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Wednesday, 20 June 2001
Page: 28035

Mr O'CONNOR (9:54 AM) —The Dairy Produce Legislation Amendment (Supplementary Assistance) Bill 2001, which we are debating here today, is an admission of policy failure by this minister and by the Howard government. If this legislation passes the parliament, over $1.9 billion will have been committed by the milk consumers of this nation to support dairy farmers in the aftermath of the deregulation of their industry. Yet the Howard government has not committed one red cent to support the dairy farmers of Australia through one of the most important periods in the history of their industry. Indeed, when the dust settles on the total package of assistance to the dairy industry, one indisputable fact stands for every dairy farming family to see: one of the big winners from deregulation of the dairy industry has been the Howard government, because it has been able to claw back hundreds of millions of dollars in tax from dairy farmer package payouts.

It is of little comfort to dairy farmers, as they endure the financial and personal pain of deregulation, to observe the Howard government, which has put nothing into their industry, indulging itself in an orgy of advertising promotion to save the political skin of the minister and his colleagues in the Howard government. That advertising dollar meter is ticking over at $660,000-odd dollars a day, or $20 million a month, as the Howard government feverishly attempts to save its political skin.

As dairy farmers battle with low prices, reduced farm values, unsympathetic banks and the personal heartaches that have followed deregulation, this government is lining the pockets of advertising industry executives in Sydney and Melbourne without putting one cent—not one red cent—of federal money into one of Australia's most important industries. Some $1.9 billion later—and after one of the largest packages of industry assistance in Australia's history, financed not through general revenue but through a milk tax on consumers—this government has yet to articulate a coherent plan for the long-term future of the dairy industry. This hapless and discredited government passed up a unique opportunity in the history of this great rural industry to set out a coherent plan for its future. It took the lazy option, and now dairy farming families in New South Wales and Queensland are paying a heavy price indeed for its incompetence.

This legislation authorises the raising of an extra $140 million in a supplementary package of assistance, with $100 million allocated to dairy farmers whose production of market milk is over 35 per cent of their production, $20 million to iron out anomalies and $20 million in extra DRAP funding. I move:

That all words after “That” be omitted with a view to substituting the following words:

“whilst supportive of Australia's dairy industry and whilst not declining to give the bill a second reading, the House condemns the government for:

(1) failing to deliver a long term plan to secure the future of the dairy industry;

(2) failing to prepare the industry to meet the substantial environmental challenges it faces in many communities in moving to a more sustainable production base;

(3) failing to adequately plan to provide for rationalisation within the dairy processing sector;

(4) failing to address the long term skilling needs of the industry;

(5) failing to stimulate further research and development in the dairy industry;

(6) failing to plan and promote further market access for dairy products;

(7) using Dairy Regional Assistance Program funds to pork-barrel for its own political survival; and

(8) failing to ensure that its latest assistance package is fair and equitable.

Each element of the supplementary package is an admission by this minister and the government that it has failed the dairy industry. The $100 million of extra assistance is squarely aimed at dairy farmers in New South Wales and Queensland, whose livelihoods have been decimated in the aftermath of deregulation. Yet, even before the ink was dry on the minister's announcement, many dairy farmers were ringing my office complaining about the inequities in the criteria used to allocate the funds. Many dairy farmers in New South Wales and Queensland heeded the advice they received years prior to deregulation—that it would actually happen. They borrowed heavily to expand their farm acreages and update their milking plants. They undertook pasture improvements and increased their herd size to reduce their dependence on quota market milk. Some of these farmers are now excluded from receiving additional assistance available under this supplementary package. No wonder they are angry.

I received representations from industry representatives last week which mooted a lowering of the 35 per cent threshold to 25 per cent with minimal net cost to the package. The advice that I have received within the industry is that it is possible to bring a significant number of deserving dairy farmers in New South Wales and Queensland into the ambit of the supplementary package at little or no extra cost to consumers. I mention consumers, as it is they, not the Howard government, who are funding this $1.9 billion package. The minister has at his disposal the resources to evaluate this proposal and I would urge him to give it serious consideration. I am attracted to it because it would most certainly introduce greater equity into those supplementary arrangements and reduce the deep divisions in the ranks of dairy farmers in many of these communities. The minister ought to swallow his pride and do the right thing in the interests of greater equity. His Prime Minister is well practised in that ancient political art of the backflip, so he need not be bashful himself if he does one. We on this side promise that we will not even look while he does the backflip.

