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Wednesday, 8 March 2000
Page: 14127

Mr CAMERON THOMPSON (11:36 AM) —I do not think that the member for Braddon and other members of the opposition are aware of the content of the amendment which certainly the member for Braddon said that he endorsed along with the four bills before the House. You cannot possibly support the four bills and the amendment, because the amendment would usurp the bills, chuck them out and replace them with a whole bunch of hot air. I would like to advise the member for Braddon just what the opposition amendment, which he is supporting, says. The amendment says to wipe out all words after the word `that' and to replace them with certain things. In carrying on about his position on the Dairy Industry Adjustment Bill 2000 and the other bills associated with it, the member for Braddon is saying that it is important that we do have a package and, like his shadow minister, he seems to think that the government should be funding it 100 per cent.

Let us consider some of the crazy amendments that the opposition is proposing. The member for Corio says that all words after `that' should be wiped out and that the industry should criticise—indeed, condemn the government—for seeking to push this important bill through the parliament. When was the referendum conducted by the new Premier of Victoria? It was not held until December last year. Is the member for Corio saying that members of this House should have completely ignored the position of the Victorian government, which had cynically cashed in on opposition to deregulation in the community and acted as if they were in some way in favour of stopping deregulation? They delayed any comment on it until after the election, and they conducted the referendum which unleashed the dogs of deregulation at the last possible moment, in exactly the way that the member for Corio seeks to criticise the government for.

When the Victorian government held the referendum, it was in a position where every other state had reviewed their existing dairy industry support arrangements under the national competition policy, and each one of those states had agreed to continue systems of regulation. It would have been crazy for the federal government to sit back with every state opposing deregulation bar Victoria. Victoria was having a referendum on the issue, and yet we were supposed to somehow clout everybody over the head and say, `Oh no. We know better than the people of Australia. We know better than the people of Victoria, we know better than you about this issue, and we will ignore what you have to say, regardless of what it might be.' It is a ridiculous proposition.

The opposition also condemns the government for failing to articulate a clear vision for the future of the dairy industry. We are advocating dairy industry self-determination. What is the Australian Dairy Industry Corporation if it is not a body that is going to give us self-determination? Who produced the basis for this package? It was the dairy farmers. I believe there is a problem in that there is a weighting within the system towards Victoria, because 63 per cent of dairy farmers in this country are in Victoria. We have to realise that—

Mr CAMERON THOMPSON —That is a fact of our existence here today, member for Braddon. I think you are absolutely mad to support this amendment, which would see us throw out the very package that the industry supports—that the people in your electorate support—in favour of nothing. It would leave them with no means of support whatsoever. What kind of an idea is that? The shadow minister thinks that is a great idea too, except he also offers free advice to the government that we should put up the entire money out of the budget.

We have heard lately about how the opposition wants to roll back, creep back and crawl back on all these issues in relation to tax. We are talking about saddling taxpayers with another $1 billion, which would have to come out of the budget somewhere. Where would we pick that money up? If we did not have a package, it would have to be paid out of income taxes—in some way like that. There has to be a package. It has been said already that Pat Rowley was right behind it, and he is from Queensland. He is a fellow who would have looked at his state industry and said, `We're going to have a very tough time under this regime,' but it is his view that in this way the interests of the industry are best served. We in the federal government have to listen to those issues, just as we listened to the outcome of those referendums and to the needs and concerns of individual dairy farmers.

There are other issues: the member opposite criticised us for imposing a new tax on milk. The opposition cannot have it both ways. One minute it is criticising us for putting a new tax on milk, and the next minute it is advocating that we should put some other new tax on—instead of a tax on milk, we could put a new excise on petrol or something, and that would pay for milk. It is a ridiculous proposition.

There are further consequences of this idiot amendment. The opposition criticises the government for failing to make any provision to assist workers in the dairy industry who may lose their jobs as a result of deregulation. What has it got to say about the component of the bill that provides an exit package for farmers? If that is not assisting people to relocate out of the industry, then what is? Read the document, for heaven's sake. Get conversant with what is going on.

Mr CAMERON THOMPSON —There are some dairy industry people up there. Go and ask them about it. There is nothing in this amendment but hot air. I do not think it is the product of the shadow minister, whom the member for Corangamite has a lot of respect for. I think it is the work of some spotty-faced individual out the back somewhere who wants to give a bit of a tar and feathering to the government and perhaps write himself a bit of a headline. Well, he can write his way into glory, but it means nothing. He has even managed to convince the member for Corio to support both the bill and this amendment. Support the bill and wipe out the bill—what a ridiculous situation.

