Mr TUCKEY (8:00 PM) —As the member for O'Connor, I represent some 4,800 wheat grower locations, the largest by nearly 1,000 of any electorate in Australia. These locations produce 40 per cent of Australia's wheat and approximately 60 per cent of Australia's wheat export. It is wheat exports which are covered by this legislation under the Commonwealth's export power. The domestic wheat market is deregulated and represents an excellent alternative to wheat producers in the high population states, where domestic consumption represents a high, if not the total, percentage of local wheat production. The WA domestic market, by comparison, is approximately three per cent of WA wheat production. My constituents are therefore totally vulnerable to any flaws that might exist in the performance of this legislation in terms of the protection they deserve.

This legislation is unique in that, for the first time in my recollection, a government has chosen to give an independent commercial entity an unconditional monopoly to sell and export an entire commodity produced within Australia. It is not unique in the terms of there being an export monopoly for wheat, as this has existed for decades through a fully government controlled statutory authority called the Australian Wheat Board. However, that authority was subject fully to government legislation and ministerial control. Clearly, the commercial entities that have been created in this legislation and some earlier legislation associated with this bill are not subject to such government control. Normally in the commercial sector the discipline that guarantees performance is the marketplace. As an agent selling commodities your client base simply walks away to competitors if the returns you achieve for them are below those provided by other competitors.

Wheat growers who, by an accident of geography, are locked into export have no such choice under this legislation. They must sell their wheat through the privatised Australian Wheat Board. Wheat growers in my electorate continue to support the concept of an export monopoly. They are, however, deeply concerned that the structures that this and previous legislation provide afford them inadequate protection both in terms of the returns on their pooling of export wheat, in terms of administrative charges and in terms of their long-term control of this company, which I now choose to call AWB Inc.

The suggestion is that, because wheat growers are the sole shareholders under what is to be termed an A-class shareholding, and as they are the sole shareholders who will be able to elect the board of directors of AWB Inc, their control is ultimate. It is equally logical to argue that the shareholders of BHP had total control over that company's board when it decided to purchase Magma Copper in the United States. The shareholders of BHP can sell—and have sold—their shares to demonstrate their dissatisfaction with the performance of the board, resulting in the resignation of senior officials and board members on some occasions.

Nevertheless, in the case of AWB Inc there is yet to be published AWB Inc's memorandum of articles of association. However, I am reliably informed that they will prescribe the board membership in terms of the qualifications that its members should have. Many of those board members will not be farmers and will not be shareholders of AWB Inc. The period of their appointment is unknown but could be three to five years, and wheat growers will have no day-to-day influence during that period. Unlike politics, it is also of little interest to many professional directors as to whether they are popular with the shareholders or not. The memorandum of articles of association will also provide for a form of preselection of directors and require an independent nominee to obtain 100 signatures from A-class shareholders before they are eligible to stand for election. This is a very substantial burden obviously designed to deter such attempts to join the board. The whole process, consequently, will provide almost dictatorial influence to the chief executive of AWB Inc.

As I read the arrangements, the chief executive will be involved in preselecting his or her own board of directors. This is called an election slate, and it is all there hidden away in the documents that are quite frequently hard to get your hands on. If you are going to be the chief executive and you want to put up your own salary and you have already preselected your board, the chances are that your salary will go up. It is also intended to convert the compulsory farmer levy called the wheat industry fund into B-class shares, the holders of which will also have a right to elect some directors at a later date. These shares are also expected to pay a dividend and, at a later date, be traded upon the Australian Stock Exchange.

The compulsory wheat industry fund, at two per cent of farm gate value for wheat, has represented a significant financial burden for many wheat growers, actually exceeding their net profit in some cases. Many farmers in my electorate are borrowing money to plant crops and/or are unable to upgrade essential farm machinery whilst having wheat industry fund reserves in excess of $100,000. The only way they can recover their funds is to sell their B-class shares on the Australian Stock Exchange after the projected listing.