With regard to the allocation to anomalies, this is simply an overt admission that the original legislation was grossly defective in not enabling the rather unique position of many dairy farmers to be accommodated in the original package. For example, I mention the group of Tasmanian milk producers—and this will be taken up by the member for Braddon, I am sure, in this debate—who supplied 100 per cent of their product into market milk but, because of the pooling arrangements in Tasmania, were deemed to have supplied only eight to 10 per cent to that market.

The third element of this package—the $20 million of extra funds for DRAP—is, once again, an admission by the government that it grossly underestimated the original impacts of deregulation on regional communities. For the benefit of dairy farmers, it would be instructive for me to outline the history of DRAP funding, for it tells us much about the incompetence of the government, the lack of policy planning, and the panic that motivates the actions of this government. There was no regional development package in the original one. It was only continual agitation by the opposition and dairy communities, such as those in the Bega Valley, that forced the government to allocate $45 million to this purpose. We had to put the political bull ring in the minister's nose and drag him around the political stage to respond to community concerns in this regard. An hour before the original bill and the package were passed by this House, the minister, in a flat panic, amended his own legislation to allocate $45 million to regional development in dairy communities affected by deregulation.

Of course we on this side of the House were pleased that the government had finally caved in on this point, but we were absolutely horrified when the minister started making allocations from the fund—and those allocations included over $200,000 to a polocrosse field and $50,000 to a wine appreciation course—even before dairy farmers had received any money from the original package. Due to our political pressure, the government had to focus that expenditure more, but we are nevertheless concerned about what this minister will do with an extra $20 million in the pork barrel. We know that about half of the Queensland DRAP allocations have gone to the minister's own electorate. We do not deny there are communities in hardship there—we do not deny there are dairy farmers who have gone through extreme hardship—but we will be watching with a close eye the allocations that are made under the extra money in this program.

There are several points to be made about this supplementary package of $140 million. I believe it is reasonable for dairy farmers to ask why it has taken the government so long to respond to the crisis facing many dairy farmers in Queensland and New South Wales. It was clear to dairy farmers within a few months of 1 July 2000 that deregulation had caused a catastrophic drop in their incomes. The ABARE report in January 2001 found that there was an estimated decline in farm gate prices in New South Wales alone of 29 per cent, in Queensland of 24 per cent and in Western Australia of 30 per cent, leading to declines in income of 54 per cent in New South Wales, 40 per cent in Queensland and 56 per cent in Western Australia. That report only reflected what farmers in those regions already knew—that deregulation had devastated their incomes, devalued their farms and made it difficult for them to obtain credit from financial institutions.

Kim Beazley's dairy task force, which I chaired, visited affected regions and we publicised, where we were able, the cases of extreme hardship in order to get this minister to act. It is now a matter of public record that this minister from Queensland only became interested in the plight of dairy farmers after the Queensland state election results when his National Party was virtually wiped out at the polls. It took the government until last week to produce a draft set of guidelines for this legislation for the allocation of the extra $20 million for anomalies. The Shane Stone memo described this government as mean, tricky, out of touch and dysfunctional. We all know that to be true. Dairy farmers now know it to be true. But we need to add contemptuous, arrogant and incompetent, as evidenced by their failure to provide this parliament with the full details of how their extra funds are going to be allocated.

I note the comments of the minister yesterday in this House about Labor policy relating to agriculture, and his failure to mention Labor's announcements on salinity, the single desk for rice and wheat, and national competition policy. We know this minister is tricky, like the Prime Minister. Up there in Wide Bay they call him `tricky Truss'. He has indulged in heavy bouts of trickery before. For example, he has claimed this compensation package as his own, even though it is financed by consumers and there is no federal money in it at all. He has criticised state Labor governments which have put money into their dairy industries, when he has put none in himself, and he has attempted to hide Costello's tax take of hundreds of millions of dollars from this package.

The minister mentioned the report of Kim Beazley's dairy task force, due in April. I can assure the minister that that report has been completed, but we had no intention of releasing that report before the minister made his announcement in May on the supplementary package and brought his legislation into this House. We on this side of the House know the government's capacity to poach policy. They are good at looting the public purse for their cheap advertising campaigns and poaching Labor policy in a whole range of areas—from BAS to petrol to salinity to the knowledge nation agenda.

