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Tuesday, 19 June 2007
Page: 64


Mr CREAN (6:38 PM) —The Wheat Marketing Amendment Bill 2007 is crucial legislation but, unfortunately, we do not have a lot of detail about what we have before us. The government has just circulated some further amendments which it proposes to move at some stage later in the debate. To put this legislation into context, it is another attempt by the government to manage Australia’s wheat marketing arrangements following the wheat for weapons scandal. I say ‘another attempt’ because the government has failed to come up with a solution. It was bad enough that the government presided over the largest corruption scandal in Australia’s history, that it was negligent in not responding to repeated warnings of abuse by the Wheat Board and that it cost the country in reputation and lost earnings to wheat growers. Now it is showing itself incapable of coming up with a solution—despite the fact that the Cole commission has reported and the government has introduced, six months ago, interim measures. Today all we are doing, in effect, is extending the interim arrangements for another 12 months. I will come to those details in a minute, because I intend to move a second reading amendment. Because we cannot technically move to split the bill, our view is that the government should withdraw it, introduce legislation only to extend the veto power to the minister, come back with proper consultations with the industry, and tell the parliament, by way of legislative amendment, what it intends to do to put in place the new arrangements. That is our preferred position, and I will be moving an amendment to that effect. If that fails, we will move for the separation of the bill when it is debated in another place.

At stake in this debate—this is why it is a crucial issue for us—is the issue of the single desk. The single desk has stood the test of time; it has served the growers well over 60 years. In the past, the Wheat Board was regarded as a world-class organisation. It had integrity and it was held in very high regard. Its activities consistently delivered Australian farmers a premium price for their product. But that reputation is now in tatters, and it happened under the government’s watch.

The Cole commission revealed that under this government a corporate culture developed in the Wheat Board that was characterised by excesses and arrogance. It is a culture which has cost the Australian taxpayer $300 million—but it is not just the cost; it is what that money went to. It went as bribes to the Iraqi regime and ended up with Saddam Hussein, the same dictator that the Minister for Foreign Affairs and the Prime Minister reviled in this place as the enemy that had to be replaced. This is a government that allowed bribes to be paid to Saddam Hussein’s regime. Those bribes ended up in the coffers of Saddam Hussein whilst, at the same time, we were sending our troops to Iraq to depose him. How stupid can a government be to allow that to happen? It is not just the fact that it has cost the Australian taxpayer $300 million; it is what it was going to do. And that happened under this government’s watch. The Australian government allowed bribes to be paid to a regime whose downfall they were committed to. We have made the point on many occasions that, as a consequence, the Australian government became Saddam Hussein’s best friend. That is how bad this is. That is how scandalous it is. And it happened under their watch.

Apart from the cost to taxpayers, this culture and the government’s negligence in allowing it to happen also cost Australian wheat growers. It has cost them at least $500 million in lost contracts so far. It has cost shareholders of the AWB half the value of their investments. This is a culture that has exposed the Wheat Board to a string of future legal actions, including actions by wheat growers in the United States—under the Racketeer Influenced and Corrupt Organisations Act; to a class action on behalf of B-class shareholders, run by Maurice Blackburn Cashman; an action by the Australian Taxation Office to recover the tax forgone in respect of illegal payments to the AWB; and a class action on behalf of some wheat growers against AWB to recover performance bonus payments made by AWB International to AWB. That is quite a string of legal actions. Industry estimates put the ultimate impact on the Wheat Board of these cases at more than $1 billion.

This sort of culture cannot come about overnight. The seeds for the growth of this corrupt culture were sown in the very structure of the organisation at the time that it was privatised by the Howard government in 1998. The government turned a statutory body into a private monopoly without an appropriate regulatory watchdog to effectively oversee the AWB’s activities. Yes, there was a watchdog but it was a watchdog that was asleep all the time and which had no teeth. The government legislated a deeply flawed structure to oversee the running of the single desk. Those responsible for putting that flawed structure in place should be apologising to every wheat grower in the country today. It was the current Deputy Prime Minister and his immediate predecessor, the member for Gwydir, who must accept a lot of this responsibility. They devised the Australian Wheat Board’s structure; they took the legislation through the parliament. They now stand condemned as having failed to produce a structure for the privatised Wheat Board that was robust enough to maintain its reputation as a company worth the trust of the international market place and of wheat growers.

