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Tuesday, 23 March 2004
Page: 26940

Mr NAIRN (5:15 PM) —Thank you, Mr Deputy Speaker, and I am pleased to promote you from Acting Speaker to Deputy Speaker, which is your correct title. I am very pleased to speak on the Dairy Produce Amendment Bill 2003. In doing so, I will say a few words about the dairy industry, particularly in my electorate of Eden-Monaro, which has a very strong, vibrant and growing dairy industry—in fact it has grown quite substantially in recent years. Some of the comments by the member for Kennedy make me look at the actual figures that he did not quote. In 2002-03, while production of milk fell, obviously because of the significant drought during that period, the production of 10.3 million litres was nearly double the output in 1979-80, and it is now continuing to rise.

Mr Katter —Over the dead bodies of the farmers!

The DEPUTY SPEAKER —Order! The honourable member for Kennedy!

Mr NAIRN —Of the other figures that he did not bother to quote, exports have risen from less than 40 per cent of production a decade ago to 60 per cent today. In monetary terms that presents a rise from about $1 billion to a record $3.2 billion in 2001-02. They are some figures that the member for Kennedy would never quote. In saying a few words about deregulation I will not dwell on it, because there is no point in trying to redebate that as the member for Kennedy did for 19-odd of his 20 minutes—I think that is all he spoke about. But there are a few that do try to rewrite history, and the member for Corio was one of those. He was interjected upon by the Parliamentary Secretary to the Minister for the Environment and Heritage, who happens to be at the table again now, who said that the deregulation was by the states. The member for Corio said that that was a `blatant untruth'. They were the member for Corio's words.

We all know that the only way that dairy deregulation actually happened was by the passing of legislation in the states. So the parliamentary secretary was spot on: the deregulation took place as the result of legislation in the states. But the member for Corio said that was a blatant untruth. I do not know how he could say that. Probably the best way to clear that up is to quote the Bills Digest, which does not take anybody's position; it just states the facts:

Deregulation of the dairy industry has been argued at a state level within the industry for some time. Given the different levels of regulation in different states and the increasing impact of the global trade in dairy products it was generally recognised that the continued regulation of the Australian industry was not sustainable.

That is what it was all about. The federal government simply showed some leadership and ensured that farmers were disadvantaged as little as possible through that process. It was inevitable that it was going to happen with the way in which every state was acting differently, and there was really no way it could be stopped, but the federal government stepped in and ensured that it was done in a way in which dairy farmers would suffer as little as possible.

With respect to my electorate, part of that process involved the Dairy Industry Adjustment Package, which was certainly of great benefit to my electorate. In fact, there were quite a number of projects that were funded to assist not only the dairy industry but other industries in the region that would naturally suffer as a result of changes to the dairy industry. All in all, there was a bit over $2.2 million allocated to my electorate under the Dairy Industry Adjustment Package. That is in addition to the assistance to farmers, which averaged out at about $130,000 per dairy farmer as part of the government's help through the transitional period. In addition, the Dairy Regional Assistance Program recognised the impact on regional communities. As I said, a bit over $2.2 million came into Eden-Monaro.

There were two excellent projects that went to Bega Co-op: one for $660,000-odd and the other for $770,000. The first one allowed a new shredded cheese line to go into Bega Cheese. That employed an additional 20-odd people immediately. That was something that Bega Cheese were working towards, but it probably was implemented about six to 12 months earlier than it would have been, because of the assistance they got from the government. So there were over 20 additional jobs in that alone. There was also assistance to Bega Dried Foods, while Bega Valley Gourmet Meats received $44,000 and a number of other projects benefited as well. The Sapphire Coast Producers Association got assistance out of that, and in the Eurobodalla there was assistance to the company Mordek, which has now seen probably 20 or 30 additional jobs and they will probably increase to somewhere near 100. The Dairy Industry Adjustment Package has certainly been of assistance to those communities.

We are pretty lucky, I guess, on the far south coast of my electorate that we have a company like Bega Cheese. They saw the writing on the wall a long time ago when the DMS scheme was introduced to keep the Victorians on the other side of the border. They knew that that could not be sustained. They were not going to sit back and say, `We'll just process some milk and hope that the government will look after us in the future.' They were proactive and they geared up their business quite substantially over a number of years, knowing full well that they would be placed into this sort of market. I congratulate them for the foresight that they had way back then, well before the actual deregulation took place.

In the Bega area there are 120-odd farmers, and most of them are shareholders in the Bega Co-op. A few farmers went out of dairying after deregulation, but not huge numbers. There are 25,000 cows, producing 140 million litres of milk each year. Those numbers are increasing and Bega Co-op are working with the farmers to increase their production, because they have certainly got the demand in the factory. That is where the real changes are taking place. Ten years ago, 80 to 100 people were employed in the Bega Co-op factory. Today there are in excess of 500 people employed, which is a quite substantial increase. They produce a variety of superb dairy products and cheeses.

The Bega Co-op was exporting virtually nothing not that many years ago—I am coming to the very beneficial things that are occurring in this industry, and the member for Kennedy is leaving the chamber because he cannot argue against these sorts of positive things; why he would have a problem with an additional 400-odd jobs into a rural and regional area is beyond me, but it is the case that an extra 400-odd jobs have been added over the last eight years into a rural and regional area, which is quite superb—and Bega cheese is now exported into North Asia, South-East Asia, the Middle East—

Mr Katter —Mr Deputy Speaker, I raise a point of order. I claim to have been misrepresented.

The DEPUTY SPEAKER (Mr Jenkins)—It is not appropriate to interrupt a contribution to claim misrepresentation. One can do so at the end of the contribution.

