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Tuesday, 19 June 2007
Page: 85

Mr SECKER (8:22 PM) —I have listened with interest to speakers from the other side and I acknowledge that the member for Corio probably has some understanding of agriculture and the wheat industry. Unfortunately, I cannot say the same for any of his 90 other colleagues. It is very interesting to see who from the other side has spoken: the member for Hotham is a city Labor member; the member for Wills is another Labor member from the city; and the Labor member for Barton, another city Labor member of parliament, is about to speak. They have no idea about the wheat industry—no understanding, no feeling and no soul for the wheat industry or any agricultural industry. It is always very interesting to hear these people get up and try to bluff their way through speaking about an industry that they have no idea about or feeling for.

The member for Corio suggested I was a wheat grower. Yes, I have been a wheat grower occasionally, although I tend to grow other crops because of the area I live in. He questioned whether I came from the Eyre Peninsula. My family does come from the Eyre Peninsula. I have two brothers, and my father and mother started there, so I am bred from the Eyre Peninsula. There is a lot of wheat grown on the Eyre Peninsula, and my family have grown a lot of wheat, so I have some experience and feeling for the wheat-growing industry. Of course, my electorate of Barker has huge amounts of wheat in a normal year, although I would estimate that last year was probably the smallest wheat crop in my electorate ever, certainly in my living memory. Because of the drought there was hardly a grain of wheat delivered to silos anywhere in my electorate in comparison with normal years, so we probably did not have some of the problems that other areas with large amounts of wheat to export faced last year. We all know that in the past the Australian Wheat Board has had a monopoly on export wheat sales. In fact, at one stage they had a monopoly on all wheat sales, whether they were for export or for the home market—but the home market was removed. I remember a lot of people saying that when that happened the sky would fall in. Of course, it has not.

Looking at the problems we face in the wheat industry, I think we all acknowledge that the AWB could not fulfil its duty as a monopoly wheat exporter because they could not sell into one of our largest markets—I think our third largest market—Iraq. It is pretty understandable that Iraq did not want to deal with AWB. I do not need to go through the reasons; we all know the reasons. We really only had three choices as a government and as a wheat industry about where to go. We could have gone for total deregulation. I failed to see any member of the Labor Party promote that idea; they certainly have not had the guts to take that first choice. The second choice was to keep the status quo. No-one from the Labor Party has suggested that we keep the status quo for our wheat-marketing exports in Australia. The only other choice was a mixture or derivation of what we have done. If somebody can point out another direction that we could have taken other than those three choices, I would be glad to hear it. We had the choice of total deregulation, no deregulation at all—the status quo—or the path that we have taken. We have taken that path after very close consultation with the wheat industry. I hear Labor member after Labor member say we have not consulted the wheat industry. Hello! What was the Ralph report about? It was about consultation with the wheat industry and the wheat growers.

About two-thirds of the wheat growers in Australia told us that they wanted to keep a single desk, but only 20 per cent of those growers wanted AWB to keep the monopoly export status, so we took a path where we said, ‘We will no longer accept AWB Ltd in the future having monopoly status on wheat exports.’ We took that stance, after consulting with the wheat industry, because of fears that they could not fulfil the conditions of being a monopoly wheat exporter by exporting to Iraq, which is one of our larger markets. We said to the industry in the interim, because it is going to take a fair while to set up a new body: ‘We will give you until 1 March next year to come up with a new body, a new single desk, to manage exports in Australia with a few changes. For example, bags and bulk exports can now go without the veto power of AWB on the basis that we make sure that we have quality control.’ We have given the industry its choice. The Australian Wheat Board says they will be looking at a demerger proposal. I have my doubts about whether that will happen. We have given the industry nine months to come up with another model for next year’s wheat marketing, but in the interim we have to use what we have already got because you cannot make an international wheat exporter out of nothing.

So we have given it to industry to come up with a choice for the future. If they do not come up with that choice then, of course, all bets are off. If, by 1 March next year, they do not come up with something that is going to work then obviously we will look at different options. In the meantime, it will be the Minister for Agriculture, Fisheries and Forestry who decides who gets the bulk of the export licences. Certainly, in the foreseeable future, the Australian Wheat Board, with its corporate knowledge and its industry know-how, will be a large player in the wheat market. But the Australian Wheat Board will no longer be able to veto exports from other companies. That will be a decision for the minister until 30 June 2008.

I rise to speak on the Wheat Marketing Amendment Bill 2007 after a very long 18 months. The wheat-marketing issue has indeed been an extremely difficult one to work through because of the strong and differing views held by wheat farmers at an electorate level, from my own electorate to right across Australia. Much time in my electorate of Barker has been spent discussing the state of the industry and its marketing future with wheat growers, who supported anything from the status quo to complete deregulation because of the behaviour of AWB both in Iraq and at a local level to keeping AWB monopoly status for the single desk. I have gone through this process until we have made the decision that we have.

It is typical of Labor to respond that it is the government that should have the answer. That is a very socialist, big government view. I do not hold to it. I believe that individuals in the industry should decide where they are going, not government. Individuals in the industry know better than governments ever will how to run their industry. This whole process over the last 18 months has certainly made determining the direction that the wheat industry wanted us to take no easy challenge for me and my esteemed colleagues, including the federal Minister for Agriculture, Fisheries and Forestry. But we acknowledge that it was a process that had to take its full and proper course, although I am fully aware of the toll it took on growers who were contemplating the future of wheat marketing and the future of their enterprises as drought took its toll in many areas.

