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Wednesday, 20 June 2007
Page: 115

Senator JOHNSTON (Minister for Justice and Customs) (5:07 PM) — I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

It has been a difficult 18 months for Australia’s wheat growers. Last year they faced a devastating growing season as winter and spring rains failed and the drought continued to tighten its grip across the country.

Growers have also had to deal with continued pressure to dismantle their wheat single desk due to strong, but justified criticism of the corporate behaviour of AWB Ltd stemming from the findings of the Cole Commission of Inquiry.

In spite of these challenges, growers continue to voice their desire to take control of their industry. This bill is a direct response to that call.

The Wheat Marketing Amendment Bill 2007 retains Australia’s single desk for export wheat and reflects the fact that the Government has always acted in the best interests of Australian wheat growers.

The key elements of this Bill include:

  • the extension of the Minister for Agriculture, Fisheries and Forestry’s temporary veto power over non-AWB (International) Ltd bulk exports until 30 June 2008;
  • the inclusion of the power for the Minister to change the entity that operates the single desk, to operate from 1 March 2008 until 30 June 2008;
  • improved powers for the regulator to obtain information, particularly from wheat exporters other than AWB (International);
  • the inclusion of the power for the Minister to direct the regulator to investigate matters relating to its functions and pass this information on to other law enforcement and regulatory bodies as necessary;
  • a range of structural and governance reforms to the Wheat Export Authority, in line with the principles espoused by the Uhrig Review; and
  • the deregulation of wheat exports in bags and containers, but with the addition of a quality assurance requirement to safeguard the reputation of Australian wheat.

In coming to its decision to retain the single desk the Government undertook an extensive consultation process with growers. The Wheat Export Marketing Consultation Committee, an independent body established by the Government and headed by Mr John Ralph, conducted 26 public meetings across the wheat growing regions of Australia and received almost 1200 written submissions.

Overwhelmingly, growers stated their support for the single desk. Almost as overwhelming was the call for the single desk to be operated by an entity entirely separate from AWB Ltd.

The Government has decided to give growers until 1 March 2008 to establish a new entity to manage the single desk. This entity may be either a completely new, grower owned and operated body, or a completely de-merged AWB (International) Ltd (AWBI).

Let me be very clear on two points. First, the holder of the single desk will have to have complete legal separation from AWB Ltd. Second, there will be no extension beyond 1 March 2008 for growers to establish a new entity to operate the single desk.

The Government acknowledges that the challenge it has set the industry is a significant one. It will require strong leadership and unity within the industry to reach a satisfactory outcome in the time allowed. It is now time for the industry to act. The Government is giving industry the opportunity to set up what it has asked for, it is the responsibility of industry to deliver.

While the Government has agreed to maintain a single desk for wheat exports it is not willing to allow AWB to retain the power to veto other bulk exports. Growers have suffered through AWB’s lock out from the Iraqi market and seen the risk of an inability to export outside of the single desk. This risk has left growers short-changed.

This Bill provides for an extension of the power provided to the Minister for Agriculture, Fisheries and Forestry’s in December last year to direct the Wheat Export Authority (WEA) to either approve or reject bulk export applications until 30 June 2008. If, for any reason, the single desk privilege should still reside with AWB after 30 June 2008 then the Bill provides for the veto power to be permanently removed from it.

The Government has stated publicly that while the veto power resides in the hands of the Minister it will continue to be exercised in the public interest and in a way that treats any application for a consent on its merits.

The Australian Government’s principal concern is the wellbeing of Australian wheat growers, which is a consideration of the Minister when determining whether or not to exercise his veto.

While it is the Government’s intention that the single desk be retained, AWB must be removed as its commercial manager as soon as possible, in order to maintain the integrity of the single desk. However, the task of replacing AWB will take some time. The commercial practicalities are such that AWB could not be replaced in time for the forthcoming harvest and will be allowed to market the 2007 harvest.

While this was not the Government’s preferred course of action, we were not willing to jeopardise the export marketing of the upcoming harvest by putting in place a new company that may not have been ready for the task. The risks to growers would be too high.

The Government is aware that establishing a grower owned and operated body will take time. Growers will be given that time, so that the new entity operates in a manner that best serves the industry.

The wheat industry is a major Australian export earner of great social and economic significance. Growers must be given the opportunity to get it right.

The current Wheat Marketing Act does not include provision to change the single desk manager. To provide the Government with the ability to transfer the single desk power to the new grower entity, this Bill will empower the Minister for Agriculture, Fisheries and Forestry to designate which entity holds the single desk.

The Bill provides that the power to change the single desk holder will not come into effect until 1 March 2008 and will sunset on 30 June 2008. The Government decided on this timing so that there was no possible cause for uncertainty. AWBI will be allowed to manage the 2007-08 National Pool, and do so in the best interests of growers. In addition, once the new designated company is in place it will have certainty that it will be the ongoing manager of the single desk.

