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Monday, 10 September 2012
Page: 10010

Dr MIKE KELLY (Eden-MonaroParliamentary Secretary for Defence) (19:27): The position that the coalition have taken in relation to the Wheat Export Marketing Amendment Bill 2012 surprises me greatly. Firstly, the shadow minister, the member for Calare, raises the spectre of the AWB, which brings back memories of the greatest public policy failure in Australian history, a heinous period for the Australian Wheat Board—which I will come back to—but also opposes an evidence based approach to policy, given that this bill pursues recommendations of the Productivity Commission, and I will come back to the detail of that. The coalition seem to have a problem with evidence based approaches to policy. We have also seen the continuation of making misleading statements on matters before the House regarding consultation, the passage of information to the industry and the restructure of the industry in relation to reform processes that have taken place post the dismantling of the single desk.

This bill, as I mentioned, effectively implements the recommendations of the Productivity Commission, taking a phased approach, noting that obviously it is best to institute reforms in a way in which the industry can absorb them and bed them down appropriately. The Wheat Export Marketing Act 2008 establishes a system for regulating the export of bulk wheat where the exporters of bulk wheat have to be accredited under the Wheat Export Accreditation Scheme, which is administered by Wheat Exports Australia. The Productivity Commission report on its inquiry into the wheat export marketing arrangements was tabled in this House on 28 October 2010. So there has been plenty of time for the coalition to absorb those recommendations.

This bill seeks to abolish the Wheat Export Accreditation Scheme and the WEC as of 30 September this year and wind up the WEA on 31 December 2012. The requirement for providers of grain port terminal services to pass the access test as a condition for exporting bulk will be retained, however, until 30 September 2014. The access test will then be abolished, on the condition that a non-prescribed voluntary industry code of conduct covering access to grain export terminals is in place. If a code such as that is approved, the market will move to full deregulation from 1 October 2014. All aspects of the industry would then be subject to general competition law administered by the ACCC, complemented by the supporting code. If the code is not approved, the access test will continue.

The bill will bring the bulk wheat export market into line with other agricultural commodity markets and promote further competition in the wheat industry, which we know will lead to increased productivity and profitability. It will also mean that more buyers will be competing for wheat, helping growers to get prices that reflect market value, which has to be in their interests. The wheat export market will be brought into line with other agricultural commodity markets, and we know that full deregulation is always in the interests of this sector, so that we can promote our cause of deregulation globally, and freeing up international trade in this sector, which will be of great advantage to our efficient growers.

Since the reforms that we have instituted were put in place, there are 26 accredited exporters, with 19 of those being active in the last marketing year. What has been the impact of the reforms that we have engaged in so far? We know that the reforms have helped to open a new global export market for Australian producers and have fostered the productivity and profitability that we were seeking. The number of destination countries, with improved access, has been higher than in the three years prior to the new arrangements. In the 2009-10 marketing year, we had 12.1 million tonnes shipped to 35 countries, but, in the 2010-11 marketing year, 12.3 million tonnes of bulk wheat were exported to 48 countries, with an additional 1.7 million tonnes shipped in bags and containers.

The Productivity Commission found that the transition to the wheat marketing arrangements introduced in 2008 had progressed smoothly. That is an independent, objective analysis of the reforms. The Wheat Export Accreditation Scheme was effective as a transitional measure, the commission found, but the net benefits it had provided to the bulk wheat industry would cease with the end of the transitional phase, which is why further reforms are important.

Of course, these reforms were not done without significant assistance and support to the industry, and this included the Wheat Export Technical Market Support Grants Program. That program helped new and small-scale exporters to develop innovative export strategies. In 2010-11, round 2 grants were finalised, and funding of $171,733 was approved for six round 3 grants.

The delivery of the government's information support, which was neglected by the member for Calare, is also very significant. A $3.83 million program continued throughout the transitional period. The information provided by the ABS and ABARES helped the wheat market to operate efficiently and should be continued if the industry are prepared to provide some funding also, in accordance with the Productivity Commission's recommendations. But that information flow has been there and has supported the industry.

In terms of consultation, it is completely false to claim that there has not been that level of consultation. The Department of Agriculture, Fisheries and Forestry liaise regularly with industry organisations, including Wheat Exports Australia, Grain Producers Australia, National Grains Australia, Grain Growers Ltd and Grain Trade Australia. Meetings on feed grain, fodder supply and demand issues, including through the Feed Grain Partnership, are held at the request of industry. There were no such meetings in 2010-11, because they were not requested.

I will come back to one of the main reasons why this reform was introduced. Australia was suffering internationally as a consequence of the failed policies of the Howard government and the tragic experience of the Australian Wheat Board. I have some deep personal knowledge of the Australian Wheat Board and the disaster of that period from 2003 onwards. When I was deployed to Iraq, I spent the period from March 2004 deeply involved in exposing some of those issues. I worked very closely with the Volcker UN inquiry. I was very closely involved in establishing the Iraqi Board of Supreme Audit's investigations and their contractual arrangements with Ernst & Young to delve down into those issues and the eight million documents that existed in Iraq at the time revealing the extent of that huge level of international corruption. I assisted United States congressional and Department of Justice inquiries. In fact, I was so deeply involved in this that the UN Volcker inquiry actually made a request to Australia that I be assigned to head up the Volcker team in Iraq. I was also offered a very significant contract from Ernst & Young to pick up responsibility for their operations in Iraq.

