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Tuesday, 19 June 2007
Page: 78

Mrs MOYLAN (7:48 PM) —I welcome the opportunity to speak to the Wheat Marketing Amendment Bill 2007, which has six key elements to address the future of marketing wheat internationally. These elements comprise:

  • the extension of the Minister for Agriculture, Fisheries and Forestry’s temporary veto power over non-AWB (International) Ltd bulk exports until 30 June 2008;
  • the inclusion of the power for the minister to change the entity that operates the single desk after 1 March 2008;
  • improved powers for the regulator to obtain information, particularly from wheat exporters other than AWB (International);
  • the inclusion of the power for the minister to direct the regulator to investigate matters relating to its functions and pass this information on to other law enforcement and regulatory bodies as necessary;
  • a range of structural and governance reforms to the Wheat Export Authority, in line with the principles espoused by the Uhrig review; and
  • the deregulation of wheat exports in bags and containers, but with the addition of a quality assurance requirement to safeguard the reputation of Australian wheat.

I must say that I am pleased to see that safeguard in there because Australia has a very fine reputation for clean, green grain. It is important that we do not do anything that would disturb that reputation internationally. The need for this legislation arose of course from the actions of certain individuals within AWB in relation to international marketing which did damage the reputation of Australia’s premier wheat-marketing organisation.

As the extent of some of the appalling corporate behaviour was revealed through the Cole commission of inquiry it became apparent that the growers of Australia have been poorly served by AWB and that alternative arrangements for exporting wheat would have to be considered. On the back of one of the worst droughts in the country’s history, the growers have had to face tremendous pressure and uncertainty with probably predictable calls to dismantle the single-desk system of selling wheat in the export market.

There are, and have been for some time, people who have wanted to see the end of this system. No area has been more affected by this than Western Australia, which grows around about 50 per cent of the nation’s export wheat. It was on the basis of the Cole findings that the government elected to establish a Wheat Export Marketing Consultation Committee to conduct a series of meetings with growers around the country and to report back on the findings. This was a very important step because I think there was the possibility of a knee-jerk reaction after Cole.

As I have said on many occasions, while we have to be concerned about what was going on in AWB and the activities that damaged Australia’s international wheat-marketing reputation, it is enormously important for us to keep a cool head and ensure that the steps we take are in the best interest of growers so that we can continue to contribute to maximising grower returns. The steps the government took were very responsible because they took the heat out of things and allowed people to stand back and examine the operation of the single desk outside of the furore that sprang up around AWB’s activities. In almost every meeting held around the country on this issue by the Wheat Export Marketing Consultation Committee, growers were very forthright in putting forward their views, which overwhelmingly supported the single desk. Even when Mr Ralph—the chairman of the Wheat Export Marketing Consultation Committee—reported, he acknowledged that around 70 per cent of growers across the country wanted the single desk to be retained. This was certainly the case with the Wheat Export Marketing Consultation Committee meeting held in my electorate at Beverley. Many of the presentations made by growers for the retention of the single desk were both articulate and compelling. We have some pretty smart growers; they have to be to survive in what is an increasingly competitive marketplace. It is fair to say, though, that there were opposing views from people who believe that wheat marketing should be deregulated. However, these were clearly minority opinions.

In a submission to the Wheat Export Marketing Consultation Committee, I made a few comments about the state of international markets and why growers overwhelmingly support the retention of the single desk. I will recap some of those comments, but I preface my remarks by saying that these are my own views. While allowing free market forces to prevail is almost always preferable in our mostly deregulated system of commerce and trade—and strong intellectual arguments can be mounted to support this from both an economic and social perspective—the fact is that Australia is not operating within an international trading environment that ensures perfect, near perfect or even semiperfect competition. When domestic wheat marketing was deregulated a few years ago—and the former Deputy Prime Minister made this point very eloquently recently because he had responsibility for this—Australia had, and continues to have, a competition watchdog to ensure that there was a reasonably level playing field for the sale of domestic wheat.