This power will maintain the system of just the one company being exempt from the bulk export controls in the Wheat Marketing Act.

Naturally, before the Minister designates a new entity to take over as the operator of the single desk it will have to demonstrate that it is financially viable and has the capacity to undertake the task. The single desk privilege will not be granted to just any entity.

This Bill also makes a number of changes to the operations of the Wheat Export Authority.

The Authority will be provided with the power to request information from parties other than AWBI, where it believes the request relates to the performance of its functions. This could include other exporters of wheat and associate companies that facilitate the wheat export supply chain.

This amendment is a significant broadening of the scope of the Authority’s existing information gathering powers. It reflects the Government’s clear intention that efforts to undermine the interests of Australian wheat growers and damage Australia’s international trading reputation will not be tolerated.

Further, the Bill provides the Minister with the power to direct the Authority to investigate a broad range of issues relevant to its functions where he considers it in the public interest to do so. The Authority will also be provided with the ability to pass on information to relevant law enforcement and regulatory bodies where it has received or uncovered information that warrants further investigation. These changes will commence upon Royal Assent of this Bill.

In addition to a strengthening of its information gathering and powers of investigation the structure and governance arrangements of the Authority will also be overhauled. The changes are based on reforms recommended by the Uhrig review into the governance arrangements of Commonwealth agencies.

The Uhrig review recommended two governance models designed to promote best practice governance. The model that most appropriately suits the functions and operations of a regulatory agency like the Wheat Export Authority is the ‘executive management’ template. This model calls for the elimination of a traditional Board structure and for the governance arrangements to be transferred from the Commonwealth Authorities and Corporations Act to the Financial Management and Accountability Act.

The Government has agreed to implement this model for the Authority. However, to maintain a level of independence from the Government it has been decided that the Authority would be made into a commission and renamed the Export Wheat Commission.

The Commission will comprise up to six Commissioners, including the Chairman, and all will be appointed based on the skills required for the effective operation of the Commission. Consistent with the Uhrig review recommendations there will be no representational appointments or Government members on the Commission. All commissioners will be appointed by the Minister and will be appointed on a part-time basis.

The views of growers will continue to be represented on the Commission. The Minister will be required to appoint at least one, and up to two, commissioners based on their strong skills, knowledge and standing in grain production and also at least one, but no more than two, commissioners based on their skills, knowledge and standing in export wheat production.

The Commission will continue to be funded by the industry through the Wheat Export Charge and export consent application fees. These funds will be held in a special account for the Commission that can only be used to fund its operations.

The Authority and the new Commission operate as a link between the operation of Australia’s wheat marketing arrangements and growers. It is important that this link continues and the Government expects it will be strengthened by these changes. In the statement of expectations to the Commission I will request that it consult regularly with industry in relation to the performance of its functions.

To provide sufficient time for the Authority to prepare itself for these structural changes the change to a Commission will not occur until 1 October 2007.

The final key element contained in this Bill responds to another request of the industry - the deregulation of wheat exported in bags and containers. This will be done by removing the requirement for exporters to first obtain consent from the WEA to export in bags and containers.

This was not a decision taken lightly by the Government. However, the Government believes that deregulating this part of the market will encourage further investment in the industry and allow further development of high value niche and new markets. It is not expected that exports in bags and containers will overtake bulk exports, as the economies of scale inherent in bulk exports means that they have a cost advantage over bags and containers. Exports in bags and containers are likely to remain a small part of the market.

Growers have raised concerns that wheat exports outside the current arrangements could allow the potential for rogue traders to undermine the good reputation of Australian wheat. That is why this Bill will make it a requirement that all wheat exports in bags and containers will have to comply with a quality assurance (QA) scheme.

The purpose of the QA Scheme will not be to dictate the quality of wheat that can be exported, but rather to make sure that exporters are meeting the specification of their contracts with customers.

The QA scheme will be developed by the WEA in consultation with industry. The WEA will be asked to have the scheme in place as soon as possible so all parties know what will be required. It is the Government’s intention that the scheme will work with existing industry standards and practices and impose as small a burden as possible on exporters.

The changes to deregulate wheat exported in bags and containers will come into effect 60 days after this Bill receives Royal Assent.

Over the last 18 months the wheat industry has faced a range of confronting issues. During this period the Government has never wavered from its commitment to consider the interests of growers. It has kept their interests paramount in its policy considerations.

This Bill maintains that commitment to growers and most importantly delivers on what they have continued to vocally and passionately support - the single desk.

Debate (on motion by Senator Johnston) adjourned.

Ordered that the resumption of the debate be made an order of the day for a later hour.