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Monday, 22 March 2004
Page: 26833

Mr BRUCE SCOTT (7:11 PM) —I rise in this House tonight to discuss the Dairy Produce Amendment Bill 2003. As the federal member for a very large rural electorate in Queensland, covering some of the most remote parts of Queensland, I represent many dairy farmers, and I am very sympathetic to their concerns. Since the early days of settlement of Australia, dairy farmers across Australia have provided the very basic foods that we all need—milk and dairy products, which are essential to our daily lives. The dairy farmers in my electorate are in a dairy region in Queensland which overflows into other federal electorates. It is actually one of the largest—if not the largest—dairy region in Queensland. It is not all in my electorate of Maranoa; it flows into the geographical area of the electorate of the member for Groom and down into the Lockyer Valley.

For the public record, I am not just sympathetic to the concerns of my own dairy farmers but also very sympathetic to the concerns of all Australia's dairy farmers and producers, who continue to experience a lot of difficulties post deregulation. They are suffering a lot of pain and are considering their future in the industry. Of course, post deregulation, we saw the rise of the Australian dollar, which certainly did not help the dairy industry in Australia. The exchange rate between the Australian dollar and the US dollar, which is the benchmark—as much of the export products in the dairy industry are sold in US dollar exchange rate circumstances—has risen to levels that have certainly had an impact on the farm gate price. The other thing that has impacted on the dairy industry is the exceptional drought. The drought meant that production was going to fall in Australia. Without supplementation of feed for dairy herds, the product that they are producing would have fallen to unsustainable levels. Of course, they had to maintain production, and that resulted in additional costs that were not budgeted for pre deregulation.

Of particular concern to me, post deregulation, is the inability of many individual producers to negotiate a fairer price for their product with our large processors and retail supermarkets. I am still not convinced by the argument that the market is working. I do not believe it is working effectively. To see that, you only have to look at the price differentials that some farmers are receiving in Victoria, New South Wales or Queensland—anywhere between 22c or 23c a litre right through to 33c, 34c and 35c a litre for basically the same quality milk. So I do not believe the market is working effectively.

To help in this regard, in very good faith the federal government recently sought the approval of the ACCC to allow dairy producers to collectively bargain for a fair farm gate price for their product. I suppose there are many members in this House who thought that this may have been an opportunity for dairy farmers to get together to be able to negotiate a better arrangement with the processors, but I think that too is an issue that is still yet to bear fruit for our dairy families.

Last week saw some dairy farmers protesting around Australia at federal members' offices. Indeed, the member for McMillan, who is in the House at the moment, and the member from the other side who spoke previously on this bill, the member for Corio and opposition spokesman, spoke of this. The dairy farmers are angry and I know that. I have met with the dairy producers in my own electorate and I certainly understand their plight very clearly. But it is wrong of these farmers to point the finger at this federal government in terms of deregulation. I want to remind the House that it was the state Labor governments who were responsible for the introduction of the legislation to deregulate the dairy industry, and it is the state Labor governments who then walked away from any responsibility to assist the industry through the very difficult and painful process of adjusting to deregulation. I urge those producers to go and see their state Labor ministers for agriculture, who introduced the legislation into their state parliaments to deregulate the industry, in any future protest. I respect their right to protest; they have the democratic right to do that. But if they want to protest on this issue they should take their anger to the state Labor governments who initially introduced deregulation legislation into their parliaments.

By comparison, the coalition government listened to the industry leaders—I must say it was their call—who saw that one day the industry would be deregulated. They sought from the federal government to have a coordinated approach to a compensation and restructuring package for the industry. It was this government that introduced legislation, to the tune of $1.8 billion to nearly $2 billion, as a compensation package that is going out to the dairy producers and regions across the nation. I believe that in terms of farm gate price for the dairy farmers of this nation the market is not working. I fail to see where the price of milk in the supermarkets has gone down post deregulation. In many instances I think it is at the same price or slightly more expensive, and yet the farmer is receiving less.