I would like to take some time in this debate to outline some of the concerns of dairy farmers about their industry in the wake of deregulation. These views came to us in the meetings that we held in every dairying region across Australia. Dairy farmers told us of the great uncertainty in their lives as a result of the government's poor handling of and incompetence in this area of deregulation. They expressed concerns about the ageing of their industry and the exodus of young families from the industry in the wake of deregulation and their concern about its long-term future. They expressed frustration at the cooperatives, which they felt had betrayed them in the marketplace; at supermarkets, whose margins on their product had widened; at the national competition policy, which they felt had caused their situation; and at the ACCC, which prevents them from collectively bargaining on the price they receive for their produce.

They told us of the horrendous personal impacts on their family life and their communities. They told us of massively reduced farm gate prices and incomes, of problems and stress in dealing with the banks, of significant slumps in local land prices and of a virtual drying-up of the market for dairy farmers, of difficult dealings with local councils and of huge hikes in input costs, in the costs of grain feeds, fertilisers and petrol in particular. They told us of the exodus of many young share farmers from the industry, the difficulty of recruiting farm labour, the problems that were encountered between lessors and lessees and the lack of investment in non-farm infrastructure that threatens the long-term productivity of their farms and their industry production.

But above all, they expressed their anger at an incompetent government that promised them payments from the package in October 2000 which they had not received by February and March 2001. They expressed their anger at a government that steadfastly refused to do anything about the anomalies that its policy had created until it was forced by the opposition and the industry to address those needs. They expressed their anger at a government that in its deceit claimed a package of assistance as its own, a government that burdened farm businesses with the GST and, above all, a government that had failed to plan for this momentous change to their industry.

That lack of planning and vision for the industry goes back many, many years with this government. It goes back to the previous National Party minister and the hands-off approach to rural industry, a policy which was endorsed and continued by this minister. Indeed, the government made great play of the fact that in the wheat and wool industries its policy was to extract the government from the industries. When the government was encouraged to take a hands-on approach to the dairy industry in the face of the two momentous changes that were confronting it on 1 July, namely the introduction of the GST and the deregulation of the industry, this government did nothing. It articulated no vision for the industry. It did not seek to develop any coherent plan for its long-term future. It left the response to deregulation up to the industry. It was the industry's responsibility, apparently, to get agreement between all the state farming organisations and all state governments on this issue and then bring the package on a plate to a lazy and incompetent government to endorse and then claim as its own.

Those are the facts of the matter, and the dairy farmers in northern New South Wales in the electorates of Richmond and Page and in Queensland know that was the case as far as their industry is concerned. They know that no vision was articulated. They know that no plan was developed. They know that there is not one cent of Howard government money in this package, in the original package or the supplementary package. They know that this minister has attempted to blame everybody else for the situation that this lazy and incompetent government created. The plan for this industry could have included a clear statement of where the government intended to take this industry over the next 10 years—a very important signal to the financial sector about how the federal government of this nation regarded this most important rural industry. Yet this government, in its slothful policy laziness, refused to put one cent into this industry and sent a signal to financial institutions that it was prepared to cut it adrift in the face of the most momentous changes in its history.

The government articulated no plan that included addressing the important skilling needs of farmers in the bottom 30 per cent of the income chain or the farm labourers that are in short supply in the dairy industry, nor the skilling of process workers to lift productivity in the value adding chain. It articulated no vision to engineer the expansion of the research and development program that would bring extra cents per litre at the farm gate to hard-pressed dairy farmers. It articulated no vision that took into account the momentous changes that would occur in the processing sector as a result of the decisions that it had forced on the industry. It did not articulate any coherent plan for the regional development of communities that were hard-affected by this action and it articulated no plan for the environmental future of the industry in the face of the enormous pressures that have come upon it in many communities.

This is an important supplementary package for the industry. But let it be known that it was forced upon this government in the wake of the Queensland state election result that absolutely decimated the National Party. Let it be known at this point in time, in the debates in this great House on this great industry, that this minister and this government have yet to articulate a plan for the future of one of Australia's great rural industries.

Mr DEPUTY SPEAKER (Mr Jenkins)—Is the amendment seconded?

Mr Horne —I second the motion and reserve my right to speak.