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Wednesday, 8 March 2000
Page: 14182


Mr SECKER (4:27 PM) —I rise to speak on these amendments concerning the dairy industry. It was interesting to hear the previous comments on these dairy industry bills. Unfortunately, the member for Corio seems to be suggesting that the government should have all the answers. That is typical of his party's socialist approach. The history of Australia is littered with government failures—when it became involved in the commodity industry, such as the wool industry, for example. The Labor minister John Kerin ruined its consistent approach with his intervention. Labor's approach was to say that the dairy industry would deregulate on 1 July 2000 but do absolutely nothing in the intervening years to help the dairy industry face the future after deregulation. Even their sham amendment is their first voice in several years on this issue of dairy industry reconstruction. Where have they been? First, they announced deregulation and did nothing about it. When we responded to the dairy industry package in a positive manner, they complain because we have given the dairy industry what they want. Their simplistic answer is to involve the government and taxpayers' money—without giving them any choice—but not the consumer where they had the right to choose.

But this is typical of Labor and the member for Corio, who thinks a centralist government has all the answers instead of the industry itself. The industry has asked for this package and we have responded. All the Labor Party has come up with is another blank piece of paper for a policy and its usual negative carping nonsense that will do nothing for the dairy farmers. Labor hypocrisy is the same: do nothing, just complain; do nothing, just say the government should have all the answers. It is typical of the Labor Party to get up here and say they support the four bills and the amendments, but those amendments delete all those four bills anyway. Labor wants to be seen to agree with everything and nothing at the same time. I suggest the members for Corio and Braddon want to have a leg each side of the barbed wire fence, and we all know what that can do to you when the fence is strained up.

Then we had the member for McMillan, who thought he had a vision—a wet one, no doubt. Unfortunately, like most of his colleagues, he failed to tell us what that vision was. I can hear him say, `I have a vision, I have a vision, I have a vision.' But what was that vision? `Oh, yes; let's knock the government because it is heavy in tragedy.' Those are the words he used. Some vision—the member for McMillan's lack of understanding of what happens when people exit an industry because, like Hanrahan, we will all be ruined and nothing will stay in the area. Does he think that, because a dairy farmer leaves the land, the land disappears with him? His answer and the Labor Party's answer is to do nothing, which would cause more dairy farmers to go broke and leave the land. Some vision. The land does not disappear. It can be used to allow another dairy farmer to expand and increase his or her efficiency. It could allow the existing dairy farmer to keep the land and diversify into another profitable industry. The opportunities are enormous because the land does not disappear as the member for McMillan might suggest in his ill-thought-out contribution, if you can call it that. Unfortunately, his inexperience and lack of expertise show clearly that he does not know what he is talking about.

It is with pleasure that I have risen to speak on this important measure affecting dairy farmers throughout Australia with the impending deregulation of the dairy industry. As we all know, the dairy industry was put on notice several years ago when the then federal primary industry minister, John Kerin, told the dairy industry that, come what may, the dairy industry would be deregulated on 30 June 2000, and that will happen. That was actually one decision I agreed with. Presently, our dairy industry has been limited in its ability to compete for overseas export markets due to socialised quota systems and the like which have unnaturally forced up the price to manufacturers in the name of that old socialist warhorse, orderly marketing. We have had two pricing structures under this old antiquated system: marketing milk, with a higher price; and manufacturing milk, which was the same milk but with a different purpose or milk which simply did not fit the bill of qualifying under a quota system. Same milk, but a different price.

As a result of this unfair pricing system, we, as a country, have been limited in our ability to compete abroad, especially against the deregulated system of New Zealand, who were continually able to undercut the Australian price of production. This not only limits our ability to compete but also limits the ability of the Australian dairy industry to expand because it stands to reason that any production over and above our home consumption has to be either exported or poured down the proverbial drain. Therefore, if we cannot export our milk due to our inability to compete, when we expand the industry, we will end up pouring it down the drain or taking losses on our exported milk products unless, of course, we subsidise those export products by charging our Australian consumers more than they should be charged and using those superprofits to subsidise the export price. It would clearly be an unsatisfactory state of affairs to charge virtually every Australian more than they should be charged, especially when milk is such an important staple food to our families and especially to our children who, in most cases, are encouraged to drink milk products as part of a healthy and nutritious diet.

In the long term, deregulation of the dairy industry will be of benefit to both consumers and dairy farmers provided that they are efficient and well managed. Some people have charged that some dairy farmers will have to leave the industry. That is true because those that are inefficient will leave the industry, sometimes through no fault of their own. Some will leave the industry because they are simply too small to be efficient, but that has been happening all my life and before that. Fifty years ago my parents were milking four cows a day and quite healthily supplementing their other farm income. In fact, 35 years ago they were still milking two cows a day, but that was because there were eight children in the family and we had our own home consumption to cater for. Thirty years ago there were several dairy farms milking 30 cows and doing okay. But they have all disappeared now, and that was under the present system of controls. Twenty years ago there were plenty of dairies milking 50 cows, but they have all disappeared. Now you need at least 100 cows, and probably many more, to survive. So there has been a natural progression in the size of dairy farms for them to remain viable.