There will be many other reasons, including the misfortune of family breakdown or drought, that will require the sale of these shares in the future. This raises two issues. Firstly, and unlike the current situation where the Australian Wheat Board operates as a statutory authority and passes on the full benefit of any discounts that it can obtain on interest and those sorts of things, such farmers will actually be charged financial service fees to generate dividends for the B-class shareholders.

`B' gets a lot of mention in this particular legislation. The proposal is that there will be a company A, a company B and a company C. Company A is to be the provider of financial services and, as such, will pay dividends to B-class shareholders. Company B is to be the company charged with selling export wheat and company A will be entitled to deal on the domestic market.

The interesting thing is that the only way that company A can earn money is to lend it to company B. The money it will lend in the first instance is wheat industry fund money. In other words, farmers will be paying interest on their own money. That, in itself, is all right if they join in and receive dividends on their wheat industry fund or B-class shares, but if for reasons beyond their control they are forced to sell those shares they will be taxed on their performance not only at the interest charges that are incurred by company A but with an additional premium to ensure that a dividend can be paid and, of course, the operating expenses of the new AWB Inc. bureaucracy can be met. Obviously, they will no longer receive any offsetting dividend if they sell their shares.

The second problem relates to the purchasers of their shares. These could be competitors to AWB Inc, other major grain traders, family style investors or large financial institutions, who of course are purchasing these shares for the financial return that will be paid. Family investors will, along with these other investors, automatically assume a proprietary interest in the dominant asset of AWB Inc.—that is, the government granted monopoly.

Notwithstanding the assurances that might be given in this place, the reality is that people will know that this investment will only make money while it retains a monopoly over export of grain throughout Australia. This legislation guarantees this monopoly to AWB Inc. for five years; it does not, however, terminate that right at that point in time. It will require new legislation to discontinue that monopoly. At this stage of the game, there could be good reason why that should not continue.

I draw the attention of the House to the circumstances that could arise if wheat growers do not wish that monopoly right to continue in the hands of AWB Inc. I make the point that, over history, the AWB has been perceived as the source of the guaranteed minimum price, the single desk in all these things, but in fact it was just the body that delivered those gifts from government. The reality is that it is now going to be a private company and it is only one of probably a dozen Australian private companies that could manage an export monopoly. In your state, Madam Deputy Speaker Kelly, a similar situation arises where the company CSR delivers services to the Queensland Sugar Corporation, but that does not have the arrangements that are being proposed here.

Quite clearly, those outside the wheat industry who have purchased shares and received dividends arising from the operations of the monopoly would object strenuously to any action by the parliament to remove this monopoly in the future. The fact that only four members—and only one, me, from the government—have decided to speak on this legislation is evidence of the number of members who might support the wheat growers' request in the future. The rest, however, would be quick to respond to the demands of their investor constituents, who could be spread all over Australia, in demanding the retention of the AWB Inc. monopoly which generates their dividends but which was disadvantageous to wheat growers. The potential for this situation to arise is of great concern to me.

The solution to all the issues I have identified is to ensure that this legislation in its own right ensures that the people it captivates do have adequate protection to receive adequate returns for the products they produce. The vehicle available for this purpose in the legislation is called the Wheat Export Authority, WEA.

I welcome the amendments which increase wheat grower participation on the board of this body, particularly the positions which will be allocated to those states who contribute the most to export wheat. However, in requesting this increased representation, both Senator Crane from Western Australia and I did so in the context that the powers of the WEA should be better defined so that its board could be effective in protecting the interests of those wheat growers who are obliged to sell their grain through AWB Inc. In this regard, I believe that the WEA should be the agent for the government in issuing all export licences, including this five-year monopoly, and as such be able to do so by adding conditions—for instance, as to the level of net return based on international evidence that AWB Inc. would return each year to wheat growers.

