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Thursday, 25 September 2014
Page: 7206


Senator BACK (Western Australia) (18:00): I move:

That the Senate take note of the report.

The Rural and Regional Affairs and Transport References Committee report Industry structures and systems governing levies on grass-fed cattle is most interesting. The committee held extensive consultation with industry representatives in hearings in Canberra, Broome, Katherine, Rockhampton, Albury-Wodonga and back again in Canberra. It was originally intended to be a very short half-day hearing into the structure of beef levies. The further the committee went into it, the further it became obvious that growers particularly were dissatisfied with the circumstances in which, as part of their fees paid on cattle sold or slaughtered, a levy is attracted. There are four elements into which the levy is paid: a marketing and research and a development component being two of them, a small amount going to Animal Health Australia for its administration and a fourth one for residues of chemicals in meat. The first two were the cause of concern for most producers around Australia. They pay about $50 million a year, so over a decade about $500 million has been paid by growers into levies. Indeed, levies are paid by the grass fed beef producers who may sell on the markets and the second group are feedlotters who would take cattle, finish them through the feedlots and then put them through for processing. Then there is a levy paid by the processors themselves.

The concern being expressed by growers—time will not permit me this evening to spend a lot of time on this—is that there is a disparity, as they claim, in terms of the voting power between individual producers and the number of cattle they might sell in a year, particularly the large feedlotters who are themselves very often linked to processors. So if they put cattle through a feedlot and beasts are in there for 50 days or more, they pay the levy, which is about a $5 levy, and then when the animal is processed they pay another levy. Growers are concerned that there is an inequity in the decision making as to where the levy moneys are spent on the marketing in the research and development component.

There were seven recommendations made by the committee. One of them related to the necessary modernisation of the whole levy collection and recording process. At the moment, when cattle are sold the agent keeps the levy moneys and then at the end of each month there is some form of reconciliation, but there is no automated process that allocates the cattle themselves back to the producer. One person gave evidence to the fact that they simply got in touch with the body that oversees this at the moment, Meat and Livestock Australia, and said to them, 'We sold a certain number of cattle.' That then gave them a vote based on the number of cattle they said they had sold.

One of the very strong recommendations was that we should bring this process into the 21st century and indeed that there should be electronic settlement not only of the levies collected on a daily basis but also an electronic reconciliation of the votes counted. That should not be all that difficult to achieve. Nobody seems to be too angry about that.

If I could put it to you this way, from the growers' point of view you would say that they are the owners and therefore they pay the levies. The second group would be, if you like, the funders or the peak body who should oversee the distribution of these funds. The third group should be the providers of both marketing and research and development services. It is important to point out to the chamber that the research and development portion of the levy is met dollar for dollar by the Australian government. The marketing component is purely industry; the R&D component is added to by the Australian taxpayer to assist in the overall research and development. That therefore introduces the need for there to be some sort of statutory oversight, particularly for that component provided by the Australian taxpayer.

At the moment, Meat and Livestock Australia is the overarching body to which the funds are paid. Then we have a group called Cattle Council of Australia, which is notionally the peak body, to which producers would look for providing information and feedback and some sort of direction. You would expect that Cattle Council should be the body that oversees decisions in regard to marketing and research and development components. That is not quite how it works. MLA on the one hand is a large organisation which is very well funded. Cattle Council, which should be giving direction to Meat and Livestock Australia, is beholden to MLA for at least some of its funding. Therefore, in my own position—and I think that taken by many members of the committee—we have an imbalance. We have the producers providing the funding, we have a peak body and we should then have the provider, who should in fact undertake the work as required by the peak body and in its turn the peak body should report back to the producers. The committee was of the view that because of this concern and tension between the funds generated by processes and those by producers, that the industry's interests would be better served if they were to separate, so that it would become more transparent as to where the funds were being collected and where they were being spent.

In Australia—this was brought home very strongly—there is little transparency from the farm gate to the consumer's plate. The United States of America has the Packers and Stockyards Act, which gives a very high level of transparency so that everybody throughout the supply chain has an understanding of where the funds are allocated and who gets what. Certainly, one of the recommendations of this committee was that the government should have a look at the Packers and Stockyards Act in the United States and see what the benefits and costs might be of doing something similar.

Why is this important? The producers would say that it is important because in the last 10 years they have seen very little, if any, increase in the per-kilogram price of meat given to them at the farm gate, whereas the overall cost of the meat product has gone up significantly. The other point they would make is that the per capita consumption of meat in Australia has gone down from about 40 kilograms to about 30 kilograms per head per year, at a time when they have paid out about half a billion dollars in levies. We do our best, if and when we can get to the Kingston Hotel on a Thursday evening, to right that wrong! Tonight will be one of the evenings when we will not be able to, so that 30 kilograms looks safe.

There are other recommendations about a role, perhaps, for the Australian National Audit Office because of the involvement of statutory funds associated with the research and development component. The National Audit Office may well want to have a look at that circumstance.

There was not unanimity in some areas. I could certainly say that I remain very concerned about a group called the Red Meat Advisory Council. As its name suggests, that council has the role of advising the minister of the day on matters pertaining to the red meat industry—particularly, in this case, matters relevant to the cattle industry. The two bodies that feed into the Red Meat Advisory Council are the Australian Processors Council representing the processors and the MLA representing the producers.

There was a point made very strongly in evidence given to us from around Australia. Probably the greatest crisis in the beef industry's history—certainly in the some-40 years that I have been associated with it—was the debacle caused by the ban on the export of live cattle in June 2011. That resulted in a circumstance in which the Red Meat Advisory Council could not come together to give any advice to the minister of the day. I hasten to add that we know very well that the minister was not in a position to take any advice because the decision was made at the Prime Minister's level. The Prime Minister was then Ms Gillard. But had the council wanted to give some advice to the minister it could not. The council could not give advice to the minister because the meat processing component of the Red Meat Advisory Council has a vested interest in making sure that the live export component of the industry is kept at a very minimal level. Why?—because the less competition there is in the market for the producers' cattle, the better it is for the processor. So if you do not have the live exports you do not have the competition, and the processors are a lot happier. That was the reason, from my point of view—I cannot speak for other committee members—we took the position that there should be a close examination of whether the Red Meat Advisory Council, if it cannot give reasonable advice, should exist at all.

I thank you, President, for the opportunity to comment on the report. I recommend it to the Senate.