There were a succession of National Party agriculture ministers who failed to ensure that the Wheat Export Authority did the job that it was established to do. When the government, and more particularly the National Party, gave a Corporations Law company, AWB, a legislated monopoly it also had a clear duty to put in place a mechanism to ensure that the monopoly power was not abused. There was need for a real watchdog, but the WEA certainly was not the watchdog that was needed. The Wheat Export Authority had extensive powers on paper to oversight the management of the single desk. In practice, it was completely ineffective, as the Cole commission so damningly demonstrated. For five years, despite the Wheat Export Authority being responsible for looking through every contract, it completely missed AWB’s involvement in the wheat for weapons scandal. Even when all the evidence was coming out on the scandal, all that the Wheat Export Authority did was ask the AWB whether it was doing anything wrong. And, of course, the AWB, as we know, said that it was not doing anything wrong. The Wheat Export Authority pathetically and meekly backed off.

The minister responsible for the Wheat Export Authority was asleep at the wheel. He did nothing to ensure that the Wheat Export Authority did its job. Worse, in March last year the minister condoned the activities when he said:

But even if the Australian Wheat Board was paying commissions for wheat sales in Iraq, that would not cause any great worry … if ever there were any kickbacks to the Iraqi regime, then I guess they would end up with the government. So that is not terribly unusual.

In other words, the minister responsible for the Wheat Export Authority gets wind of the fact that there are kickbacks but does not think that there is anything wrong with them. Everyone now knows how wrong they were. But this was the minister of the day charged with the responsibility and he just did not get it. Did the minister direct the authority to vigorously investigate the allegations that were flying around at the time? No, he did not. Did the government, through any of the ministers, act on the 35 warnings that the Cole commission uncovered? No, it did not.

This approach by the current government is in stark contrast to the approach taken when Labor was in government. Labor had to oversee the activities of the Australian Wheat Board in similar circumstances—during the invasion of Iraq the first time when sanctions were imposed on the regime. UN sanctions were imposed and Labor ensured that there was no such rorting under its watch. Gareth Evans, the then Minister for Foreign Affairs and Trade, insisted that his department satisfy itself that the sanctions were not being breached by Australian companies. During the first Gulf War, there were no bribes paid. Labor also managed to ensure that Australian wheat interests were protected. I was then the Minister for Primary Industries and Energy, and I announced ex gratia payments to grain growers who would have lost out because of the application of the sanctions. We protected the integrity of the UN sanctions but also protected the interests of growers. That is what effective ministers do. They do not go to sleep at the wheel; they do not shift the buck. They take their international responsibilities seriously and they understand that, if there are to be consequences in terms of affected parties, governments may need to step in and make appropriate payments. There is a huge contrast between the approach that Labor adopted versus what unfolded under this government: the absolute negligence and slothfulness of this government and this cabal of ministers who allowed the wheat for weapons scandal to occur. The Cole inquiry noted that there were 35 warnings—35 times when the government could have acted and should have acted. This is pure incompetence.

The Department of Foreign Affairs and Trade also failed big-time. The Cole report was damning in relation to DFAT. I quote:

… DFAT did very little in relation to the allegations or other information it received …

Further on it says:

DFAT did not have in place any systems or procedures in relation to how its staff should proceed in response to allegations relating to the breach of sanctions.

These are damning indictments of the department, but where does the buck stop? That is the question that still this government will not address. We say and the Westminster system says: the buck stops with the minister. It is clear that a succession of National Party ministers and the foreign minister have let wheat growers of this nation down. Australia’s wheat growers fund the operations of the Wheat Export Authority through a levy on every tonne of wheat that they sell. They must feel really short-changed as a result of its actions, and now they are being asked, as a result of this legislation, to accept as part of the ongoing interim solution that another National Party minister be given power to effectively manage and operate the single desk. The faith of the growers knows no bounds if they are prepared to put their blind faith in that solution, and that is why the legislation that we have coming to us today is so flawed.

The bill proposes six changes, in essence, to the Wheat Marketing Act. It gives power to the Minister for Agriculture, Fisheries and Forestry to change the company that manages the single desk from 1 March 2008. I make two points about that which is contained in the legislation. First of all, that date is after the election—very convenient indeed, because the government cannot solve the problem now. The member for O’Connor, who is in the chamber, has taken a very active interest in this debate and I will be very interested to hear what he has to say subsequently. The government recognises the need to change the company, but it is not going to make any decision about it until after the election. Also, the legislation makes absolutely no provision for how the unnamed company should operate. What sort of legislative solution is that? How contemptuous is this government? It is expecting people to buy a pig in a poke after the election.

