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Wednesday, 8 March 2000
Page: 14185

Mr ADAMS (4:43 PM) —The honourable member for Barker had a few words to say in blaming the Labor Party for this outcome or for reaching this stage in the evolution of the dairy industry, saying that it was because of the Labor Party and the Socialist Labor Party that we have reached this conclusion. I do not know if he remembers or ever read about Black Jack McEwen or the Fraser government. The Howard government has been in power for four years, so I would have thought that they would have had a bit of time to try to pull together a better opportunity for the future of, and a bit more vision for, the dairy industry.

Even at this stage of the day and this late in the debate, this government is foreshadowing that it is going to make amendments to this legislation before it goes through this House. Before the bill finishes going through this House it has got about seven or eight amendments to put before the House. So it cannot even get its own legislation right on this vital industry for the country; it has to have amendments coming into the House late in the day when the bill is three-quarters of the way through its debate. That is a disgraceful situation and just proves this government's incompetence and the incompetence of the Minister for Agriculture, Fisheries and Forestry in the way he has gone about the dairy industry arrangements.

This is a collection of bills in response to the proposed deregulation of the dairy industry at the end of the Commonwealth domestic market support arrangements. As I understand it, the package contains a total of approximately $1.74 billion for compensation and exit payments to dairy farmers, to be funded by a Commonwealth levy of 11c per litre on sales of drinking milk, applied at retail level and collected at the wholesale level over the next eight years. Of course, it is a wholesale milk tax. The Treasurer gets up here every day and attacks wholesale taxes, but this is the wholesale milk tax that we are imposing on the consumers of Australia.

The levy is due to begin on 8 July 2000 with payments rights accruing from 1 July 2000. It will apply to all liquid milk products sold domestically, including whole milk, modified milk, UHT milk and flavoured milk. Imported milk will be subject to the levy, as it is a tax on use, and export milk products will be exempt from the levy. The determination of producer entitlements will be the responsibility of an independent body, the Dairy Adjustment Authority. There is an additional clause which says that the package will be automatically withdrawn should all the states and territories not deregulate the milk marketing arrangements to the minister's satisfaction within six months of royal assent. What this all means to me is that the Liberal government has said to the big milk producers, `If you want deregulation, you pay for it, and we are not a bit interested in what happens to the small milk producers and the workers in the dairy industry around this country.' The government has failed to ensure that the industry can continue to prosper and expand. I have had consultation with a number of producers and many workers in my electorate in Tasmania and they were not impressed with the way in which some of them are being treated. They cannot get out because the exit provisions are so mean that you would have to have a property worth less than $90,000—not a very big operation. Few properties that run cows are that small, and you would have to be pretty small and run down to be worth only $90,000. So, even if their accountant or professional has advised them to leave the industry, they will not be able to with this sort of compensation.

I think the most distressing thing about this deregulation is that the government has failed to make any specific arrangements for those regions that potentially face a significant contraction of the local economy in the post-deregulation environment. No studies have been done on the impact on regions. The only area that I know of is around Bega. The honourable member for Eden-Monaro is in the House, and I think that is in his electorate. There has been some work done on the impact of the industry in that region, but nowhere else. So, for all the hot air about caring for regions, it is obvious that it is all just hogwash. This whole government talks about regions, but here is the vital opportunity for the government to have shown its concern for regions and it has failed that, and it is going to impose enormous hardship in some areas. The only evidence that we do have is that funds will not stay within local regions, that there will be a serious downturn in those areas, and probably some in South Australia as well. A good proportion of the dairying areas will be affected.

The whole thing is crazy and the way it is structured will not do the industry any good in the long run. Where is the research and development? Where is the retraining for those who will have to leave? There isn't any. The industry is now in the hands of the big players, many of whom are now competing in the international market. This means the jobs will go as they struggle to compete, and the local market will come off second best. I have been pursuing on the Internet some of the issues being discussed in the dairy industry. People have been very vocal in criticising the European Union and the United States for subsidising their industries, yet they are still there. One of the reasons is that they have a mandate to protect the small farmers, because it allows the traditional country farms to continue to supply an income for rural families or they would have to throw them on the unemployment heap. This costs money, of course, in whatever country you are in.

My feeling, like that of many of the small dairy farmers with whom I have had discussions, is that total deregulation is not necessarily the way of the future. It could in fact be placing a valuable domestic and export industry at risk, especially if there is a major world downturn. As one of my very angry farmers said, the level playing field of international commerce may be considered a noble goal, but can we, as such a small minnow in the international trade shark pool, afford to risk the potential and probable damage to our industry? And in world terms we are small. However, the domestic dairy industry in Australia is one of our largest rural industries, with over 60,000 employees on farms, in milk processing and production and manufacturing plants, in trucks and in distribution and marketing. The industry turns over around $7 billion a year and exports bring in around $2 billion a year. It sounds big and impressive, but compare it with New Zealand and we pale into insignificance. New Zealand, with a small land mass and a population of three million people, produces 11 billion litres with an export component worth $A4 billion.

