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Tuesday, 23 March 2004
Page: 26936

Mr KATTER (4:54 PM) —Earlier in the debate on the Dairy Produce Amendment Bill 2003 we heard a number of government speakers refer to the benefits of free trade that have flowed to the dairy industry. In fact, almost every single one of those speakers did that. I accept the remarks of the member for Patterson—his remarks were laudable. However, the other speakers on the government side, to a man, referred to the free trade agreement. I do not know if they did that with a conscious disregard for the intellectual integrity of this place or whether they did it out of a towering ignorance. I will give them the benefit of the doubt and say that these people are very ill-informed.

To talk about a $55 million a year benefit is quite ridiculous when one understands that this industry is worth some $12,000 million a year to the Australian economy. It is quite silly to talk about a $55 million window of opportunity that is occurring in the United States in light of that figure. It is hard to quantify that figure, but it is my duty to the House to say that fresh milk consumption is 1,924 megalitres at $1.57 a litre—the current average price for the three major capital cities—and that amounts to $3,021 million. The amount of manufacturing milk is 8,402 megalitres and, of course, this milk is processed and should ultimately be worth considerably more than the fresh milk. So we are talking about an industry worth some $12,000 million and we have people standing up here seriously talking about the wonderful, economically life-saving benefit that is flowing from $55 million a year.

I will not mention names because I do not really think I should indulge in personalities, but I would be remiss in my duty if I did not point out the forces and individuals that are at work in the dreadful happenings that have befallen this industry. I was still in state parliament when they deregulated the delivery system. There used to be franchise areas and a milko—the milk delivery man. He also delivered the milk to the big supermarket chains and got a percentage of the profit because he had the franchise rights to that area. That subsidised his delivery of milk to the poor people who did not have motor cars—like single mothers and aged people—and who did not have the ability to go down every two or three days and purchase fresh milk. It was a very important duty. I spoke to the leader of the industry and said, `Surely, if we deregulate this the milkos will vanish, the milk won't be delivered, and there will be less consumption of milk.' He said: `No, this will be for the greater benefit of the industry. It will open up new opportunities.' It did, for the retail chains. Looking back and searching my memory bank, we must question the leadership of this industry going back a considerable period of time.

When that conversation took place, consumption of milk in Australia was 101.7 litres per person. The consumption of cheese was 8.8 kilograms. The consumption of cheese has risen from 8.8 kilograms per person to 12 kilograms per person, whilst the consumption of milk has fallen from approximately 102 litres per person to 97 litres per person. All I know is that we got a little note from our milk delivery man. I think we had three or four kids still at home at that stage at Charters Towers, and he simply wrote us a note which said, `Sorry, it has been nice doing business with you over the years but we can no longer service this part of town.' I think there are hardly any parts of the city of Charters Towers that are now serviced by a milko. Too bad for the single mothers with three or four kids! Too bad for them! In the United States, where there is no delivery system for newspapers, they only sell half as many newspapers as we do in Australia. Whilst they may possibly be a dumber race than us, there is also an element there which shows us that when you take away the delivery system there will be less consumption.

In my 31-year parliamentary career, whenever I have seen a piece of legislation or an act by government the first question I have always asked myself is: who is going to profit from this and who is going to suffer pain as a result of this decision? Who is going to win and who is going to lose? The winners were Woolworths and Coles, the big retail chains, who paid less money—they did not have to pay a franchise overrider on the milk that they purchased. The losers were those single mums with small fridges who could not really fit in a dozen milk bottles so they did not have to go downtown each week. They have simply had to go without.

Milk is a valuable food. Most of the states in Australia not so long ago, some 10 or 15 years ago, delivered milk to every single pupil in every single school in this country, if my memory serves me correctly—it was most certainly the case in Queensland—because of the extremely valuable nature of this commodity. But many people clearly are going without today, with home consumption having fallen so dramatically.

