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Wednesday, 20 June 2007
Page: 40


Mr SCHULTZ (11:19 AM) —I rise to talk on the Wheat Marketing Amendment Bill 2007. The agricultural industry in Australia once maintained a reputation as a proponent of fair trade in an uncompromised export market. This reputation was achieved through transparency and accountability, two notable characteristics which serve as the basis of a free market economy. A fair export wheat market export system for growers should encompass these same principles and characteristics. In light of increasingly unsettling revelations about the AWB, it appears a fair export system for export wheat growers cannot be achieved through the retention of the single desk.

For many of Australia’s wheat farmers, the findings of the Cole commission of inquiry into the disgraceful corporate behaviour of AWB Ltd will have considerable, far-ranging ramifications for the marketing of Australian wheat. The reputation of Australia’s wheat market has been tarnished by the corruption mastered by AWB through its sale of wheat with kickbacks to Saddam Hussein’s regime in Iraq. The scandal has resulted in the loss of substantial overseas markets for Australian export wheat growers.

As if this were not enough to keep our wheat farmers awake at night, the ongoing drought has tested the resilience of many farming families and is already pushing many to the limit. To then encourage farmers to participate in a market with a significant lack of economic competition, dominated by a single seller, with the continuation of a structure which has already been discredited worldwide, is unfair, if not morally wrong.

The Wheat Marketing Amendment Bill 2007 retains Australia’s single desk for export wheat. The Wheat Marketing Amendment Bill 2007 also purports to heed the calls of growers for the retention of the single desk. However, for many wheat growers, particularly those in Western and South Australia, where the majority of international export wheat is grown, the dissemination of the single desk is a welcome change from days gone by.

In the past 30 years we have seen a substantial shift in Australian grain exports, moving from a wheat monoculture to rotations with other crops and pastures. None of these other commodities, such as barley, canola or sorghum, have the oppressive effect of a single desk stifling their market. It is quite ironic that many of Australia’s wheat growers also successfully grow canola and barley for export without a single desk. It has been argued that, as Australia’s dominant crop, wheat merits some sort of special treatment. Clearly, there is no justifiable basis for this argument; beef is the dominant livestock produced in Australia and it does not rate exceptional treatment. After the formation of the Federation of Australia in 1901 large-scale broadacre cropping was promoted, and Australia’s wheat belt doubled in size. With the onset of World War II, the Australian Wheat Board, AWB, was established. Its purpose was to stabilise prices and meet wartime demand. However, it was allowed to retain monopoly control over the international market.

Monopolies are often characterised by a lack of economic competition for the good that is provided and a lack of viable substitute goods. Surely the Australian wheat export industry is mature enough now not to return to the social agrarian policies of the 1950s and 1960s. The lack of competition has the potential to foster inefficiency, a lack of innovation from within the industry as well as substandard management. If the Cole inquiry into AWB has not produced enough evidence of substandard management, the recent revelations by the very active and dedicated federal member for Indi, Mrs Sophie Mirabella, about the treatment of one of her constituents by AWB indicate the extent of its collusion and corruption. The issue was raised after a Springhurst businessman accused the AWB of trying to steal his company and breach international trading laws. Ian Metherall revolutionised how farmers store grain in Australia by importing IpesaSilo grain storage bags, which allow farmers to store tonnes of grain on their farms. Mr Metherall has described how AWB requested that he enter into a joint venture with them, only to find that the contracts they had drawn up would have done away with his control of the business. He also claimed that AWB owed his company hundreds of thousands of dollars after a deal with AWB India went awry. He claimed that his company sent machinery and bags to India after AWB agreed that its foreign market rights and commissions would be respected. He then described how AWB requested via email that he alter an invoice and change the amount if he wanted payment for the transaction. ‘I said I wouldn’t change it, because I knew it broke international law,’ Mr Metherall said. Ian Metherall has described the culture of AWB as ‘ethically bankrupt’. ‘I’ve always asked: are they there to grow it or control it?’ Mr Metherall said. ‘It is a bigger picture we are looking at—a war over control of the grain.’

