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Wednesday, 20 June 2001
Page: 28055

Mr SIDEBOTTOM (11:39 AM) —The fact that we are here again debating this government's response to the issue of dairy deregulation proves to me one thing—and that is that from the outset the government got it wrong. Its answer to deregulation of the dairy industry was the kind of response you get when you really do not have a response. From the start, this government had no plan, and still has no plan, for dairy farmers and dairying communities who were nervously awaiting deregulation of their industry. The coalition had no blueprint for the future of the dairy industry and still does not. Instead, what we have seen from day one is policy making on the run.

Yet again this government has run into trouble. What we are seeing now is another case of policy breakdown. The Dairy Produce Legislation Amendment (Supplementary Assistance) Bill 2001 is an attempt to fix it. This amendment is yet another admission of government policy failure, the failure to properly recognise what dairy farmers in many farming communities across Australia would be in for post-deregulation, a failure that this side of the House tried to bring to the attention of the government some time ago.

We were all told about the inevitability of dairy deregulation. What was this government's response? Nothing. There was no response. It sat on its hands and did nothing. It was left to the industry itself to come up with a compensation package it hoped would soften the impact of deregulation. Hence the Dairy Industry Adjustment Bill 2000. That bill made provision for a $1.78 billion package funded by an 11c a litre levy on milk consumers—a tax. These arrangements, known as the dairy industry adjustment package, comprised three programs: the Dairy Structural Adjustment Program, the Dairy Exit Program and the Dairy Regional Assistance Program. I particularly remember the last of those programs being rushed into this House late one evening, when members were given virtually no time to debate the program. It was an eleventh hour measure, hastily incorporated into legislation after the government belatedly acknowledged—due in no small part to the effort of members on this side of the House, and I certainly acknowledge the effort of the members for Corio, McMillan, Paterson, Lyons and Bass—that there was very little or no provision for the impact of deregulation on dairy communities at that stage. This, I am pleased to say, led to a $45 million program for regional areas.

I supported the original bill, which was debated in this House over 12 months ago, and I support this new legislation—albeit with a number of reservations, as outlined in the amendments tabled by my colleague who is at the table, the member for Corio. The aim is to provide further help to those suffering hardship because of deregulation, in the form of the Dairy Produce Legislation Amendment (Supplementary Assistance) Bill 2001. In effect, it will provide an additional $140 million. The $140 million will be raised, again, through an extension of the milk levy—that is, from milk consumers, not the government.

Of course, there are always going to be `anomalous circumstances' because of this government's inept handling of dairy deregulation. I support further assistance because it is clear that many dairy farmers slipped through the net following the original dairy adjustment package. I am very pleased also to see that at last there is acknowledgment of dairy farm lessors. There are a significant number of lessors in my electorate who have been adversely affected by deregulation of their industry, and I would like to come back to this later.

The big disappointment in the whole dairy deregulation saga is that this government has once again been too slow to act. Indeed, it is a report by the Australian Bureau of Agriculture and Resource Economics, ABARE, which highlighted the continuing hardships caused by deregulation that has forced the government to further act. The truth is that from the start the government did not want to know about dairy deregulation. It was the industry that did the bidding for the initial compensation package to help farmers adjust to the challenges that lay ahead, and now ABARE has also shamed the government into action.

As I have mentioned earlier, it must also be remembered that not one cent of the package is federal government money. The entire package is being funded by the milk levy on consumers—a milk tax. However, not only are consumers taxed but their tax is further taxed. The government pays nothing but collects two taxes, and therefore is pocketing hundreds of millions of dollars from a hidden tax on the money raised to help farmers adjust to dairy deregulation. Recent estimates put the tax take from the milk levy at over $400 million. Again, this money is being raised through an 11c a litre levy on consumers. At least 3c or 4c a litre from that is going straight into Treasury's coffers.