I find it ludicrous that the government agency empowered to, as the legislation says, `control the export of wheat' must also knuckle its forehead to AWB Inc. If, for reasons of wheat grower benefit, it wished to license the export of a quantity of wheat larger than one container, it actually has to get their written permission. The body that the legislation says is controlling the export of wheat has to go to the person who has the export monopoly and say, `Can I please send more than one container of wheat out of the country or let somebody else do it because there is a benefit to the wheat industry in so doing?' That is in clause 11 of the amending bill, dealing with subsection 57(3) of the original legislation.

Fortunately, this requirement does cease on or after 1 July 2004. At that point the WEA will have more powers as to whom it licenses. Similarly, the WEA appears to have no power to include or exempt certain wheat varieties such as durum from the monopoly. The issue of the rights of wheat growers who produce certain varieties that the AWB refuses to export is unresolved. I trust the Minister for Primary Industries and Energy (Mr Anderson) will tell the parliament how such growers might service available niche export markets for bulk exports, not just single container loads or bags. Clearly, in this situation the WEA should be able to issue an export consent without the written approval of AWB Inc. Put simply, it has happened in the past: the Wheat Board says it does not want to handle certain varieties of wheat, and if you go out and get your own market for it you just simply cannot get it out of the country.

My other area of concern relates to the method of electing board members to the Grains Council of Australia, the GCA. At present, only nominees who have established farmer organisations can be members, which disenfranchises all non-members of those organisations, including many who simply cannot afford the cost of membership of those farmer organisations, which frequently runs to thousands of dollars. The Wool Council has addressed this issue recently by creating three positions to be elected by plebiscite of all wool growers, irrespective of their connections with farmer organisations; and considering the importance of the GCA and the operation of this bill, soon to become an act, I consider they should undertake a similar process at the GCA.

Due to my continued representations the government has, at the 11th hour, included clause (1)(b) under the heading of powers and functions of the WEA, as a further amendment. That does add somewhat to the responsibilities and the powers of the Wheat Export Authority. The original bill said:

The Authority has the following functions:

(a) to control the export of wheat from Australia;

(b) to monitor nominated company B's performance—

that is the exporting company's performance, and this is the new bit—

in relation to the export of wheat and to examine and report on the benefits to growers that result from that performance.

That at least makes it clear to the WEA that they have a responsibility to report to the parliament. That is the limit of their power. This amendment, whilst clearly charging the WEA to conduct an appropriate supervisory role, still restricts its powers to one of persuasion by reporting its concerns to the government. Based on my long experience in this place and the opportunity for reverse lobbying by the executive of AWB Inc. and its non-wheat growing shareholders of the future, I am not confident of an appropriate government response to any report arising from the WEA. I have already pointed out that there are nine wheat growing electorates in Australia where the wheat growing locations exceed 1,000. That is about the extent of their influence in this place.

If AWB Inc. is constantly underperforming in the international marketplace, then wheat growers will be the only losers, as they will continue to pay all the administrative and financial charges that the B-class shareholders and the AWE Inc. bureaucracy demands. I hope my concerns are never realised. However, just as I have promoted them in party forums, I would be wrong not to put them on the record today.

I apologise to my constituents for my failure to achieve more, and personally believe their future would be more stable if they elected to undertake their own statewide marketing arrangements in WA through a WA grain pool-Cooperative Bulk Handling consortium. However, I doubt this initiative will be taken and, once this bill passes both houses, it would be very difficult as, were the federal government to approve this arrangement in the future, it clearly would be sued for damages by AWB Inc. for removing its five-year monopoly rights. That is another aspect of this legislation.

The reality is that, notwithstanding how poorly AWB Inc. performs, they would argue that they were not and, just as we have discovered with mobile phones, this parliament is locked into a five-year agreement by its own legislation, not by some contract which has conditions put upon it. I am not happy with it, but I have promised my party room not to oppose this legislation, more particularly because the Prime Minister (Mr Howard) did at least assist me with that additional amendment. I tend to agree that there is also no rush. Quite clearly, the AWB as a statutory authority, with or without a loan guarantee, could conduct the business it conducts today. But we will just have to wait and see how all this goes. I repeat: I am not opposing the legislation but I am not at all happy with it.