This is not the case in the international marketplace. We all know that growers in both the United States and the European Union are heavily subsidised by their respective governments, which give no indication that they intend to remove the generous cash subsidies to wheat growers anytime soon. It is unrealistic to suggest that Australian growers should accept full deregulation of the export market under these particular circumstances. They are not competing on a level playing field. In addition to the direct cash subsidies, the United States and the European Union use a combination of aggressive export credit programs, food aid programs, government funded promotions, government funded marketing activities and direct government diplomatic intervention at a commercial level.

With a total lack of commitment by the EU and the United States to change their domestic agricultural policies as they affect the international market, it would be very unwise and very unfair to place additional burdens on the backs of our own growers at this time—particularly following one of the worst droughts in the country, and with alarming increases in the cost of fuel, fertiliser, bulk handling and transportation further squeezing profit margins. Our farmers are very efficient, notwithstanding that they operate in a very volatile sector and are subject to the vagaries of weather and fluctuations in interest rates and international money markets. Additionally, the traditional approach to domestic interest rate changes are often considered in the context of consumer activity and levels of indebtedness in our major capital cities, sometimes seemingly without sufficient thought of the impact on rural Australia. Notwithstanding these restraints, Australia’s success as one of the three largest exporters in the world is significant, and it can be strongly argued that this has largely been achieved by growers funding the strategic plans and the marketing success internationally of the single desk.

It is for all the aforementioned reasons that a high proportion of growers reject the case for the deregulation of wheat marketing. This is a time to consolidate, to consider important changes in the structure of the single desk, to provide greater transparency—no-one can argue that greater transparency is not required—and greater contestability in the delivery of essential services to growers and to ensure that we contribute in a way that maximises returns to growers and ensures a market for wheat in the increasingly competitive global marketplace. In these deliberations, growers’ interests should be central to the future shape of export wheat marketing in this country.

Pearce has just over 600 growers, and although they do not grow the bulk of Western Australia’s wheat they operate in a fairly predictable rainfall area and grow high-yield crops and high-quality wheat for export. In a survey I did of Pearce growers, I found that they are predominantly of the view that there is great value in maintaining the single-desk system. In fact, 92 per cent of respondents were in favour of retaining the single-desk national pool, 72 per cent of respondents wanted AWBI demerged from AWB Ltd, 94 per cent wanted a grower owned and controlled single-desk marketing organisation and 77 per cent wanted the Wheat Export Authority to be retained. Many made the comment that they thought the Wheat Export Authority needed greater investigative strength and ability, and that is something that the government is incorporating in this bill. Many in the industry believe that the interests of growers would be best served by a grower owned and controlled entity with a real opportunity to maximise returns to growers without the obvious conflicts that have arisen through the existing corporate structure.

There have been some concerns raised about aspects of these amendments; however, I believe that, with goodwill between the government and the grower representative organisations, these minor issues can be addressed. There are issues around the make-up of the new Wheat Export Authority and there are other minor issues, but I understand that talks are taking place to try to make sure that those issues are worked through in a sensible manner. This bill makes it possible for a demerger to take place, and that is what is currently needed. It allows us to put in place a mechanism to ensure a marketing organisation that is grower owned and controlled and which does retain the full integrity of the single desk.

Splitting the bill, as I heard proposed by the member for Hotham, and supported by the member for Wills, would be a disaster for growers. It would create greater uncertainty and would jeopardise any possibility of the development and establishment of a new grower owned and controlled single-desk marketing operation into the very near future. This work needs to be done now. It cannot be done without the certainty of the passage of this bill in its current form. So it is enormously important that we put our full support behind this bill today without splitting the bill and causing greater anxiety and greater concern to the wheat growers of Australia.

The time frame to come up with a new entity is tight, given the task ahead. It is a mammoth task to establish a new entity, but I believe that those in the industry working towards this outcome are very determined. They have been working behind the scenes for some time now to try to achieve this. I believe that they will be doing everything humanly possible to achieve that new entity within the time frame that is given. I support this bill.