I also want to talk a little bit about the free trade agreement with the United States and the benefits that will flow to the Australian dairy industry, provided we can make sure we have a viable dairy industry in the future, under the free trade agreement that has been negotiated between Australia and the United States. This is a package of measures that is yet to be officially signed off. We hope we are going to have the support of the Labor Party. We have not heard from them lately but I would urge the member for McMillan, who is on the other side of the House at the moment, to go to his leader and get him to support the free trade agreement with the United States that is on the table at the moment and to stop playing politics with one of the most important trade agreements that this country has ever negotiated. We have negotiated an agreement with the United States of America, the largest single economy in the world, and I ask members of the Labor Party to stop playing politics with it and to show that they will support this free trade agreement.

From day one it is going to bring immense measurable benefits to the dairy industry in Australia. For instance, the Australian dairy industry can send nearly three times as much of current tariff quota products from year 1, with an ongoing growth in the quotas at an average rate of nearly five per cent per annum. The increase in year 1 is worth $55 million to the industry. Isn't that worth pursuing for the dairy industry, the producers and those dairy farmers we have spoken about tonight? It is $55 million in the first year. That is across the board for all dairy products that are constrained currently by quotas. It is also going to provide significant new market opportunities for dairy processors and producers. I am indebted to the Minister for Trade and his office for providing me some material in relation to the free trade agreement, and it is available on the Internet more widely for producers out there. For the benefit of the opposition, I urge them to go onto that site and look at the initiatives and what this free trade agreement will mean for Australia.

The deal includes access for dairy products that have been previously excluded from the market of the United States of America. The agreement provides for a significant increase in duty-free access to the United States market for Australian dairy products imported with tariff rate quotas. In addition, the in-quota tariffs in existing dairy quotas will be reduced to zero immediately the agreement enters into force. However, over-quota tariffs on dairy products subject to quota arrangements will not change under the agreement, except for gruyere cheese. The dairy products subject to tariff rate quotas are divided into a number of product categories. The exact products contained in each category are set out in a table which people can see on the Internet, or they can go to the minister's office and have a look at it to see the comprehensive range of products that will be affected by this free trade agreement.

I would like to read into the Hansard some of the products that will be affected. For instance, under the existing WTO arrangements with the United States, the quota for milk and ice-cream is zero. There will be an additional 7.5 million litres in year 1 of the free trade agreement, and that will grow by six per cent year on year for the life of the agreement. Condensed milk, under the WTO quota as it is at the moment, is a mere 92 tonnes. Under the free trade agreement, there is 3,000 tonnes in year 1. For butter and butter fat, there is zero quota at the moment under the WTO and 1,500 tonnes in the first year of the agreement, which will then grow by three per cent year on year. Skim milk powder is at 600 tonnes today. There will be an increase of 100 tonnes and then an increase of three per cent year on year. For other milk power, including whole milk powder, a mere 57 tonnes is allowed under the WTO quota today. That will rise to 4,000 tonnes in the first year, with an increase year on year of four per cent. In the interests of time, I seek leave to table the balance of that table of arrangements for the free trade agreement with the United States, because it is comprehensive and it highlights the importance of the free trade agreement with the United States of America.

Leave granted.

Mr BRUCE SCOTT —I thank the member for McMillan. In conclusion, let me say that the dairy industry has gone through extremely difficult times. I have highlighted some of the concerns that I have on behalf of dairy farmers in my electorate and, more broadly, dairy farmers across this country. I am yet to be convinced there is a market that operates that is free and that delivers a sustainable price for the dairy farmers across this nation. The government abhor any of Australia's industries coming unstuck through deregulation. That is why we are completely committed to ensuring the long-term viability of not just the dairy industry but all industries. We will continue to seek a better way for dairy farmers to do business so that they can not only negotiate at a local level with their processors but be there in the long term to make the most of the free trade agreement which we want to sign in the course of this year—a free trade agreement which will bring benefits across many industries, including the service industries, and also to the agricultural sector.