Mr Nairn —It is a deregulated market.

Mr ADAMS —I will come to that in a minute. New Zealand exports 90 per cent of its milk production, which in international trade terms is 31 per cent of the world market, whereas Australia is managing to export only 12 per cent of its milk output. What these figures say is that those who are on the edge of the industry and want out will look for the quickest and easiest way. They will take their compensation and may sell out to New Zealand. Already in Tasmania we have companies which are New Zealand owned. The playing field has changed. The money goes out of the state. How does Australia compete with the power of the New Zealand cooperative milk company, which is now one of the biggest milk companies in the world with tentacles all over the place? And for the member for Eden-Monaro, with all the deregulation, they are still a one-desk seller because they know the significance of selling into the world market and have a great structure for marketing milk throughout the world. Maybe there is an argument for New Zealand to join forces with Australia. If you talk to New Zealanders, they will tell you that we should be selling into the world market, working together, but I doubt whether they will agree as they are doing very nicely on their own—thank you very much. They have just agreed to merge the two biggest New Zealand manufacturers, which will give them another advantage over us and over other milk exporters. They will be looking, I believe, for takeovers of Australian companies and will be moving in on Australian manufacturing in the near future, for sure.

Although we may be able to build our exports a little over the next eight or 10 years, I doubt whether we will be able to overtake what is happening in other parts of the world. So where does that leave our farmers? At the beck and call of one or two companies which control the price and distribution of milk. When the United Kingdom's dairy industry was deregulated in 1994, the producer owned cooperative milk marque had 80 per cent of the suppliers. It now has only 50 per cent and they tend to be the smaller dairy farmers with no clout at all.

The milk market is going to be under pressure and the levy being paid out will end in eight years. Farmers are free to do whatever they like with the money, so there is no incentive to do any further restructuring or redevelopment of the industry. What will happen in eight years time when the industry is crying poor? Will they come back to the government of the day doing an Oliver Twist and asking for more? Subsidies will be things of the past and I can pretty well predict that I would say to the industry, `Well, you did not heed my warnings back then that the industry needed to insist that government carry out a proper assessment of the likely impact of deregulation in dairying regions.' What sort of impact is it going to have on country towns in some of those dairy regions? We just do not know. It also needs to insist that farmers and other industry workers need retraining and reskilling to go into other areas.

I blame the government for being so short-sighted and for being such a cheapskate. It is the government's role to lead, to assist and to cajole to make things happen. It needs to understand and protect communities in which massive change is occurring. It needs to look at the long term. This government has failed dismally. I remind this government that, as a direct result of the Kerin and Crean plans over the 13 years when Labor was in government, dairying moved from being an inefficient, inward looking industry on the brink of collapse, limping along only with the assistance of support structures and subsidies, to its present position as a major rural export industry. Restructuring was achieved in an orderly manner over those years and now suddenly we are faced with deregulation without any structure. `Survival of the fittest' is the motto now. What if the export prices drop and the world market is suddenly restricted? What if the exchange rates do not go our way and New Zealand picks up the competitive edge, which it surely will? How is government going to help the industry?

We are not going to delay these bills on this side of the House. I see we are going to have amendments introduced before the bills pass through the House. We are certainly not going to be accused of interfering, seeing that people have voted to accept it. This government is quite good at accusing others of not doing what it should be doing. Many of us on this side of the House are not happy with the long-term effects that these bills are going to have on the rural areas we represent. We think it is a sell-out of small farmers and the domestic industry and a complete cop-out by this government. I condemn them for that.

I am pleased to remember that the Labor Party has a lot of runs on the board in helping restructure rural industries. Many rural products were developed and improved over Labor's time in office. We looked after the workers who are being displaced and found proposals to put to work those who had been unemployed for years in the country. The uncaring approach which this government is using is typical of the questions now being asked out in the bush. The Prime Minister is city-centric. No amount of wandering around the bush with an Akubra on is going to make him anything else. He does not understand what is going on out there and never will.

I see that a small regional task force was set up after pressure from state Labor ministers on the federal minister to put it in place. I do not think it has any strength at all, but at least it is an attempt to try to get the minister to look at some provision of regional assistance if some of the matters I am mentioning here start to appear. But of course it will not be enough, and there is no indication anyway that money will be spent in those areas. So deregulate, but do it at your own peril and do not blame us if we say, `We told you so,' when it falls in a heap. The only worry I have is that Labor will have to pick up the pieces. That will require some very advanced thinking. I believe the second reading amendment deserves support so it reminds people what could have happened with a government that thought in advance, had some vision, had some caring feelings about regional Australia and really thought deeply about what to do. When a major industry is being restructured in your country, you would think you would have some compassion for the people that are going to be affected in the way that many dairy farmers will be in this case. I believe the amendment picks up what could have been with a little bit more effort and a little bit of forward thinking by the minister who represents the government in this parliament..