Through that period of drilling down, it was very apparent—as the Volcker report found—that the Australian Wheat Board and later AWB Ltd were not the only but certainly the largest source of kickbacks to the Iraqi regime. As a result of these kickbacks from the AWB, effectively we saw about $300 million going into the war chest of Saddam Hussein. So, at the same time as we were gearing up to go to war with Saddam Hussein, sending our soldiers into battle against his forces, the Australian government was sitting back and allowing $300 million to flow into his coffers, to fight our soldiers. In addition to that, the raison d'etre for the war, the casus belli, was to support the UN sanctions regime against Saddam Hussein—and who turned out to be the biggest violators of that UN sanctions regime? It was the AWB and Australia. Minister Mark Vaile and Minister Alexander Downer failed in their duties as ministers, because they had specific responsibilities to monitor the contracts and to maintain due diligence in support of that sanctions regime, to prevent those very things from happening.

Of course, these things started to come to light, and I was certainly reporting them back to Australia. In fact, I vividly remember my report in May 2004 where I said, 'The jig is up for AWB,' and this information flowing back to the Australian government, who then subsequently denied that they had any knowledge of these things until much later. But, of course, as the inquiries and documents started to flow, we found out that lots of warnings were starting to trickle through. The evidence was becoming clear as far back as the year 2000. So for them to deny their knowledge of this really flagged two things: either they were completely incompetent and negligent in something so vital to Australia's international engagement and in relation to a matter in which we were sending our troops into action, or they were deliberately covering up what they knew about this issue. And, of course, they set up the Cole inquiry and limited its terms of reference so that it was not able to delve down into the responsibility of the government.

Mr Bruce Scott: Madam Deputy Speaker, I raise a point of order. I would just like to draw your attention to the bill before the House. I am not quite sure where the war in Iraq has anything to do with—

The DEPUTY SPEAKER ( Ms Owens ): Is your point of order on relevance?

Mr Bruce Scott: Wheat Exports Australia, not the Australian Wheat Board—

The DEPUTY SPEAKER: The member will resume his seat. The parliamentary secretary will be relevant.

Dr MIKE KELLY: I thank the Deputy Speaker. It is entirely relevant because this bill is about the process of moving away from those days, and the member for Calare raised the issue of the Australian Wheat Board as an example of great practice that we should get back to. I am pointing out that those days were a terrible time for Australian wheat exporters, because, as I came back to Australia and held meetings with government officials here, I was told: 'Look, the Howard government are involved in delicate negotiations for a free trade agreement with the United States. They do not want this sort of information out there at this time.' I warned them, of course, that this was going to threaten Australia's position in relation to wheat exports to Iraq—that, if we were not to engage in due diligence in investigating the terrible situation that had existed with the AWB, we would pay for it. And we did, all because the government wanted to pursue its free trade agreement negotiations with the United States.

Certainly I would like to set one aspect of the record straight. At the time that my statements were being reported in the media, there was a misinterpretation in some of that that I was pointing the finger at one particular member of the Department of Foreign Affairs and Trade, Heidi Venamore, who worked with me in Iraq. Nothing could have been further from the truth. She was a very diligent public servant doing her best, and certainly the information was coming back to Australia. There was a misinterpretation of that situation, and certainly Heidi Venamore is an excellent servant of Australia and did a very fine job during her time in Iraq.

But the situation that pertained at that time with those limited terms of reference means that Australia really will never know the full story of the extent of the government role in covering up or being incompetent in relation to that period of time. We can never return to those days of the Australian Wheat Board.

We are progressing now to a proper, evidence based, market based approach to the management of the grains sector in this country. Why anybody on the other side of the chamber would be opposed to that defies belief and understanding. Certainly we know that it is providing the efficiency, the effectiveness, the productivity and the profitability that we sought to achieve with these reforms.

I would like to reflect finally on one last point, which I think brings us to an understanding of why the coalition probably do not accept or understand these points. I recall that Prime Minister Howard on 13 March 2003, six days before the start of the Iraq War, said that Saddam had rorted the oil for food program to buy weapons at the expense of his people.

Mr Bruce Scott: Madam Deputy Speaker, I raise a point of order. The parliamentary secretary is defying your ruling to be relevant to the bill before the House. He is now talking again about the Iraq War.

The DEPUTY SPEAKER: The parliamentary secretary will continue talking about wheat export marketing.

Dr MIKE KELLY: Thank you, Deputy Speaker. I can understand why the coalition would be so sensitive on this issue, given that it was the greatest failing of public policy in this nation's history, where they let our troops down, let the country down and let wheat growers down. If the Prime Minister, Mr Howard, knew in March 2003 that the system was being rorted, then the question was: how could he not have foreseen that the Australian Wheat Board was deeply involved in that? I cite an article by Evan Whitton, who then summarised his interpretation of that position by saying that really, if Mr Howard had been a witness for AWB, the counsel should have said something like, 'Are you a complete fool, Mr Howard?'

Certainly I think that what we are seeing now is a coalition that cannot come to grips with a much-needed reform. As much as they were completely incompetent at that time in regulating the grains sector, we are seeing now, reflected in these suggested amendments and their lack of understanding of how an agricultural market should work and what is in the interests of our growers, that they are failing our grain growers sector.