In the amendments that have just been circulated there is another amendment being proposed by which the Wheat Board International and any affiliates are not allowed to stay as designated companies, but other entities can keep the designated company statement. Does this mean they will get the veto power that the minister relinquishes? Who are we contemplating in these new bodies and what powers will they have?

The second thing that the bill does is extend the minister’s temporary veto power for another 12 months. From the Labor Party’s point of view this is the most time-critical issue in the legislation. I accept that. The fact remains that the minister got the veto power last December. It was meant to last only until 30 June this year, after which the veto was to revert to the AWB in the absence of any alternative solution. That is why we are debating this legislation now; that is why it has to go through—because the veto power is the essential mechanism for ensuring the single desk. The veto power essentially means that no-one else can export, but, instead of coming up with new arrangements, the government has deferred the important decision on new arrangements until after the next election. It is now seeking for the minister’s temporary veto power to be extended for another 12 months. I also note that another amendment that has just been circulated will see the minister lose his power of designation on that date, obviously to put pressure on the government to come up with a solution. We are being told what the minister does by way of losing the power, but who gets it at the end of that time if they still have not resolved the problems? There is much uncertainty associated with this legislation and a hiatus created because of the inability of the government to get its act together.

Other changes proposed in this legislation involve the provision for broader information-gathering powers to a rebadged Wheat Export Authority regulator. So WEA goes, and a new body called the Export Wheat Commission comes in, but all this legislation does is enable it to obtain information from other wheat exporters and their associates. There are no additional powers; it has just a further information-gathering capacity. Another provision in this bill gives the minister power to direct the regulator to undertake investigations that the minister considers appropriate and pass the relevant information to other law enforcement and regulatory bodies. Again, it is an exercise in asking this new body to give information—it does not really go to the assessment of whether or not the existing powers of the new regulatory body are going to be sufficient to stop scandals occurring in the future.

The bill also seeks to adopt the Uhrig reforms for the governance arrangements and structure of Commonwealth agencies and it seeks to deregulate exports in bags and containers. That initiative is welcome and we wanted further information in relation to it. I understand that the deregulation of non-bulk wheat exports will apply now 60 days after royal assent. That amendment has been circulated today but was not in the original legislation.

All in all, this is a very unsatisfactory way to do business and to address the problem. The government claim that the majority of growers support the changes being proposed by them. It is a bold assertion because the fact is that until last week the growers had not seen what is being proposed, and the government are essentially using the numbers and the urgency of the time to ram this through. They are desperately going around trying to accommodate concerns, as evidenced by the four new amendments to the legislation that were not part of the original bill, which we have not really had time to consult with the industry about, and the mysterious Ralph report, which the government used as the basis for their claim that 70 per cent of growers support the changes that they are proposing and which to this day the government has refused to publicly release.

So what are they hiding? A report of the commission? They asked it to undertake consultations, but they will not produce the findings. And they come into this place and assert that the growers back what they want to do. The truth is that the growers are bitterly divided in respect of where we go next. The government have ignored the views of a large number of wheat producers from the major exporting states of South Australia and Western Australia. Why? It is because their views do not suit the outcome that the government want. The so-called consultation over the past few months has been about resolving Liberal-National Party politics, not about listening to the growers. The government, in essence, are choosing to hear what they want to hear

In respect of ministerial powers, some growers, particularly in the exporting states of Western Australia and South Australia, are concerned that the minister will abuse the veto powers and unfairly restrict reasonable competition. On 22 May the Prime Minister talked about ensuring that export applications are assessed on their merit, but the legislation is silent on merit. Our view is that this issue is just one of many that need proper consideration and proper deliberation. That is why the Senate Standing Committee on Rural and Regional Affairs and Transport is a mechanism that we suggest might be appropriate in the other place. The thrust of the second reading amendment, which I will move at the end of this speech, calls on the government to refer these sorts of issues to the appropriate House committee. We believe it does require further, detailed consideration and the proper use of the parliament to overcome the problems and address these important questions.