I note that the supplementary assistance provided for in the bill is primarily focused on providing additional aid to dairy farmers producing for the liquid milk markets in Western Australia, Queensland and New South Wales. At this stage it appears Tasmania will not get much of a look-in—and I will get to that shortly, if I can. However, we are still waiting on the full detail. That is a worry in itself because, as we know with this government, the devil is quite often in the detail. The important thing is that farmers and dairying communities who need assistance get it. To get it, they need the guidelines, and we are still waiting for the guidelines on this particular issue. This is disappointing to me and to the many farming communities spread across my electorate: the north-west coast of Tasmania boasts some of the finest dairying country in the world. Our dairy industry, which is predominantly centred in my magnificent electorate of Braddon on the north-west coast of Tasmania, employs around 2,000 people at farm level and a further 1,600 in factories and in distribution.

I have heard first-hand from many dairy farmers and their representatives in the Dairy Task Force—much derided by the other side, but a very positive initiative by this side and which will form the heart of our policy initiatives on this. Let me say that there was no token representation at the Dairy Task Force, certainly in my electorate, and there was very wide representation from that. Problems that particularly surfaced in my electorate were those facing lessors, and these were high on the list of priorities raised in the visit. The frustration of dairy farm lessors was expressed this way by Ms Lynett Griffiths, a committee member of the Dairy Farm Owners Action Group, who last week gave evidence to the Senate committee looking into the effects of dairy deregulation. Ms Griffiths said:

Lessors were the first farmers to feel the effects of deregulation and were virtually excluded from receiving any packages under the dairy structural assistance plan because of the wrongly held belief that we were investors and would suffer no loss of income because of our lease. This wrongly held belief appears to be the reason for our exclusion and, even though we have made numbers of attempts to convince the minister for agriculture and fisheries ...

Well, he has taken some convincing, but at last the minister has accepted another of the shortcomings of the government's response to dairy deregulation. The Dairy Produce Legislation Amendment (Supplementary Assistance) Bill includes limited provisions to make discretionary payments to lessors who earned at least 50 per cent of their gross income from the lease in 1998-99 and who have suffered a 20 per cent fall in lease income during 2000-01. However, there are concerns that there may be only a handful of dairy lessors who will benefit, because most did not earn 50 per cent of their gross income from the lease.

I mentioned earlier that I want to highlight concerns that some of Tasmania's market milk producers may miss out on a share of the additional assistance. This bill is particularly focused, as I mentioned, on providing more aid to dairy farmers producing for the liquid milk market in Western Australia, Queensland and New South Wales. Dairy farmers and dairying communities in these states were identified in the ABARE report as being particularly disadvantaged by dairy deregulation. The Tasmanian Farmers and Graziers Association is worried that a number of Tasmanian dairy farmers who supply 100 per cent of their output into market milk will not be eligible for a share of the $100 million for market milk producers.

As I understand it, because of the pooling arrangements in Tasmania, a group of close to 20 suppliers whose total production goes into market milk will get nothing, due to the criteria likely to be applied—another anomaly looming, I fear. The Chairman of the TFGA's Dairy Council, Mr Brendan Thompson, put it this way in a recent media report. Mr Thompson was quoted in an article in the Tasmanian Country newspaper of 25 May, as follows:

We're very disappointed by the way the package has been set up. We would have thought the money would have been made available for market milk producers in all states.

Mr Thompson went on to say:

It won't go unnoticed that there is some political expedience involved here.

Surely not political expedience! Is there an election in the air? What is that whiff that we pick up in rural and regional Australia? Surely funds raised to help cushion the impact of deregulation on farmers and dairying communities will not be used as a political pork barrel by the government!

In conclusion, the response from most dairy farmer organisations to the new package has at best been lukewarm. It does, however, attempt to deal with some of the anomalies thrown up by the original package. However, anomalies still remain. It is very important that the minister listen when we make application on behalf of those that have been affected by some of these anomalies. I refer again to issues related to lessors. Even today I heard of one example of a lessor who is still not going to make the criteria, on the surface of it, and will not benefit in any way from the dairy deregulation package. It is very important that these problems be looked at and that farmers, farming communities and the families involved are dealt with accordingly.