There are various elements of this bill that I would like to cover. Although deregulation is something that the industry has fought very long and hard for, and on which the government has supported them, there are also elements which could have been made better. But at the end of the day you have to be pragmatic in this business. You have to provide the best possible outcome for people. After all, politics is supposed to be the art of the possible, and members opposite who want to deny that principle are living in cloud cuckoo land. We have a package here worth $1.74 billion, which is the biggest ever package seen for any industry. Victoria has 63 per cent of the total milk production, and therefore that state is driving what happens in this country. It is not something that the federal government is particularly driving, but we want to ensure the best possible outcome not only for the industry but for the consumers that are reliant upon it. However, this is a very big package, and it does provide a lot of money to inject into the industry to provide for an orderly transition. In this package there is $1.63 billion for people adjusting to survive within the new industry. There is also the rest of the money to go into the dairy exit program. We have set up the Australian Dairy Adjustment Authority to take up the administration of this proposal.

As a result of this, there is also a levy of 11c per litre on all liquid milk, which will apply from 8 July. That is predicated on a very strong forecast from within the industry that, as a result of these measures—and we can rely on the industry for this advice—the price of milk in relation to the impact of this package is going to fall between 11 per cent and 15 per cent. That is the forecast of the industry, and there is no better advice available on that point. As responsible members of parliament we do have to take on board what the industry's view is and what its forecasts are.

If you take away a 15c drop and you add on an 11c levy the idea is that, basically, you will wind up with no change as a result of this measure, this step in deregulation. So we wind up with a no-change position. I think that is something we can argue for. Of course, over time as the package works its way through and all the various components of it are realised, we will start to realise the full 15c a litre drop in price. However, that does mean that the industry, as a result of this process, will be more efficient and more competitive and that its export opportunities will be enhanced. That does not necessarily mean that milk will be cheaper, because you cannot be sure what other market forces will come to bear. There are all kinds of things. We are talking about a 10-year period.

Mr Sidebottom —Two bob each way.

Mr CAMERON THOMPSON —You might laugh; you can stick your head down a burrow, but I want to look ahead 10 years and ask what will happen then. You cannot give any reliable forecast. The fact that has to be borne in mind is whether or not this package is going to have an impact and drive the cost up or drive it down. The best information available to the government and to you, member for Braddon, is that the price will remain the same.

When it comes to some of the existing structure of the industry that is reflected in this package—and this comes back to some of the points about it that I do not think are absolutely 100 per cent perfect but are as close as they can be—and we look at milk production in the various states in Australia, if we go to Victoria we find that 92 per cent of production in Victoria is manufactured milk. That is a total of 5,914 million litres out of a total of 6,422 million litres. For example, market milk makes up 391 million litres in Queensland and manufactured milk just 437 million litres out of a total of 829 million litres. So manufactured milk in Queensland makes up 52 per cent of our production. It is similar in New South Wales, where manufactured milk makes up 53 per cent. On an Australia-wide basis, just to show the impact of Victoria's huge production, manufactured milk actually makes up 8,256 million litres out of a total of 10,188 million litres. That means that production in Victoria, unlike any other state, is skewed very strongly towards manufactured milk.

What does that mean? It means that manufactured milk brings a return for producers far below that of any of the quota milk that applies in any of the other states—or indeed in Victoria, where there is quota milk. So, the proportion of the production that relies on manufactured milk means that people in Victoria are used to operating at a much lower rate of return than in other states. So it is not surprising then, when we see this opportunity to deregulate in Victoria, that Victorians should seize that opportunity. They have an advantage in the marketplace, and that is a fact. There is no way that, if they choose to go about this course of action, given the Kerin plan and what it has set in place, under the Constitution of Australia, they can be stopped. The only opportunity for that to be pulled up came with the Bracks referendum on the issue, as I referred to earlier, and that was not until December last year. As the member for Corangamite said, not surprisingly, 89 per cent voted to go down the road towards deregulation.

