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Thursday, 6 March 2003
Page: 12454


Mr SIDEBOTTOM (10:00 AM) —I am pleased to rise and address the Dairy Industry Service Reform Bill 2003 and the cognate levy bill Primary Industries (Excise) Levies Amendment (Dairy) Bill 2003. The legislation proposes change to the delivery of dairy industry services including the privatisation of the Australian Dairy Corporation and its registration as a Corporations Law company known as Dairy Australia Limited; the abolition of the Dairy Research and Development Corporation and transfer of its functions to the new Corporations Law company; authority for the Minister for Agriculture, Fisheries and Forestry to declare an industry services body for the purpose of receiving and expending industry levy funds and matching Commonwealth R&D funds; the consolidation of three existing industry levies into a new dairy service levy; and the opportunity for levy payers to participate in periodic levy polls on the dairy service levy rate.

The proposed model for the delivery of dairy industry services is similar to the model adopted in recent years for other rural industries including horticulture, pork and eggs. That is, it combines in one organisation the delivery function of hitherto discrete industry services such as market promotion, and research and development. During debate in this chamber on similar industry changes, Labor has expressed concern about the consolidation of disparate industry functions into one body. Nevertheless, Labor has maintained that where such a change is desired by industry we will not stand in its way.

The reform process was industry initiated and the proposed model is the subject of industry recommendation. That is something that we accept but with one important and responsible caveat. Labor will not agree to a new industry service structure that does not have sufficient regard to accountability for expenditure of compulsory industry levies and Commonwealth R&D funding. It is for very sound reasons that we take this position. When announcing the government's plan to privatise the Australian Dairy Corporation, the minister said that the new industry services body will manage $35 million in levy funds and $15 million in matching Commonwealth R&D funding each year. It is no small sum of money.

The statutory basis of the ADC and the Dairy Research and Development Corporation provides this parliament with the opportunity to scrutinise these organisations and ensure that they properly account for the expenditure of funds, most especially public funds. Of course the parliament's capacity to scrutinise a private company is clearly more limited. During a second reading speech on the Dairy Industry Service Reform Bill, the minister talked about some of the accountability measures he proposes. These measures include the requirement that an industry services body enter into a statutory funding contract with the Commonwealth before the minister makes an industry services body declaration. The minister must also approve in writing the constitution of the company and the nomination of inaugural directors.

It is pleasing to note that some accountability measures introduced by Labor in respect to reform of the pig industry service structure have been included in the Dairy Industry Service Reform Bill. I refer in particular to the requirement that a declaration of an industry service body be tabled in each house of parliament and published in the Gazette. During his earlier speech in this debate the minister said the company would receive compulsory levy funds collected by the Commonwealth and matching R&D contributions only `so long as it remains accountable for them to both levy payers and the parliament'.

In relation to the administration of the Dairy Structural Adjustment Fund the industry services body will be required to present an annual report to the minister and the minister will be required to table a copy of this report in each house of the parliament. But in relation to the expenditure of levy funds and matching Commonwealth R&D contributions there is no reporting requirement to the parliament in the proposal before us. This is a matter of concern to those on this side of the chamber. The opposition received a departmental briefing on these bills earlier this week. The assurances given to this House by the minister were, not unexpectedly, echoed by his department. The department said that the statutory funding agreement between Dairy Australia Ltdand the Commonwealth would impose rigorous planning and reporting requirements.

The department also said that the statutory funding agreement would contain limitations on the form of the company structure beyond those outlined in the Dairy Industry Service Reform Bill. But, regrettably, the opposition was advised that the minister had failed to produce, even in draft form, the constitution of the new company and the contract between that company and the Commonwealth. Along with these foundation documents, the minister has neglected to prepare the subordinate legislation that will allow the new arrangements to function properly. In fact Labor understands that the drafting instructions for these regulations have not yet been prepared. Most extraordinary is the fact that the proposed start-up date for the new company, 1 July 2003, is less than 16 weeks away.

The constitution, funding agreement and necessary regulations should have been ready at the same time as the legislation. On Tuesday afternoon the minister provided the opposition with a document outlining the key provisions in a yet to be drafted funding contract. Thankfully it is a start, but it is not nearly good enough. Members who were in this place during the last parliament will recall the March 2001 debate on the Pig Industry Bill. During that debate my colleague the member for Corio, Mr Gavan O'Connor, and my Tasmanian friend and colleague the member for Lyons, Dick Adams, noted the failure of the Minister for Agriculture, Fisheries and Forestry to provide the opposition with a copy of the proposed Australian Pork Ltdconstitution and the funding contract between the new pork industry service body and the Commonwealth. Two years later we find ourselves in exactly the same position—same broad restructure proposal, same minister and, unfortunately, the same disregard for the parliament.