Our inquiries indicated that a good two-thirds of growers preferred the single-desk option, but only 20 per cent wanted the AWB to remain the manager with the monopoly status and the veto powers. So the government has listened and followed this course of action in preparing the Wheat Marketing Amendment Bill. That is something I wish to highlight: the coalition government has listened to the country’s wheat growers affected by this complex issue so as to make the best decision possible. And I will be first to admit that not every wheat grower in my electorate is going to agree with this action. I have had wheat growers ring me up and say, ‘I think you should go on a total deregulation basis.’ I have had wheat growers say to me, ‘We should just keep it as it is with the monopoly status,’ and suggesting ‘wink-wink, nudge-nudge’ that the AWB in Iraq was only doing what other wheat industries from around the world have done.

I cannot hold to that view. I cannot condone the actions of the AWB, and I could not possibly go with any action that would reward the actions of the AWB. Growers have told us they want to take control of their industry. Growers have told us overwhelmingly that they want a single desk and that they want the single desk to be managed by an entity separate from AWB Ltd. Today the growers have their answer. In this legislation a combination of their requests are answered. It gives the opportunity for the industry to take the bull by the horns, so to speak, and drive this change. It must be noted—and, hopefully, growers will appreciate it—that the government has allowed significant time for the establishment of a grower owned entity, as it is not possible that it can be formed immediately. It will take time. It is as simple as that. You cannot create a single desk overnight. It takes time.

Growers need the certainty that there will be a body—whether it is the AWB and whether they like it or not—that will at least be there to manage the export of the vast majority of Australian wheat and that it will be open to other competitors on the basis that it brings the best price to the growers. I think some of the argument has been lost on this, in that we need to look at what gives the best returns to wheat growers in Australia. That has to be our ultimate aim. No matter whether you are on the Labor side, are on our side or are anyone in the industry, the ultimate aim has to be the best returns to the growers. That is the No. 1 aim—and probably the only one.

This bill also proposes to deregulate the export of wheat in bags and containers, but with the addition of a quality assurance requirement to safeguard the reputation of Australian wheat. And Australian wheat is well recognised all over the world. The Iraqi people love our wheat, and they want it. But they were not prepared to deal with AWB Ltd. That is why we had to have the three sisters operation for exports last year. In providing greater certainty and opportunity to those seeking to develop niche and new market opportunities, bag and container exports make up but a small proportion of Australia’s wheat exports—roughly three per cent to five per cent—but can often deliver a higher return to growers than the bulk export market can. One person in my electorate whom I call a friend does that. I did not make this decision based on him being a friend; he has become a friend through my dealings with him and the fact that he has been able to get better returns for my crops, whether they be wheat, lupins, barley or whatever.

Previously, wheat exported in bags and containers was required to have valid consent from the Wheat Export Authority. This amendment removes that requirement. In its place, the exporter will be required to comply with the conditions of a quality assurance scheme to be developed by the WEA. This will not dictate the quality of the wheat that can be exported but will make sure that exporters are meeting the specification of their contracts with customers so as to protect the good reputation of Australian wheat from the errant behaviour of rogue traders.

Exports in bags and containers are at a competitive disadvantage to bulk exports because of the higher freight costs in comparison to bulk. They face the added capacity of constraint due to a limited number of available containers. As such, there is a structural limitation to the total volume of wheat that could be exported in bags and containers. Growers also very clearly see exports in bags and containers differently to bulk exports. What this means is that this amendment in the bill will not undermine the single desk. The single desk will still account for 95 to 97 per cent of the Australian wheat market for export.

An important part of this bill that I need to highlight today is the extension of the temporary veto power of the Minister for Agriculture, Fisheries and Forestry over non-AWB (International) Ltd bulk exports until 30 June 2008. It must be reiterated that the minister will continue to exercise this duty in the public interest of all Australian wheat growers and in a way that treats any application for a licence on its merits. The minister’s role will be to direct the industry regulator, the Wheat Export Authority, to approve or reject bulk wheat export applications. This has been, and will continue to be, on a case-by-case basis. Importantly, this extension ensures that the power of veto over bulk exports does not revert to AWB (International) Ltd on 30 June this year. While we acknowledge that AWBI is the only entity that could realistically manage the 2007-08 harvest, it will not hold the power of veto over bulk exports.

From 1 March 2008, this bill will grant the minister the power to designate a company as the holder of the single-desk export privilege. This ability did exist once but was removed from the act in previous amendments. As part of this, the government will require that the new entity is completely legally separate from AWB Ltd and has a strategy developed to allow the company to take over the single-desk management before the 2008-09 harvest. Exactly when the minister may exercise his power after 1 March will depend on a number of factors: taking into account the progress growers make in developing and establishing a new entity, the capabilities of the new entity at a given point in time, the need for AWBI to finalise sales from 2007-08 pools and obvious transition arrangements involved in the handover of the single-desk entitlement to a new entity. I take this opportunity to stress that the government must be satisfied with the financial viability and capacity of any new entity proposed to take over as the manager of the single desk.

Australian wheat growers, including many from my own electorate, have had a few tough knocks this past 18 months. But I am confident that this bill will offer direction and guidance to pick this industry up and get it going in the right direction once again. Our wheat growers have a fair bit ahead of them to meet the 1 March deadline, but there is no doubt we are looking at a change for the better.