There have been various serious adjustments within the dairy industry in the past. In the 1970s, when Britain joined the EEC, the number of dairy farmers in Australia was halved, from 45,000. In fact, by 1975 we were down to 30,630 dairy farms in Australia. By 1999, we were down even further, to 13,156 dairy farms in Australia. Another upheaval in the industry, mentioned earlier by the member for Corangamite and I think the opposition spokesman, was when closer economic relations with New Zealand burst onto the scene in the 1980s.

As I said, not everyone is happy with the package. Naturally enough, it is something that really is going to provide an opportunity for these Victorian farmers to radically improve their returns. It is going to be a challenge for people in other states because, although they can be competitive and they have a strong reputation as competitive producers, they will have a job to do. They are the ones who basically are going to have to get out there and make the adjustments. There have been some critical comments. I have to say that Winston Watts, from the New South Wales Dairy Farmers Association, said, `Well, if you've got to be raped, you might as well be paid for it.'

Mr Horne —That is exactly right. That is what you are doing.

Mr CAMERON THOMPSON —That is a very critical comment but the point is, as he was saying: you must be paid. That is precisely what this package provides. Defying the Constitution of Australia, which is what you want to do, is the only way to avoid this kind of thing happening. You have to pay if you want to ensure that people in your electorates will be able to make the adjustments and be able to gear up to compete with those Victorian farmers. You should be behind them and supporting them in that effort, not sitting back there carping and whingeing about it and putting up crazy amendments that basically will scuttle the whole plan. It is a crazy nonsense to go ahead with that.

I have to say that in states where there are quotas there is another thing to consider. I saw noted in an article on the issue that these states, naturally, have had to be dragged to the table on this issue because they are the ones who have been administering quota systems for market milk. They are the ones who have been able to charge stamp duty every time a dairy quota is sold. They have been making money. Dairy quotas are a tradeable commodity, and they have been making money through stamp duty on them. I have seen mentioned the possibility of people starting a class action because of the loss of value in those quotas. Naturally, the states have to be very careful to avoid creating a liability for themselves in that regard. So I do not think their position is entirely as it is presented. I think a lot of it is window dressing and a lot of it is hoo-ha. But we are in a position where we have to face up to the real world, and that is what this package facilitates.

I was talking earlier about the difference in production costs in New South Wales, Victoria and Queensland, and I will give you some figures on that. In Victoria they can produce milk for 24c a litre, in New South Wales the cost is 32c a litre, and in Queensland it is 34c a litre. Over all, there have been efficiency gains over the years, and I think this process will provide for those efficiency gains to continue. In 1984-85, the milk produced per cow within the dairy industry was 3,336 litres; by 1998-99 that had increased to 4,867 litres.

Dairying is our third largest rural industry, behind beef and wheat; and we are the third largest exporter of milk in the world, behind the EEC and New Zealand. I represent an area where there are many dairy farmers, and when this arose many dairy farmers came to see me, concerned about the end to deregulation.

Mr Slipper —It has been well represented for a long time.

Mr CAMERON THOMPSON —It has been, and the member for Fisher did an excellent job as my predecessor in representing dairy farmers in this area. There was concern about losing access to the regulated industry, and this is where I come to my concerns around the edges of the package. The package is based on a requirement for payments to be made back to individual farmers, based on a ratio of 46.23c per litre for market milk—that is, for quota and for people in that area—and 8.9c per litre for manufactured milk. Throughout the process, I argued very strongly for the manufactured milk component to be reduced still further and for the money to be more strongly directed towards the market milk, because they are the people who have to make the readjustments and the changes.

As I said, if you take away this package you take away the hope altogether for people in states like Queensland and New South Wales. You have to see that the manufactured milk people are the ones who are going to do well under the new regime; they are the most strongly positioned to profit as a result of it. So it irks me a little that that payment is necessary in order to get their involvement in it—and it does require that everybody be involved. There has to be a payment of that order, but I would prefer that that be even further reduced and that the money go in greater proportion to the people who will have to make the adjustments in their operations. That is a concern that was argued, by me and by others, as strongly as possible at the time, and the process has been taken as far as it possibly could while we take into account the need to ensure that everybody is involved in the package. If everybody is not involved in the package, it ceases to be a national package. This is where the Commonwealth has done an excellent job on this matter. We have been able to draw all those states together and to recognise their competing interests.

In closing, each of the states has received large amounts of national competition policy payments. The member for Braddon referred to those payments as being an opportunity to fund this process. (Time expired)