing them with any benefit. All they are seeing is a declining milk cheque. These families are certainly not enjoying Mr Howard's economic sunshine and, without immediate and effective action on the part of the federal government, their lot may deteriorate further.

This government continues to tell us and the farmers that deregulation of the dairy industry has nothing to do with it. Mr Anderson repeated that line again at the National Party convention in Tweed Heads. Mr Anderson and the Minister for Agriculture, Fisheries and Forestry, Mr Truss, say that the deregulation of the dairy industry is really a matter for the states and for the industry itself. While the regulation of farm gate milk prices for market milk is a matter for individual states, the reality is that the market is already deregulating itself. Mr Anderson also made that point yesterday. He told National Party delegates that the Victorian industry had enjoyed unbelievable productivity growth and expansion and now accounts for 64 per cent of national production. He inferred that that was the source of the problem. We all encourage industries to improve their productivity and grow their exports. So it is a bit tough to then link Victorian farmers with the wider industry problems, as Mr Anderson did in Tweed Heads.

Mr Anderson then went on to say that Victorian farmers and successive state governments had made it plain that they planned to deregulate. He said that section 92 of the Australian Constitution ensures that trade between states cannot be restricted. So, in the light of this market reality, it is also a bit rich to blame the state governments of New South Wales, Queensland and Western Australia for deregulating the dairy industry. That, frankly, is little more than desperate politics on the part of the federal National Party.

The real issue now is who should be responsible for managing the adjustment package to help dairy farmers cope with this further change in their industry. The dairy industry is worth around $7 billion a year. It employs around 50,000 people, mainly in regional and rural Australia. It exports $2 billion worth of product annually. It has delivered massive gains in productivity, with production increasing by 50 per cent over the last decade and with only a marginal increase in the size of the national herd. Its future, however, is very much a matter for Canberra, and so is the management of the regional adjustment that will inevitably flow from the end of market milk quotas. Mr Anderson claimed over the weekend that the federal government has moved to put in place `the biggest restructuring package ever seen in this country'. That claim is misleading.

Firstly, it was the industry and not the federal government that came up with the package. The federal government, after all, only endorsed it, finally and reluctantly. Secondly, the government should have been working with the dairy industry to get this package in place at least two years earlier, but it did not. Given the position of the Victorian industry in the national marketplace, it has been clear for some time that a nationally coordinated approach to dealing with this change would be required. This was acknowledged by the former minister, Mr Vaile, at the March 1999 ARMCANZ meeting in Adelaide. He also acknowledged, along with his state colleagues, that the time available to address major issues was critical—remember, that was in March 1999. The Commonwealth's role in the dairy adjustment arrangement was spelt out in the report from the 16th meeting of ARMCANZ in August last year. On page 29, the report states:

Issues for the Commonwealth in considering the ADIC proposal include the need to ensure the dairy package facilitates adjustment towards increased international competitiveness while alleviating potential for industry dislocation through addressing the adverse impacts of deregulation at an individual and regional level.

It further states:

An agreed national response will be an essential element in any package of measures that might be facilitated by the Commonwealth.

So, as at August last year, the Howard government accepted that it was responsible for ensuring that adjustment in the dairy industry is properly facilitated. I repeat: the Howard government accepted that responsibility in August last year. And it was the Howard government's role to alleviate the potential for industry dislocation by addressing the adverse impacts of deregulation at both an individual level and a regional level, and it accepted the job of facilitating the whole package.

I note that Senator Woodley, who is genuinely committed to advancing the interests of people in the bush, has released a pamphlet which encourages farmers to the view that re-regulation of the Australian dairy industry is an option available to government. He is wrong. Senator Woodley and I spoke to hundreds of dairy farmers right across Australia as part of the Senate's inquiry into this industry last year. And we both reached the same conclusions—as did other senators on that committee. The breakdown of state based milk marketing structures was not only inevitable but in fact already happening.

This point was made in an article by Cathy Bolt in the Australian Financial Review in November last year. The article was headed `Milk deregulation—it is already here'. It referred to a one-third drop in the regulated price paid to Tasmanian farmers for milk used in flavoured milks by processors because of the availability of cheaper milk from South Australia. It also pointed to market pressures forcing a cut of 0.3c a litre in the farm gate price of milk in New South Wales. The article also highlighted the fact that Woolworths had put out a tender for the supply of milk to all its New South Wales stores. That tender was won by National Foods. And the article also referred to the fact that Coles had linked up with the Dairy Farmers Group. Cathy Bolt in the article concluded that, given all of these manoeuvrings, deregulation on 1 July was largely academic. The Senate committee, including Senator Woodley, came to the same conclusion.

The Australian dairy industry is a model industry. It has achieved everything that has been asked of it by governments, and more. It has dramatically improved its productivity, increasing milk production by 50 per cent over the past decade, with only a marginal increase in the size of the national herd, as I said earlier. It has dramatically increased exports over the last decade, and the export market is where its future lies, given that the domestic liquid milk market is now less than 20 per cent of the total market and is declining. The domestic milk market is expected to grow at a rate of only one or two per cent.

As I said earlier, despite Mr Anderson's claim that the government put the adjustment package in place, it was in fact the industry that developed a package, and it was the industry and the Labor Party that forced the government to meet its responsibilities by establishing a satisfactory process through which farmers will receive the financial help they will need. It was the Labor Party in the states that forced the Howard government to look to assist regions that will be adversely affected by the deregulation of the industry. Now is not the time for the federal government to step back from its responsibilities to 13,500 dairy farmers and their families. It is not time for the Deputy Prime Minister to step back from his responsibilities to those dairy regions that will be adversely affected by the changes to the industry that are now under way. It is very much a matter for Mr Anderson and Mr Truss to ensure that Australian dairy farmers get the financial assistance they need and that dairy regions get the financial support they need to enable them to manage what will be a difficult but inevitable process.