Mr Katter —I said, continuously, that they got into Canberra—

The DEPUTY SPEAKER —The honourable member will resume his seat. The honourable member for Eden-Monaro's comments were not an invitation for the honourable member for Kennedy to return to the chamber and make further comments.

Mr NAIRN —Thank you, Mr Deputy Speaker. I exercised great restraint in staying in my seat while the member for Kennedy was speaking; unfortunately, he cannot do it when I am providing some very good positive information and facts about great things that are happening in a rural and regional part of Australia.

Bega cheeses are now going into North Asia and South-East Asia. In fact, I bought packets of branded Bega cheese in supermarkets in China the year before last. Exports are going into the Middle East and into Central America and South America. When you look at those exports into the Middle East, particularly, you see that that is an area of great prospects. In October of last year, Bega cheese went into Iraq for the first time. That was a tinned cheese product which was produced specifically for the Middle Eastern market. It is halal approved, it has Arabic labelling et cetera. Markets in the Middle East that are receiving Bega cheese include the United Arab Emirates, Saudi Arabia, Bahrain, Kuwait, Jordan, Egypt, Lebanon and now, over the last few months, Iraq, Qatar and Yemen. That is more good news coming out of an industry which has certainly done it tough.

It has not been easy, that is for sure, but down in Bega we have a board chaired by Barry Irvin—the other board members are Max Roberts, Richard Parbery, Tom D'Arcy and Richard Platts—that really have some vision for the company and have taken it forward, and they are taking the farmers along with them. They have been able to provide a higher fee to their farmers for the milk that they produce, particularly over the last year or so, when we had a very serious drought in that area. Fortunately they were eligible for exceptional circumstances assistance from the Australian government.

Bega Cheese also looked after their farmers by increasing their payments and dividends. Their last annual report shows a turnover of $218.5 million and a profit before distributions of $10.894 million. Because of the difficult circumstances—coming out of deregulation and then being hit with the drought—Bega Cheese distributed drought premiums and dividends which totalled just over $10 million to all of their co-operative shareholders, the farmers. They actually distributed nearly all their operating profit to their shareholders to help those farmers through that difficult period. I think that is a real bonus for those farmers. The board of Bega Cheese should be congratulated for taking that position.

The annual report also shows that sales revenue was up 20 per cent, to $218.5 million, as I said; operating profit was up 38 per cent, to $10.894 million; and bulk cheese production was down nine per cent in that year—and that is because of the drought circumstances that the area went through. Cutting and packing output was up 49 per cent; they put out 36,695 tonnes of cheese. This was able to be done because of an investment of $100 million to expand the manufacturing operations in Bega over the past 10 years, and the staff levels have gone from around 100 people to over 500. That is a very good story, and they are certainly looking to increasing their exports. A statistic which is quite interesting is that 40 per cent of all domestic cheese purchased in Australia comes out of the Bega factory. They do not produce all the milk down there, and they do not produce all the cheese, but 40 per cent of all domestic cheese sold in Australia comes out of that factory. That means that a lot of cheese is being trucked in from Victoria, mainly, for cutting and packaging. The various cheeses come in in blocks and then they are cut and packaged in Bega. That is a great credit to them. They are looking towards things like the free trade agreement to assist even further.

The dairy industry is certainly one of the industries that will benefit hugely out of a free trade agreement. Let me go through some of those benefits. Milk, cream and ice-cream currently have no quota with the US. In the very first year, 7½ million tonnes will go into a quota there, with a zero tariff. Condensed milk currently has a quota of 92 tonnes. That will be increased by an additional 3,000 tonnes in the first year and, once again, there will be no tariff. For butter and butterfat we have no quota currently. In the first year, there will be 1,500 tonnes of quota, also with a zero tariff. Cheddar cheese currently has 2,450 tonnes a year of quota, with a tariff on it. In the first year of the free trade agreement, an additional 750 tonnes will be allowed, with a zero tariff. Similarly, for many other cheeses there will be substantial increases in the quota in the first year, with most of the quotas increasing by between three and six per cent per annum in perpetuity but with the tariff being zero right from day one. We are looking at increasing exports of dairy products from Australia into the US from around $40 million to $95 million to $100 million as a result of that free trade agreement—and certainly Bega Cheese will be well placed to benefit from that sort of change.

I will finish by mentioning the Eurobodalla, where we also have quite a number of dairy farmers, although not the same number that we have in the Bega Valley. The Eurobodalla was certainly going to be impacted by dairy deregulation, and that is why a number of Dairy Regional Adjustment Program projects were funded in that area. Probably the standout one, which has been terrific as far as creating jobs is concerned, was a grant to a company in Moruya called Mordek to enable them to enlarge their steel-manufacturing plant. At the same time, because they got that assistance, the people involved with that company were able to substantially expand the industrial estate. We had a problem on the coast between Batemans Bay and Moruya where there was virtually no industrial land left, and this particular assistance, through the Dairy Regional Adjustment Program, allowed a major industrial estate to be brought forward, providing much-needed serviced industrial land. Eurobodalla Shire Council thought that that might give them a bank of industrial land for close to five years, but in fact virtually all the blocks were sold even before the subdivision was completed. Already there are a number of new factories and businesses starting.

The direct number of additional people employed at Mordek as a result of the grant was in the order of 15 to 20—although I think that has now gone to well over 20—and the flow-on effect is huge. It really will be felt right through that region in a very positive way. Therefore, it was an absolute tragedy that Senator O'Brien attacked this project in the Senate. He talked about corruption and, even though a political Senate committee that was put together said there was nothing untoward, he chose not to apologise to the people he attacked under parliamentary privilege. It is a great project. It has provided a lot of jobs and it will provide a lot more jobs for the future, as have quite a number of the projects that have been funded throughout my electorate of Eden-Monaro under the Dairy Regional Adjustment Program.