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Wednesday, 28 August 2002
Page: 5905

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

That this bill be now read a second time.

The purpose of this bill is to provide for an additional function of the Australian Dairy Corporation (ADC) to allow for:

the planning, facilitation and participation in the reform of the dairy industry statutory service provider bodies, the Australian Dairy Corporation and the Dairy Research and Development Corporation;

the funding of these processes; and

the minister to issue directions to the ADC in specific relation to this additional function.

The bill also provides for farmers with entitlements under the Dairy Structural Adjustment Program or Supplementary Dairy Assistance Scheme to access exit assistance through the Farm Help Re-establishment Grant scheme, following the ending of the Dairy Exit Program on 30 June 2002.

In relation to the provision for an additional function for the ADC, it is clear that significant changes over recent years in the market situation and corporate structure of the Australian dairy industry, particularly since deregulation in July 2000, have prompted the dairy industry to seek a rationalisation of industry statutory service delivery arrangements to better meet industry priorities and to improve service delivery functions.

To move forward this reform agenda, the dairy industry has approached the government with a proposal for reform which would see the two statutory service providers merge and become one Corporations Act company, directly accountable to levy payer members. As with the wool, red meat and horticulture industries that have undertaken similar reforms, a particular focus of the dairy industry proposal is on providing the industry with greater ownership of R&D and market development priorities, as well as enabling levy payers to have a greater direct input into the nature and direction of these key service delivery activities.

Of course, as with any reform of this magnitude, investigations must be made into the viability, suitability and efficiency of what is being proposed and it is clearly important that, within these reforms, industry services are tailored to the new industry environment. This bill provides the funding mechanism for this process to take place by enabling the Australian Dairy Corporation to fund an investigation of the best options for reform, and thereby allowing government and industry to work together to develop a proposal that meets all these requirements.

Additionally, the amendments provide for the ADC to fund the Commonwealth, the DRDC and industry's involvement in the reform processes to ensure a full consultative process takes place, along with the provision of advisers to assist in the investigation of the best options for reform.

While the government has yet to consider a detailed reform proposal, it is clearly in the industry's interests to ensure that any proposal that comes forward has been fully analysed and rigorously examined by expert business and legal advisers. With the passage of this bill, the work can begin in earnest so that the government can work towards industry's desired start date for the reformed bodies of 1 July 2003.

The Australian dairy industry continues to be an innovative, progressive and highly successful rural industry and its ongoing program of reform is to be admired. This bill will ensure that government and the statutory authorities can assist the industry in meeting the challenges of the future and ensure the industry continues to grow and prosper—from the Australian farm gate to supermarket shelves throughout the world.

The bill also provides for farmers with DSAP and SDA entitlements to access exit assistance under the FHRG scheme. This is necessary following the cessation of the Dairy Exit Program on 30 June 2002. Currently, only those farmers who are not holders of DSAP and SDA entitlements are able to apply for exit grants under the FHRG scheme. These amendments will enable this inequitable situation to be corrected by removing the impediments to holders of DSAP/SDA entitlement to access the Farm Help Re-establishment Grant scheme.

Importantly, the amendments provide the same level of access to the FHRG scheme as was available to DSAP/SDA entitlement holders under the Dairy Exit Program. The FHRG provides eligible entitlement holders with payments of up to $45,000 tax free and access to a retraining grant of $3,500. The total amount of the exit payment will be based on an assets test and eligibility requirements applied under the FHRG scheme.

As was the case under the Dairy Exit Program, DSAP and SDA entitlement holders who are eligible for an exit grant will have this grant reduced by the amount of DSAP and SDA payments received, as well as having all future entitlements under the DSAP and SDA schemes cancelled. This is necessary to ensure that all farmers are treated equitably and that those with DSAP and SDA entitlements do not receive any unfair financial advantage.

The bill provides for the cost of these changes to the eligibility for the Farm Help Re-establishment Grant scheme to be funded out of the Dairy Structural Adjustment Fund from which the Commonwealth's dairy industry restructure measures are funded. It is expected that there will be little or no impact on the fund given the requirement that all future DSAP and SDA entitlements be cancelled as part of the grant of exit payments under the FHRG scheme.

The government is conscious that those farmers with DSAP or SDA entitlements may have to confront more general circumstances outside industry deregulation that will require government assistance to exit agriculture with dignity and with realistic choices for their futures. For this reason, the government takes the view that these farmers should be provided with access, on an equitable basis, to the current exit grant arrangements available under the FHRG scheme to other farmers.

In conclusion, the government believes that it is important to continue to support efforts aimed at ensuring the continued profitability and expansion of the dairy industry in Australia. These efforts not only relate to the possible reform of the dairy statutory bodies but also extend to supporting those who, for a variety of reasons, are unable to continue in the industry. These amendments signify the government's continuing commitment to the dairy industry as a whole, to individual farmers and to their future. I commend the bill to the House and present the explanatory memorandum.

Debate (on motion by Mr Cox) adjourned.