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Thursday, 5 October 2000
Page: 20859


Mr TRUSS (Minister for Agriculture, Fisheries and Forestry) (9:31 AM) —I move:

That the bill be now read a second time.

The purpose of this bill and the accompanying Repeals and Consequential Provisions Bill is to create a new horticultural services company.

The new company will be formed when the assets, liabilities and staff of the existing Australian Horticultural Corporation (AHC) and the Horticultural Research and Development Corporation (HRDC) are transferred to the new company. A trust is also to be established to hold the reserves of the Australian Dried Fruits Board, which is to be abolished under the legislation.

The formation of the new company has strong industry support and is the culmination of over two years of hard work by the industry in partnership with the government.

The proposal for the new company began with the green paper in February 1999, when the Horticultural Industry Alliance Steering Committee examined the options for a new corporate framework for horticulture service delivery. The aim is to deliver better industry ownership and involvement in marketing and research and development for the horticulture industries and to allow the synergies between marketing and research and development programs to be fully exploited by the industry.

Following widespread consultation with industry, a white paper was prepared recommending a new blueprint for industry service delivery involving the establishment of a single company operating under Corporations Law to replace the AHC and the HRDC. It was estimated that moving to a single horticulture services company would provide approximately $0.5 million annual savings in administration when the company is fully operational.

The industry, supported by the government, considered in detail how the company might best be set up and run, given the current 25 levy paying sectors and voluntary contributors to the existing corporations and the possibility this number might expand under company operations.

The model embraced by industry, and supported by the government in this legislation, involves industry representative bodies owning the company through its membership and providing for individuals or other bodies to contribute funds for marketing and research and development.

Each industry body or others contributing funds to the company, through the statutory levies or by voluntary contributions, will hold voting rights in the company in proportion to the level of funds they contribute.

Funds of approximately $2 million are to be held in a dried fruits trust which will be accessible to the dried fruits industry for marketing programs.

Levy payers will have the opportunity to consider the investment plans developed by an industry advisory committee at an annual levy payers meeting. The company will then arrange the most cost-effective delivery of these marketing and/or research and development plans.

The company will receive the assets, liabilities and staff of the two existing corporations. Net assets to be transferred are valued at $20 million and primarily comprise industry moneys held on behalf of the horticulture industry sectors for marketing and research and development programs.

In order to provide for continuity of programs and staffing from the AHC and the HRDC, all staff and their entitlements are being transferred to the new company.

The role of the company will be to provide marketing and research and development services to industry and to administer export control powers currently held by the AHC. The government will continue to match research and development funds provided by the horticulture industries up to 0.5 per cent of the gross value of production, as applies to other rural industries. In 1998-99, the government matching for horticulture research and development was $15.2 million.

The legislation provides for the Minister of Agriculture, Fisheries and Forestry to declare the company to be the industry services body and the export control body, if certain conditions are met.

These conditions include the requirement that the company be limited by guarantee, have an appropriate constitution that recognises the industry and public accountability role of the company and that the company has signed a deed of agreement with the government to fulfil these industry and public accountability requirements.

If the company changes its constitution in a manner considered unacceptable to the government, becomes insolvent, or fails to comply with the legislation or the deed of agreement, the legislation provides for the government to retain the right to declare another body as the industry services body or the export control body or to retransfer the assets and liabilities to another suitable body.

These safeguards have been provided in the legislation to ensure the company delivers what the industry and the government expect of it.

The government will also allow the new company to administer export control powers in a specific market, for a specific product, where it can be shown that the arrangement is beneficial to both the industry and the nation.

The most notable current use of export control powers relates to the export of oranges to the USA, where Australian growers have been able to earn price premiums from the export of quality fruit that meets the USA import quarantine requirements. Since 1991, when the trade began, exports to the USA have grown to over $40 million per annum.

The company will be able to issue export licences and continue to use the current export control powers for a further two years, where these have already been approved by the AHC.

After two years, the further use of export control powers will require a new five-step process to be followed by industry and the company.

This involves preparation of a case by the industry, extensive consultation with industry and final approval of the export control by the Secretary to the Department of Agriculture, Fisheries and Forestry (AFFA). This new five-step process also includes the preparation of a regulation impact statement by AFFA to ensure the proposed use of the powers complies with national competition principles.

The company's ongoing use of the powers will be subject to conditions set out in the deed of agreement and to Administrative Appeal Tribunal review to ensure exporters are fully informed of the use of export control powers.

The new company arrangements are expected to deliver significant benefits to the horticulture industries. These include:

· design and delivery of research and development and marketing services would be integrated into one company, to allow the provision of `market driven' research and development programs,

· afford industries the flexibility to determine the arrangements that best address their individual circumstances,

· generate streamlined and focussed industry programs that have the capacity to realise synergies between research and development and marketing,

· harness the expertise of other members of the horticultural supply chain, where appropriate,

· and promote commercial innovation at the farm business level through providing programs that complement the activities of individual growers.

The bill is strongly supported by the horticulture industry, which is to be commended for its efforts in bringing this initiative to fruition—in partnership with the government.

About 28 separate horticulture industries are party to this agreement. It represents the beginning of a new era for the industry. I compliment the leaders of the industry for their foresight, and also Senator Judith Troeth, the Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry, for the way in which they have worked through the complex issues which have culminated in this legislation being brought before the House today. I present the explanatory memorandum.

Debate (on motion by Dr Lawrence) adjourned.