Members on this side of the House have a legitimate concern that public money not be spent without appropriate accountability. One hopes that members of the government share that concern, but I am confident that the serious and serial offence will not be raised by government speakers on this legislation. I wonder why. The reforms proposed in the bills before us did not evolve overnight. I have little doubt that the minister will seek to explain his failure by reference to the passage of the Dairy Industry Legislation Amendment Bill in the last half of 2002, but I implore him, for the sake of his credibility, to resist that temptation. It is always a mistake for a minister to blame poor timetabling of his own legislation for faults in his administration.

Last year the parliament gave the ADC the authority to fund an investigation of an industry service reform model. The proposed model is no surprise to the minister, no surprise to the dairy farmers and no surprise to the opposition. More than six months ago, on 28 August 2002, the minister told the House:

... 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.

Labor allowed the bill appropriating funding for development of the reform model a speedy passage through the parliament. During its passage through this parliament, Labor urged the minister to develop this industry model in a considered way. It is disappointing that the minister has failed to do this. Not only have six months passed since the minister acknowledged the industry's desire for a reform path; more than 18 months have passed since the dairy industry itself proposed the formation of a Corporations Law company to undertake industry services.

I would like to turn briefly to the details of the proposed structure. The Dairy Industry Service Reform Bill 2003 provides for the privatisation of the ADC to a Corporations Law company, Dairy Australia Ltd, and the transfer of all DRDC assets and liabilities to the new company. Dairy Australia Ltd membership will comprise dairy levy payers and peak farmer and industry bodies. Levy payers will not be compelled to join the company, but those who do so will have an opportunity to participate in decision making about its board and the services it provides. All levy payers, whether they elect to join the company or not, will have an opportunity to vote at periodic levy polls on the rate of the dairy service levy.

The new company will deliver services similar to those currently delivered by the ADC and the DRDC and some technical services currently delivered by the Australian Dairy Industry Council. Export control, which is currently administered by the ADC, will not be undertaken by Dairy Australia Ltd but will be administered by the Department of Agriculture, Fisheries and Forestry. ADC staff will continue to be employed by the new company following privatisation. DRDC staff will transfer to the new company and maintain continuity of employment. Labor is assured by the government that employees have been engaged in appropriate consultation on the impact of the proposed changes which, in relation to employment numbers, is expected to be minimal. This is a matter that we on this side of the House will monitor closely, and we will hold the minister to his word.

The Primary Industries (Excise) Levies Amendment (Dairy) Bill 2003 consolidates the existing corporation levy, promotion levy and research levy into a single levy known as the dairy service levy. The maximum rate of the new levy will be the combined maximum rate of the existing levies. The industry argues that the single industry body and the consolidation of three existing levies will provide the new company with flexibility in relation to expenditure, within the parameters of the statutory funding agreement. It is an argument that the government clearly endorses. The dairy industry levy and the levy paid by farmers to the Australian Animal Health Council will not be affected by the proposed levy changes. However, the new industry services body will administer the Dairy Structural Adjustment Fund currently administered by the ADC, but will do so in the form of a trust.

These bills must be considered in the context of changes to the structure and operation of the Australian dairy industry over the past two decades. The industry has changed considerably over that time. Technology and farm management have improved and market changes have also occurred here and abroad. Labor has been a supporter of the dairy industry and a proponent of reform. The Kerin and Crean plans are recognised, even by many of those opposite, as key events in the industry's development. I have no doubt that the current Minister for Trade will recall his praise for the efforts of the current Leader of the Opposition—in his words, `a hell of a lot of work went into this'—and join with him in acknowledging the work of Labor primary industries ministers Kerin, Crean and Collins in supporting the Australian dairy industry. Thank heavens for 13 years of Labor, I say.

Industry change, including deregulation, has not been without cost to many dairy farmers and regional communities, particularly in the old quota states of New South Wales, Queensland and Western Australia—and I know all members in this House are well aware of the challenges and costs to those communities. Farm numbers have fallen, herd sizes have risen and the production sector has undergone an inexorable rationalisation. The initial response of the Howard government to deregulation was belated and inadequate. I know my colleague the member for McMillan was in the House as we urged the minister to act on this very important inevitable restructuring that was required, but the minister belatedly reacted. The eventual package was not driven by any general concern within the government about the impact of deregulation on the industry but by the hard work of industry and the urgings of the Labor Party. The program that emerged under pressure, the dairy industry adjustment package, is not funded by the Commonwealth but by an 11c per litre tax on milk.

