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Tuesday, 19 June 2007
Page: 70


Mr TUCKEY (7:08 PM) —I wish to say to the spokesman for the opposition, the member for Hotham, that I do not now believe that the suggestion he and his party have made to split this bill is necessary. My reason for saying that is the amendments to which he has just referred. I have made some notes here, which he might find quite informative, as to the effect that those amendments will have. The Wheat Marketing Amendment Bill 2007 provides the following conditions for the next 12 months of operation of the export wheat market. I will come to the future as it may be.

The Minister for Agriculture, Fisheries and Forestry will retain the veto power over applications from parties other than AWB (International) who apply to export wheat up until 30 June 2008. This is achieved in this legislation, as it was presented to the House last week, by the simple process to be found in schedule 2 as follows:

Schedule 2—Veto power etc.

Wheat Marketing Act 1989

1 Section 65 (paragraph (b) of the definition of temporary period)

Omit “2007”, substitute “2008”.

In other words, contrary to some remarks that were found in the second reading speech, this House is approving an extension of the veto provision under the conditions that were passed in both houses in December 2006. There is nothing in those provisions that states that the minister should do other than take account of the public interest and—I might add some words he put in his second reading speech—the rules of the World Trade Organisation. That might be interesting in the court case, which I think is now in progress, which relates to one of the vetos that was applied and the reasons given.

The first thing to understand—and this will be accommodated in the second reading speech in the Senate—is that it will be clarified that the conditions relevant to the veto are unchanged from what they were previously. The Prime Minister said in this place in question time, in answer to a question from the member for Grey, that the applications in this 12-month period to export wheat will be judged on their merits and the public interest. That will be clarified because there were some questions related to that. These matters were agreed and are now being circulated by the government.

The speech that will be made in the Senate will also clarify that the proposed new entity, of which I will speak further—and the member for Hotham raised some questions about what that might be—must establish its financial viability to conduct the management of single-desk marketing in the future. At the moment the bill only requires that it be registered under the Corporations Act. Clearly, that is an insufficient requirement. The speech will also reaffirm that the deadline for the creation of this new entity is 1 March 2008, with no extension, as implied in the explanatory memorandum to this legislation.

The power expressed in this bill for the minister to designate this new entity to assume the rights and powers of single-desk management will have a sunset of 30 June 2008. The bill presently, as proposed to this House, commences the power to designate a new single-desk manager on 1 March 2008. That power expires on 30 June 2008. That is a major change because, as the bill was presented to this House, that power existed in perpetuity. That was not the intention. As I will explain further, it is the intention to look at this new entity in the short period after the deadline that has been proposed to the farmer group that is interested in undertaking this challenge. That all has to be finished within three months. Furthermore, this minister or any minister in the future—no doubt the member for Hotham would be looking forward to that—will not have that power in perpetuity. No doubt the member for Hotham would be looking forward to that.

Furthermore, and of most importance, if the minister does not designate this new entity in the period 1 March to 30 June 2008 then the veto power will not further apply to AWBI, as it applies in the original act. This amendment is to ensure that if no new entity is designated, as would otherwise occur, the veto would revert to AWBI. That certainly never was the intention of the government and this amendment makes sure of that.

As a result of those matters I have mentioned, the regulator, now known as the Wheat Export Authority but to be called the Export Wheat Commission, will, unless the government of the day takes other legislative action, become the manager of the export power for all parties bar AWBI. I find it unfortunate that, in those circumstances, because of the present and existing legislation, AWBI does not have to get an export licence like everybody else. I think the very lack of that discipline of obtaining an export licence is the reason the whole Iraqi affair managed to occur—that and, of course, the confidentiality provisions that apply to this company but to no-one else.

 When I want to know what BHP, Rio Tinto or anyone else is getting by way of price for their coal or their iron ore, even during a period of negotiation, I can find it in the Financial Review. I have never been able to understand why AWBI, throughout its life, has been entitled to not tell anybody that it sells wheat for a certain price in a certain market. It claims it might give some information to its competitors. But I am sure its competitors had the information every time, by the fairly simple process of asking the buyer what they paid for it. That is the point. The new entity will become the manager of the export power for all parties bar AWBI, which will still have the right to export but no power to prevent any others whom the Export Wheat Commission so authorises from doing so—in other words, AWBI will never again have the power over its own regulator, as has existed in the past.

The time limit on the QA arrangements for bags and containers is to ensure that the opportunity for people to export in bags and containers will be available within 60 days of royal assent. That is to limit the time it takes to put together the QA requirements—which I point out have been and are now in operation. The restriction on bags and containers that exists in the original act related to getting an approval for the actual export, but the processes by which the quality of the grain and the other necessary factors to maintain Australia’s export reputation are monitored are in place and are part of that approval process. I hope those particular conditions will be reintroduced under the QA proposals. The minister has agreed that he and his department can undertake the process and get the proclamation out in 60 days. That clears the air for people who are interested in these particular provisions.