I suppose this story started with Mr Keating and his deregulation. There are people on both sides of this House that would regard the initiatives in his national competition policy as being a wonderful leap forward for Australia. I most certainly do not represent the people that enjoyed the leap forward; I represent those people that were leapt on top of by other people. In fairness to Mr Kerin, he tried desperately to hold up and stave off the day of disaster. I always thought that was analogous to the Danegeld. King Alfred was paying the Danes to stay at home. Very similarly, DMS payments were made to the Victorians so they would not cross the Murray River. When those DMS arrangements were exhausted we moved into a free market system where balancing payments for fresh milk subsidised, or most certainly helped, the manufacturing side of the industry. I do not want to go into the details of why that was a logical, sensible thing to do from everyone's point of view. When those payments ceased, naturally the Victorians were incensed. In 1990, the Victorians were on about 24c a litre. The Sydney market was delivering some 52c a litre. The Victorians were being told by Murray Goulburn and Bonlac that if only they could get across that border they would be able to get 52c a litre. They got across the border all right, but they did not get 52c a litre. They are still on 23c or 24c a litre. In the meantime, the CPI has moved up from 104.9 to 144, so they have suffered a 40 per cent loss in the real purchasing power of their incomes.

We were told again by the leader of this industry that we must not go cold turkey—the one thing we cannot do is go cold turkey. I heard this gentleman speak in Malanda and I said: `Hold on a minute, we are like the Iraqis here or somebody: we're going to run up the white flag before the enemy even arrives. Surely we're going to fight this.' Then I got a lecture on how we could not possibly go cold turkey. I did not know a lot about the industry, and I bowed to this man's leadership. He had considerable leadership—and still has, I might add. The government drew up a plan. Instead of fighting deregulation, which the Country Party in days past would have tenaciously fought, the traditional party and the traditional people that represented the dairy industry drew up a plan to facilitate it. My father recalls that people in the party room said, `Unless we get a better deal in Victoria, we're coming across the border.' He said that literally there were fisticuffs when two of the New South Wales blokes said, `You come across the border and we'll break your bloody legs'. Excuse the language, Mr Deputy Speaker, but that was the language used. I must say, in fairness to the speakers on the opposition side of the House, that each of them has blamed the government for deregulation, and each of the government speakers has blamed the opposition for deregulation. I notice that there are not a lot of people putting up their hands and saying, `I'm proud of deregulation.' This side of the House passed the national competition policy legislation, and it was their state governments that implemented it.

Mr Fitzgibbon —What about the constitutional issues?

Mr KATTER —Let me finish. You will like what I am going to say—don't interrupt me. The other side of the House drew up a plan in which they said, and I am almost quoting the agriculture minister verbatim, `Your farmers will get on average $100,000 per farmer, but only on the condition that each state deregulates. So if you do not deregulate you will deprive your farmers of $100,000.' Surprise, surprise! Mr Amery and Mr Palaszczuk with hands on hearts said, `We didn't want to do it, but we are being forced to do it by the minister.'

There is not a single person in here with the slightest shred of intellectual integrity who would say that the government were not up to their eyeballs. I am not saying that all the government members wanted that to happen—far from it. I think many of them were staggered and taken aback by what the agriculture minister did. The parliamentary secretary puts up her hand. She most certainly was. She showed a lot of courage during the state election campaign in saying that publicly.

The singular input from the leadership of the dairy industry, to quote one of the three biggest dairy farmers in Queensland, was to break our will to fight deregulation. I have to question the modus of that person in light of the deregulation of the delivery system in the dairy industry. People might ask why dairy was deregulated and pharmacy was not. Those who went along to listen to John Bonger would have heard him say, `Any further deregulation of this industry, Mr Treasurer, will not be tolerated.' He said that in front of 1,000 people at the annual pharmacy dinner. He let it be known that, if anyone attempted to deregulate that industry, they were going to get their fingers broken. He was not very nice about it; he was very definite about it. He had a very good minister in Minister Wooldridge, who stood strongly against the deregulation of the pharmacy industry. So we have the cheapest pharmaceuticals in the world, and I suspect that will be undermined by the free trade agreement.

So Mr Wooldridge and Mr Bonger opposed deregulation, and now a minister for agriculture and a leader of the dairy industry—and I will not use their names—have done just the opposite; at every twist and turn they have facilitated deregulation. It was a dreadful deception of Victoria because not only was the $100,000 dangled in front of them but they had already been deregulated, so they were getting $100,000 for nothing, really. Also dangled in front of them was the 50c Sydney market. Those two things are not out there now. I dare this government or the state government in Victoria to have another vote on dairy deregulation and we will see how it goes this time. People like me were not in the know then and trusted the leadership of the dairy industry. We are different people now and we will be down there in Victoria waving the flag with great aggression this time.

