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Wednesday, 20 June 2001
Page: 28053


Mr SOMLYAY (11:28 AM) —There is a misconception about the problems with the deregulation of the dairy industry, and that is that it is a consequence of competition policy. I hear that everywhere I go in my own electorate. I hear it being said by people in the industry and by people in the Labor Party. Unfortunately, a misconception is also held by some members of the National Party and the Liberal Party. Recently I was at the state convention of the Liberal Party. One of the vice-presidents, in speaking about the post-mortem on the state election in Queensland, clearly stated that one of the factors involved in the result of the state election was the effects of federal dairy deregulation. Therefore, I was very disappointed that this misconception is even held by persons in my own party. Let me make it very clear. There were no federal dairy regulations. Dairy regulation was a province of each state. When the Victorian dairy industry made up their mind to deregulate, it was inevitable that there would be a massive effect on every other state.


Mr Horne —What was the ultimatum given to them?


Mr DEPUTY SPEAKER (Mr Hollis)—We do not want to know the ultimatum. Do not answer that. Any comments will come through the chair.


Mr SOMLYAY —Victoria produces 80 per cent of all of Australia's dairy products. Therefore, deregulation was going to have a massive impact on every other state. Of course the dairy industry came to us, as a federal government, and said, `Help us.' Had Victoria deregulated without some adjustment scheme being put in place, it would have been devastating for the dairy industry in New South Wales, Queensland and Western Australia. I mention these states because these are the quota states. In Queensland, dairy quotas are a tradeable commodity. They were the equity farmers had in their farm. It was the same in New South Wales.

When the state government went to deregulate the dairy industry in Queensland as a part of the package of the Commonwealth's $1.7 billion package it was consequent upon deregulation in every state. Had the Beattie government in Queensland not wanted dairy deregulation, all they had to do was not deregulate and then the package could not have come into place. The danger there was that the flow of products from Victoria, where they can produce more cheaply and more efficiently all year round, would have devastated the industry, but it would have been something that happened immediately and caused problems overnight.

At the request of the industry—and we had many meetings here with Pat Rowley from Queensland—the Commonwealth put together a package based on a consumer levy of 11c a litre. It is a $1.7 billion package to help the industry readjust. That was put in place. The states all legislated to deregulate their industry, but there was absolutely no assistance from the Queensland government to those people who held quota. As I said before, quota is a tradeable commodity. It was the farmers' equity in their farms. Queensland had a moral, if not a legal, obligation to compensate people for their quota.

I mentioned that the dairy industry was not a part of competition policy but, as a consequence of competition policy, Queensland and the other states will attract national competition policy payments from the Commonwealth as a consequence of dairy deregulation. The Beattie government, and, I suppose, the Carr government in New South Wales, had a moral obligation to buy out those quotas—to pay the dairy farmers for the quota. They received revenue taxes, stamp duty, from the trading activity of those quotas. Therefore, they had a moral obligation to compensate every farmer for their loss of quota. Every farmer was entitled to that compensation and they did not receive it. Overnight they lost their equity. When a dairy farmer went to a bank, that quota was part of his equity and the basis upon which he would receive a loan for carry-on finance or whatever. That went overnight. The farmers were devastated. Mr Beattie had an obligation to compensate those farmers. I keep repeating this because there is a conception in the community that dairy deregulation was a Commonwealth issue. And it was not; it was purely a state issue. There was an obligation on the Beattie government to pay out these farmers for their quota.

As the member for Blair said earlier, the Queensland budget came down last night. Of course, in the great tradition of Labor governments, they are in the red. Only four per cent of the Queensland budget was spent on matters relating to agriculture. With the industry devastated as it is because of deregulation, the Queensland government should have compensated these people—I say it again—for the loss of this quota. This is why we are considering the Dairy Produce Legislation Amendment (Supplementary Assistance) Bill 2001. Had the Queensland government, the New South Wales government and other state governments compensated dairy farmers for the loss of this quota, we would not be here discussing this bill. As I said, state governments had a moral obligation to compensate for quota, if not a legal obligation. But the Commonwealth was not prepared to sit back and see these dairy farmers suffer any longer.

The ABARE report was brought down some six months after the deregulation of the dairy industry and it showed that further assistance was required. What this bill does is put in place an additional package over and above the $1.7 billion package. This amount is $140 million, and it is broken up on the basis of $100 million in supplementary market milk payments to dairy farmers who are most heavily dependent on market milk production, $20 million for eligible people who because of extraordinary circumstances were excluded or their entitlements were significantly lower than normal under the government's Dairy Structural Adjustment Program, and the $20 million expansion of the Dairy Regional Assistance Program.

On 29 May the Prime Minister visited Gympie in my electorate and announced that a $1.6 million grant would be given to a Gympie company, Nolan meats, as part of the Dairy RAP, as a grant to create jobs in that town which is heavily dependent on the dairy industry in the Mary Valley. That will translate into 150 jobs over the next four years. The Dairy RAP is not meant to create jobs in the dairy industry; it is meant to create jobs in towns and regional centres that are affected by the downturn in that industry.

Additional milk payments will be made to people with interest in farms that were dependent on market milk returns for more than 35 per cent of the milk they delivered in 1998-99. Payments will be made to people who were granted an entitlement under the DSAP and who can demonstrate that they are still actively involved in dairy enterprise.

I met with a group of dairy farmers in my electorate last Friday who are at the top end of the dairy industry; they milk between 400 and 500 cows per day. They made it very clear to me that they, as efficient farmers, are not helped particularly by this package. This package is aimed at people who are most affected by the downturn. But the farmers at the top end, the efficient ones who want to keep farming, want a floor price scheme, some sort of a price where they can continue to produce in the efficient manner in which they have produced in the past. Initially it was anticipated that the price in Queensland would be the Victorian price plus the cost of freight, which is around the 45c per litre mark. As it turns out, these farmers are now receiving 36c a litre and they cannot exist on that amount of money. I commend this bill to the House and I commend the compassionate attitude the government has taken to the dairy industry.