The Wheat Marketing Amendment Bill 2007 provides for 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. The deregulation of wheat exports in bags and containers will give greater certainty and opportunity to the development of niche and new market opportunities. The behaviour of AWB has put into question the reliability of the Australian wheat export industry as a whole and has forced us to question how well suited a single desk is to represent and market nearly all of Australia’s wheat overseas—this is not to mention the high costs associated with running a single desk. It is estimated that to run a single desk you need capital of about $600 million to $1,000 million. I will be interested to see how that money is going to be raised by 1 March next year.

AWB was charging wheat growers about $300 million a year to run its organisation, and now Australian export wheat farmers have nothing but a poor reputation to show for it. The single desk structure means that farmers are forced to take what they are given for their produce and allows no room for individual farmers to go outside the structure and find buyers that the single desk does not deal with. Competition should be encouraged as a way to make the industry more efficient and cost-effective. The findings of the Ralph inquiry suggest that many growers wish to retain a single desk. However, not every farmer agrees with this position. Why should these growers be forced to sell their wheat to a national pool if they do not want to? Talk about agrarian socialism in the extreme!

Much of the wheat grown in Queensland, New South Wales and Victoria is consumed in Australia, while most Western Australian and South Australian wheat is exported. Interestingly, the most pressure to retain the single desk is coming from growers in NSW and Queensland, the majority of whom do not export wheat. The principles of a free market economy do not coincide with a situation in which a market is dominated by a single seller, as is the case with the retention of the single desk in Australia, which protects vested interests at the expense of Australia’s broader economic interests. If Australia seeks to be a nation that is committed to free market principles, why make wheat an exception to the rule? I will leave the community to think about that. No other industry forces its sellers to go through a single exporter. There is no rational argument to support the continuation of a single desk. Cattle producers, dairy farmers and horticulturalists receive no special treatment. The Iraqi kickbacks scandal has left a black mark on AWB’s reputation throughout the world. Why, then, should individual farmers be expected to pay the price for a company in disrepute? Australia’s export wheat industry has been discredited by the organisation that presented its face and image, and because of this Australian growers will continue to suffer as other countries continue to avoid Australian wheat.

The one-size-fits-all approach of the single desk militates against excellence. People who produce good wheat are not rewarded and those who produce poor quality product are not penalised. In the age of competition policy, there is no place for the single desk. Farmers should have the right to export wheat wherever they want and to choose who should sell it on their behalf. However, if the government is to proceed with the creation of a new entity which holds the single desk, then the government must, at the very least, be satisfied, firstly, that this entity is a completely separate legal entity from AWB Ltd and, secondly, that it reflects the government’s clear intention that any behaviour which undermines the interests of Australian export wheat growers and damages Australia’s trading reputation will not be tolerated—and I would hope that the government has got the message that the days of appointing political apparatchiks, who have caused significant problems with the export wheat industry, are over and it looks for somebody who is at arm’s length from the political arena. Thirdly, the government must be satisfied that the views of growers will continue to be represented, with the minister appointing at least one commissioner based on strong skills, knowledge and standing in export wheat production. Finally, it must be satisfied as to the financial viability and capacity of any new entity proposed to be the single desk holder. A government grant of a monopoly power confers on the recipient a great privilege and power. It therefore carries with it a corresponding responsibility to maintain a culture of ethical dealing.

In closing, let me say that I am very pleased that the due diligence of the member for O’Connor has once again resulted in some sensible amendments to the Wheat Marketing Amendment Bill 2007, which some people on this side of the House do not like. But those amendments make the bill more open and transparent and make people more accountable. I had reservations about supporting this bill, but I will follow the long-held historical tradition of abiding with the majority rule within the government. I can say this: I will be watching what happens between now and 1 March 2008 with a great deal of interest. You can rest assured that I will bring to account those who need to be brought to account for the way in which they play their role in this process. I will expose, where it needs to be exposed, any assistance that comes from AWB, whether or not it is intended to directly or indirectly influence any new company that is formed by 1 March next year.