These matters were brought to the attention of the leadership of the dairy industry and this place by Professor Coper, Dean of the Faculty of Law at the ANU and the most distinguished academic and lawyer in this field in Australia, and David Jackson, an outstanding leading barrister in the country—they pointed it out to all and sundry—in their publication The curious case of the callow crayfish: the new law relating to section 92 of the Australian Constitution. Any person in this House could have gone down to the library and asked for the latest information on section 92 and would have been given a book on section 92 after Cole v. Whitfield.

While there are a number of cases that followed Cole v. Whitfield, with the Bali Marketing Board in New South Wales v. Norman probably being the most important, that information clearly indicated that just because Victoria was coming across the border that did not mean New South Wales or Queensland had to deregulate. There was a way of getting around that and it was delineated by the two most outstanding lawyers in the country in this field or in any field. Let us move on, because there are people in this place who are still stupidly advocating deregulation. What a recipe for, and what a monumental history of, disaster.

Mr KATTER —The member for Corangamite is one of them, so let me spell it out for his edification. In 1988, pre deregulation, the market indicator price for wool was $6.47 a kilogram. By 1995, some seven years after deregulation, the market indicator had fallen to $3.95. Needless to say, people got out of wool, and the income for this country, which was $5.9 billion in 1988, fell to $2.9 billion by 1995. What an absolute disaster for this country. Ten per cent of the nation's entire income was coming from wool until Mr Keating undermined the scheme and deregulated the industry.

Alan Jones the commentator said some three weeks back, `Now we have only half a wool industry; the numbers have fallen clean in half.' I did not believe that, so I went to the library and got out the figures. I was quite appalled to find out that he was correct. There were nearly 200 million sheep in Australia; now there are about 100 million. So that was the first deregulation—what a marvellous success story! If there are any doubts in your mind, Mr Acting Speaker, about the value of the minimum pricing arrangements and regulations, listen to this: in 1970, prior to that wonderful man Doug Anthony introducing the scheme, the price was 65c a kilo; within three or arguably four years the market indicator had gone to 184c a kilogram. So it went up 300 per cent when statutory marketing was introduced. When statutory marketing was taken away, the price dropped clean in half—pure coincidence!

When tariffs were removed from the sugar industry, the price did not go down. The retail chains put the price up from 201c for a two-kilogram pack to 232c. That was the average price in 1994, 1995, and 1996—I am taking out the spikes and troughs, to be fair. By the June quarter of 2001 when these figures were put together the price for consumers had gone up by 15 per cent, so it was hardly a success story for the consumers. The world price for raw sugar in that 1994 to 1996 period was $386 a tonne. The price for sugar fell dramatically because Brazil got into ethanol and the subsidies from Europe took effect, plummeting from $386 a tonne to $223 a tonne—a massive fall in the price of sugar. The price fall should have gone down to the consumers. Did it go down? No, it went up. Instead of going down it went up 55 per cent, to $441 a tonne.

Exactly the same thing occurred after deregulation of the egg industry. The price of eggs in Brisbane rose from 193c a dozen to 304c a dozen and the price for the farmers went down 65c a dozen, delivering to the retail chains and the middlemen $427 million a year in extra profit. They have got $442 million a year in extra profit out of the sugar industry after deregulation. So we can see clearly who is benefiting—who is winning and who is losing.

That brings me back to the dairy industry. The dairy farmers in North Queensland simply got a polite letter from the dairy industry—and I am not blaming the industry; they have to get their products onto the shelves of Woolworths and Coles—saying, `You were getting 58.9c a litre. Since deregulation, we've got to compete against these other people, so you'll only get 41.5c a litre.' You wake up one morning and you have lost 30 per cent of your gross income, which in any normal business would be 100 per cent of your net. Mr Acting Speaker, did the price to consumers go down? No, it went up from 115.5c to 156.5c. It rose some 41c. The price to consumers rose, and the price to farmers fell 19c. In North Queensland, it went from 59c to 41c; in southern New South Wales, 52c to 35c; on the mid-coast of New South Wales, 47c to 30c; and south Queensland, 55c to 31c—an average fall of 19c. If you multiply that for that year when the consumption of milk was 1,884 megalitres, that is $1,130 million in extra profit for the middlemen. What a great success story! (Time expired)

The DEPUTY SPEAKER (Mr Jenkins)—I call the member for Eden-Monaro.