Let us go to the regulator’s powers. The debate about the regulator’s powers has been ongoing since the year 2000. The government has ignored the recommendations of the NCP review of 2000, a Senate committee report in 2003, several reports from the Wheat Export Authority itself and, ultimately, the Cole commission. The government has ignored the Cole commission’s recommendation to review the Wheat Export Authority’s powers. We do not have any proposal about what those powers should be. It has the ability to gain some extra information, but the government has not addressed the powers. The Cole commission specifically said it should. The government is asleep at the wheel again. It will not take on the hard decisions, it will not go through the consultative processes, and we end up with this flawed legislation.

Only two weeks ago, the Prime Minister said that the WEA would have significant new powers, but the legislation does not propose any. The new regulator could continue to be the toothless watchdog, the watchdog remaining asleep. The new powers only extend the reach of the regulator—its ability to gather information—but not its powers. This too is unacceptable to Labor—and to a lot of the industry whom we have spoken to, I might add. It is another reason why these issues should be referred to the appropriate parliamentary committee. On the questions of what the cost will be and who will pay it, the government has either not considered or not publicly released any assessment of the potential financial impacts on the industry arising from the new regulatory framework. There is no new money for the new WEA, the Export Wheat Commission. Who will bear this cost? What will be the cost to the grower? Where is that issue addressed in this legislation?

On the question of the bags and containers, the industry has expressed concern about the proposal for quality assurance of bags and containers. Some groups are claiming that it is an unnecessary bureaucratic hurdle designed to put a false barrier in the way of trade. The government has not proven its case for a QA scheme. Industry considers that the existing law and market mechanisms are more than adequate to ensure quality. Industry cannot see the role of government in this area, other than to ensure that the traders are responsible and not rogues. But the proposed quality assurance scheme does not address fiduciary or prudential standards. There is also concern from the growers about the costs of the quality assurance scheme, and this range of issues should also be referred to proper parliamentary scrutiny.

It is reasonable that stakeholders continue to have concerns over what the government is putting on the table at this time, since they have not had the full opportunity to consider the impact of the proposed changes contained in the bill. There is a risk that the government is going to create a worse situation. There is a risk that the various proposals in the bill will create further cost burdens to the growers and leave Australia uncompetitive in the international marketplace. There is a clear need for aspects of this bill to be looked at further, with proper scrutiny, in order for Australia and Australian growers to get the best possible outcome in the long run. This is another classic example of the government not really listening—going through all the fanfare of saying it is going to consult, setting up the Ralph review and saying it is going to be serious about fixing the problem for future but still coming up with no real solution and not addressing concerns of major interest to the growers of this country.

That is why Labor would encourage the government to consider splitting the bill so that the minister’s power of veto can be passed immediately, so that it does not revert on 30 June to AWB (International), but so that other non-urgent aspects of the legislation—the ones that I have referred to in this address—can be put forward for consideration and scrutiny. They can then come back in a composite bill which has received proper consultation and consideration. Accordingly, I move the second reading amendment that has been circulated in my name:

That all words after “That” be omitted with a view to substituting the following words:

“the House:

(1)   notes:

(a)   the proposed legislative measures in the Wheat Marketing Amendment Bill arise directly from the Australian Wheat Board’s role in the now infamous ‘Wheat for Weapons Scandal’;

(b)   the Government should be held accountable for the fact that it:

(i)   failed to act on at least 34 substantial warnings about the role of the AWB in the scandal;

(ii)   failed to utilise the clear mechanism available to insist that the AWB reveal all information in its possession regarding its role in the AWB scandal;

(iii)   failed to adopt practical and sensible measures to oversee the role of the AWB during the period of the ‘Wheat for Weapons Scandal’;

(c)   the Government limited the terms of reference of the Cole Inquiry to such an extent that it was unable to meaningfully evaluate the culpability of the Government in the ‘Wheat for Weapons Scandal’; and

(2)   calls on the Government to split the bill so as to separate:

(a)   the provisions relating to the extension of the temporary veto power of the Minister for Agriculture, Fisheries and Forestry over non-AWB (International) Ltd bulk exports, from

(b)   the remaining provisions of the bill, which should be referred to the House of Representatives Standing Committee on Agriculture, Fisheries and Forestry for inquiry and report”.

I genuinely urge the government to adopt the course of action we propose, particularly given the new range of amendments that have just been dumped on us. I hope the government starts to get this right. Labor are prepared to cooperate in achieving that outcome. I only hope the government takes up the opportunities we are offering. (Time expired)


The DEPUTY SPEAKER (Mr Haase)—Is the amendment seconded?


Mr Brendan O’Connor —I second the amendment and reserve my right to speak.