There are several reasons for this increase in the minimum size of dairies, including the need for better hygiene requirements, which surely none of you would reject. Even though I was brought up on milk that would never go anywhere near passing today's health regulations, I certainly do not feel any the worse for it—in fact, I have never heard of someone dying from milk produced under what we would now say are antiquated and unhealthy conditions, but that is another question for another time. These extra health requirements are costly and made some of the dairies unviable unless they got either bigger or better at producing milk. Other costs of production, including the price of land, the price of inputs and the price of labour, have all led to the size of dairies increasing, even under the present regulated and protected regime, which we all know is going to end in a matter of months on 30 June 2000.

So the dairy industry knew it was to be deregulated and that this would result in lower prices to the dairy farmer, which would put further pressure on dairy farmers if they want to survive. Many dairy farmers are already under pressure and might be halfway through a process of upgrading their stock or equipment in order to become more efficient. The effect of overnight deregulation and the resulting lower price received for their commodity may not allow them the ability to adjust, so dairy farmers are in an unenviable predicament.

Therefore, the industry was faced with two choices: (1) to do nothing to allow the farmer to face the future confidently or (2) to come to the government to try to sort out some sort of restructuring package that allowed their constituents to restructure their enterprises to become more efficient or to leave the industry with dignity. What they needed was some sort of guarantee of the future, which doing nothing would not have produced for them. So the dairy industry did come to the federal government and should be congratulated for coming up with a package that allowed restructuring with some sense of confidence in the future of each dairy farmer's respective enterprise.

I also congratulate the federal Minister for Agriculture, Fisheries and Forestry, Warren Truss, and his predecessor, Mark Vaile, for their work and involvement with dairy industry representatives to ensure a workable package for restructuring the dairy industry in Australia. I would also heap a lot of praise on the member for Corangamite for his wise stewardship and chairmanship of the government's dairy industry committee, which worked assiduously for 12 months on this single issue. I have been pleased to be a member of this committee's deliberation over that period. We spoke with many dairy farmers and their representatives, and we spoke to many milk processors and manufacturers. I am sure that many members of that committee spoke with many farmers in their own electorates, like I did, and came to the undeniable conclusion that a package of some sort had to be delivered without a government subsidy.

After looking at many schemes, we finally decided that the 11c a litre levy on milk sales was the appropriate way to go. Whilst I had, and still have, some reservations about the size of the scheme, I will give it my support, as I hope this parliament will. This will result in existing dairy farmers having the choice of exiting the industry with dignity and receiving a one-off payment of up to $43,000 or remaining in the industry and receiving payment for eight years, which is being paid for by that levy. This gives participants the chance to plan for their future with guaranteed payments that will give them a range of choices, such as debt repayment, increasing their herd size, increasing the genetic background for more efficient production or expanding their whole production ability, all in order to become more viable production units.

Approximately 80 per cent of South Australia's milk production occurs in the seat of Barker, which I have the privilege to represent. As South Australia produces about six per cent of Australia's milk, this equates to about five per cent of Australia's milk production occurring in the seat of Barker, which is a significant proportion. From the areas on the Fleurieu Peninsula through the River Murray flats to the south-east of South Australia—all areas I represent—there has been general agreement with this restructuring package, with the one exception that I have received several representations based on the need to take into account the quality of milk produced, such as protein content, which is not allowed for under this package. For example, those using jersey cattle or high protein producing friesians are penalised for producing quality rather than quantity—or, rather, quantity is rewarded instead of quality. The present payment schemes allow for this, so it would seem to be a simple exercise to use this as a basis for the restructuring payments. Unfortunately, those at the top of the dairy industry peak body have not seen fit to recommend this to the government. One can only question the motive for this treatment when, for an efficient dairy industry, it could be argued that we should be encouraging quality rather than quantity, or a mixture of both as there is under the present payment regimes.

I actually believe that the South Australian dairy farmers will benefit under this restructuring program more than all the other states, with the possible exception of Victoria. This is because the South Australian dairy industry had the foresight and strength to largely deregulate their industry some time ago. So, when full deregulation occurs, there will be less dislocation of and shock to its industry than in those other states where they clung to their antiquated, orderly marketing systems that penalise new and expanding entrants. Also, South Australian dairy farmers have the potential for more expansion in production, especially in the south-east of the state with the enormous irrigation available to enhance the productive capabilities of their dairy herds.

The writing was on the wall when the Victorian dairy industry voted five to one in favour of deregulation and the restructuring package just a few months ago. As they produce over 60 per cent of Australia's milk, it stood to reason that sheer market force would ensure that deregulation would occur and milk would cross state borders—in fact, it already had. Therefore, it is sheer folly for any other politician to get up here and suggest that we should not support this restructuring process. A former member for Wakefield, the Hon. Bert Kelly, used to use the story of King Canute hopelessly trying to stop the tide coming in. Of course, we cannot. Likewise, we cannot stop the tide of milk crossing state borders—and nor should we, because it is not in the best interests of our consumers and it is not in the best long-term interest of our dairy farmers.

Let me also congratulate the handling of this issue by the South Australian Minister for Primary Industries, the Hon. Rob Kerin, who has continually used commonsense over this issue, especially when faced with the irrational behaviour of some of his interstate counterparts. I support the restructuring package, with which we are helping the Australian dairy farmers, because the only alternative was to do nothing and to let them suffer without some hope of a viable future. This package allows dairy farmers to plan their future with confidence, and that is a good reason for this parliament to support it.