As noted earlier, the new industry services body will administer the fund, out of which adjustment package payments are made. The Minister for Agriculture, Fisheries and Forestry will be acutely aware of one component of the package, the Dairy Regional Adjustment Program, because his electorate of Wide Bay has been the biggest recipient of funding under this program. By a remarkable coincidence, the Minister for Agriculture, Fisheries and Forestry has found himself handing out more dairy regional adjustment package cheques than any other member in this place. Even more remarkable is the fact that the value of these cheques exceeds the sum of DRAP grants to any other electorate in the country. As Mel Brooks, as Louis XVI, said, `It's good to be the king.' This is largesse gone mad—but far be it from me to say it was pork-barrelling!

Another matter worthy of note in relation to the Dairy Structural Adjustment Fund is that the dairy adjustment levy is now likely to linger longer than the original proposed end date of 2008. According to the review conducted by the Dairy Adjustment Authority late last year, the levy—that is, the 11c a litre tax on milk sold off the supermarket or milk bar shelves—will need to remain in place until 2010, two years longer than the original commitment given by this minister. I might add that rural and regional Australia hopes that the coalition government will be but a distant memory by 2010. Nevertheless, it is important to note, in the context of a debate on the administration of dairy levies, another broken tax promise by the Howard government.

The dairy industry has overcome challenges in the past, and I am confident it will overcome the challenges presented to it in the future. Current challenges include the drought, which has significantly curtailed milk production and export income in the current year. An ABARE forecast released at Outlook 2003, which I was able to attend the other day, predicts the dairy industry will recover production lost to the drought but recovery will be slow. We on this side of the House have been justly critical of the minister's inadequate response to the drought that has gripped much of Australia, including our major dairying regions for many months. Labor again urges the minister to address the shortage of feed grain by conducting a national grain audit and reviewing the protocols that apply to the import of feed grain. It is not good enough for the minister responsible for our rural industries to sit back, look at the sky and hope for rain.

Due to the reforms implemented by Labor in the 1980s and the early 1990s and the leadership the industry itself has shown, the Australian dairy industry is an outward looking industry. It is an internationally competitive industry, curbed by the distortions in the international market created by unfair and anticompetitive trade barriers. This week the Minister for Trade announced the government's negotiating objectives for the proposed US-Australia free trade agreement. Those objectives include the elimination of tariff quota restrictions on Australia's dairy exports to the United States. Liberalisation of trade in dairy goods is an objective shared by the dairy industry, but not just in relation to the United States. At a time when we are discussing the future of the dairy industry, it is important to note the connection between improved market access and a sustainable future for the industry. The government would best serve the interests of all Australia's rural industries, including dairying, by putting the Doha Round first.

I have outlined some of the concerns held by Labor about the reform proposal and some of the more general challenges confronting the dairy industry. I have acknowledged the fact that the proposal has had a long genesis, is industry initiated and, indeed, is desired by most industry members. Industry initiated proposals, as all in this House would be aware, are terribly hard to get off the ground. The scope of the current proposal is a tribute to members of the industry who have nurtured the reform proposal and dairy farmers who have participated in consultations. Labor is pleased to acknowledge Mr Pat Rowley, Chair of the Australian Dairy Industry Council and long-time industry leader, and the ADC's Ms Helen Dornom for their contribution to the reform proposal agreed by the government and now before the House.

The dairy industry wants the proposed new industry service structure in place and operational on 1 July 2003. Unfortunately, the minister has let the industry down by dragging his heels on key aspects of the industry's reform proposal. I have referred to the minister's failure to provide the opposition with important details associated with reform of pig industry services. During the debate on the Pig Industry Bill 2000, the same minister said:

I have given an undertaking that documents will be available for the opposition to scrutinise prior to the debate in the Senate.

We demand no less on this occasion. The devil is in the detail. The deadline proposed by industry and agreed to by government is just 16 weeks away. According to the minister, the new company will have responsibility for expending $50 million per annum. The very least the minister can do is inform this parliament of just how the new industry services body will work. I advise the House that Labor will move to defer consideration of this legislation in the other place until the minister accedes to our request.