In general, these amendments satisfy me that we can make progress with this legislation, as the growers—who have campaigned so hard to have the right to test the wider opinions of the wheat export grower community by gaining their financial support to establish this new grower entity—are accommodated in these arrangements. It might be of some interest to members of the opposition to know what this is about. There is much divided opinion, which is very hard to assess, amongst export wheat growers in terms of the quantity of wheat one might export compared to another and whether they want to continue with a single export marketer. Unfortunately, polling and those sorts of things have not provided that assessment. The Ralph inquiry had some 15 per cent of the wheat grower community make submissions or attend one of the public meetings, so it is very difficult to say what the other 85 per cent might consider is the best option for their future. This legislation opens the opportunity for that to be proven.

A group of farmers associated with certain grower organisations—farmer representative bodies that have a small and reducing membership—will undertake this challenge. Most of them, I note, the other day were pleading with the NFF for reduced affiliation fees because their membership numbers are so low, for a variety of reasons, that they do not have the resources to continue to pay these fees. In other words, as a group they do not have a high degree of representation. But the government has agreed to give them one last chance to put an appropriate body in place. It is they and they alone, not somebody new on the scene, who have until 1 March 2008 to put a viable proposition before the government.

If they fail, to quote our Prime Minister, ‘All bets are off.’ The minister will have no body to designate. According to these amendments—which I ask the opposition to support—that veto power will not revert to AWBI. It cannot go to anyone else, so the Export Wheat Commission will be the controlling body. Unless there is further legislation, AWBI as a company with no power over anyone else will still be exempt from having to get an export licence. It will be able to continue conducting its pools or whatever it likes but with no power to stop anyone else that the Export Wheat Commission might approve.

We have to look, then, at the opportunities that arise with the formation of this new group, this new grower entity. I remind the House that, based on the creation of AWB Ltd and its fully owned subsidiary, AWBI, wheat growers contributed $600 million under a process known as the Wheat Industry Fund. Also, I would remind the member for Hotham, were he still here, that it was implemented by the Hawke Labor government. I think he said that it was some sort of insurance scheme at the time, but the community always knew that it was going to be the financial base for a corporatised body of the nature of AWB Ltd. I would imagine that $600 million in 1999 would be closer to $1 billion today—and that money was equity, not loans. Further, it represents only 20 per cent of the value of a typical 15 million tonne pool that wheat growers deliver in an average season. That is the amount of wheat that will be gifted to this new entity if it is designated. It is pretty obvious that there has to be a firm financial base so that the growers will get paid.

As growers deliver the ownership of their wheat at the time of delivery, they are entitled to know that this new manager will have its own cash equity resources to do the job for which the growers will be charged a fee. The concept promoted by the promoters of this group is for it to borrow such funds—that is, the basic equity that exists in AWB—as it may require them. This is not acceptable, as the only security it will have is the growers’ wheat. That would make you feel pretty good: you have been obliged to give this group your wheat and then it mortgages it to run the business. Yet that is being contemplated by the promoters of this group. The hurdles that will have to be jumped before this parliament will endorse, through the minister, a proposed new company have been identified. It is not going to be a $2 company, and that is the important point about it. Growers should not have to finance such borrowings from the proceeds of their crop. Under other arrangements that are available now, they would not incur such a charge.

I note here the matter of bags and containers. Growers will be able to find markets themselves overseas for bag and container lots. There are many flour mills that would appreciate the opportunity to buy in such quantities. What is more, in the present boom of mineralisation, Mr Deputy Speaker Haase, of which you are well aware, the price of bulk shipping has been going up very rapidly and containers—Australia has none; it is a great exporter of them—could provide a highly competitive opportunity in certain niche markets.

In the few minutes I have left, I want to mention quickly the circumstances of the current 2005-06 pool. I have been given a table of that pool, which at the end of this speech I might ask permission to table. The table indicates how much money wheat growers are owed by AWBI for wheat that they were forced to deliver in 2005-06. It is money that growers would desperately like to have at this time to finance them through the drought or, for those who have experienced a better turn of events, to put in a crop in areas where there has been rain. The last payment has not been made to them. In many cases, that last payment represents between $10 and $60 a tonne on their delivery. Growers who delivered 1,000 tonnes—and in parts of your electorate, Mr Deputy Speaker, it would be 10,000 tonnes—are still waiting to be paid $40 or $50 a tonne. In my electorate, such people are now contemplating their second year of no rainfall.

These things happen, as the member for Hotham has described, because of the lack of power within the act as it was written back in 1998. I wish that I had time to read to the chamber my 1998 speech, or just its opening remarks, in which I predicted every one of the disasters that have occurred. Of course, that speech is in the Hansard. If we are going to have a new entity—and I am concerned about it but I have agreed that that opportunity has to be extended—I hope that a couple of the following speakers will tell me where the money for it will be coming from and where the guarantee of equity will reside for wheat growers when they deliver their wheat. They would have to do that for growers in Western Australia, for wont of any other marketing opportunity except for bags and containers.

With those few remarks, I will conclude. However, it is important that we understand that improvements have been made to the legislation to give some certainty to wheat exports by whoever has to deal with them in March next year.