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Tuesday, 3 June 2008
Page: 4274


Dr NELSON (Leader of the Opposition) (10:34 PM) —The Liberal Party will not be opposing the Wheat Export Marketing Bill 2008 and the Wheat Export Marketing (Repeal and Consequential Amendments) Bill 2008. We will, however, move a small number of amendments in the Senate to the Wheat Export Marketing Bill 2008 which will improve the proposed system. Wheat growers have always been our first priority and focus throughout this process and in our policy making. This is not a simple issue. Among wheat growers there is a considerable diversity of opinion about the best arrangements for wheat marketing. I would like to recognise and thank the many individual growers who took the time to contact their local members and my office, in writing, by telephone and in person, to offer their views. Some will be very happy with the changes in this legislation. Others will not be supportive. We have weighed these views very carefully in arriving at what we believe is the right decision.

The Australian Wheat Board was first established in 1915 as a wartime measure to ensure equitable returns and that limited wartime shipping capacity was allotted efficiently. Similar arrangements were instituted in 1939, with powers including a marketing monopoly for both domestic and export consumption, encompassing the concept of ‘orderly marketing’. This was considered the best way of countering the market power of private grain merchants who were judged to be operating cartels and profiting through the control of storage, transport and access to market information at the expense of struggling producers. After the war, the Wheat Stabilisation Act 1948, backed by complementary state legislation, established AWB as a statutory authority and provided it with powers for ‘single desk’ export and domestic marketing.

Over the last quarter of a century wheat marketing arrangements have undergone changes. In 1984 a permit system was introduced for direct trade between producers and consumers of stockfeed wheat. In 1989 the AWB monopoly on the domestic market was removed following a royal commission into grain handling and storage and the Industries Assistance Commission review of the wheat industry. The Wheat Marketing Amendment Act 1998 transferred the former statutory AWB’s regulatory export control functions to a new agency, the Wheat Export Authority, while terminating control over AWB Ltd and its subsidiaries and transferring the ownership and control of AWB Ltd to growers.

In recent decades the Commonwealth and state governments have deregulated single desk style arrangements for sugar, rice, barley, oats, cotton, dried fruits, eggs, oilseeds, sorghum, beans, peanuts, honey, potatoes, milk and wool. However, until now the single desk for wheat exports has remained with the support of many growers who believe it has helped manage risk and provided supply chain efficiencies and marketing expertise along with strength in numbers and a sense of control. This arrangement generally enjoyed bipartisan support until recently.

In 2001 the Labor Party election campaign policy stated:

Labor is committed to leave the single desk for wheat in place, with a review in three years time.

In 2004 Labor’s election policy stated:

Labor has always been a strong supporter of the single desk and has no plans to conduct further reviews ...

Following the exposure of AWB’s operating activities through the Cole inquiry, the coalition in government acted decisively to address the situation and removed the ability of AWB International to solely sell bulk exports. The then government also agreed that the 2007-08 wheat harvest would be the final wheat harvest to be managed and marketed by AWB International. In a statement to this House on 22 May last year, then Prime Minister Howard said:

If growers are not able to establish the new entity by 1 March next year, the government will propose other marketing arrangements for wheat exports. Let me make this clear to the House. The options available would include further deregulation of the wheat export market.

The then Prime Minister also said:

If this country is at some time in the future to move away from a single desk operation, it will need in order to justify that decision to get something decent in return from the corrupted international wheat markets that have worked so heavily against the interests of Australia.

It is unfortunate that Labor has moved to end the single desk without any concurrent requirement that such changes be linked to free trade concessions for Australian wheat growers. As a consequence, Australia has now lost a significant bargaining chip and an opportunity to extract concessions from either the WTO Doha Round or other negotiations.

It is unfortunate also that Labor was not clearer about its intentions in its last-minute election policy. In that policy, Labor said:

A Rudd Labor Government will introduce major new reforms to wheat export marketing.

Labor proposes a new model for exporting wheat which retains a single desk for the control of wheat exports and at the same time increases choice for growers by allowing a number of selling options.

This led many growers to expect that Labor would retain the single desk, which, as the exposure draft bills indicated, was certainly not the case.

We respect and uphold the right of our coalition partner to have a different position from the Liberal Party on this matter. However, the Liberal Party will support the bills with amendments that will enhance their operation. They reflect our philosophical belief in individual freedom and freedom of choice.

Wheat growing is very different today from 60 years ago in the postwar environment that saw the single desk established. Modern wheat growing is far removed from the old picture of simply ploughing a paddock, planting your wheat, spraying some weeds along the way and harvesting it when and if it rained enough to do so. Modern wheat growing is characterised by practices such as ‘no till’ farming that aims to disturb the soil as little as possible and, more recently, through ‘precision agriculture’, described by the Grains Research and Development Corporation in the following terms:

Information-rich agriculture. The use of yield maps, other spatial information and input-control technologies to better match agronomy to paddock variability. The aims are to increase profit and improve environmental management.

These technologies provide detailed information about geographic location and spatial variability in soils or crops. This information can be used by growers and advisers to improve cropping decisions, crop agronomy and the efficiency of farming operations.

…some growers may use GPS only when establishing raised beds or controlled traffic systems or for sowing into the previous year’s inter-row, or just to reduce overlap when spraying or seeding. Others use yield maps to check the performance of different varieties or the impact of a pesticide. Others again are establishing paddock management zones and using variable rate application to better match expensive inputs with potential yield.

In the same way growers have access to better information and technology when it comes to growing wheat, they also have access to better information and technology—including modern transport, storage and communication—when it comes to the marketing of wheat. The new possibilities and options presented through better information and technology, combined with the emergence of new and niche markets, make the case for change clearer. Growers now need to be able to have the choice as to how they grow and how they will market their grain.

With an end to the single desk, the export wheat business will move towards similar arrangements that apply to the domestic wheat industry, other grains and bagged and containerised wheat. They will also move towards the same deregulated system as operates for virtually every other commodity—including those that are often produced on the same farms. We believe this will bring benefits from competition, with more players giving growers a greater choice for selling their grain. This is particularly important for wheat growers in Western Australia and South Australia who are predominantly export focused and who have small or distant domestic markets. New entrants could be expected to compete, seeking out new markets, customers and the most efficient storage, handling and transport services, thereby reducing costs.

In considering our position on this issue, we carefully considered the views of the majority of stakeholder groups who either supported or did not oppose the changes. These include but are not limited to: the PGA Western Grain Growers; the South Australian Farmers Federation; Eastern Wheat Growers; the Grain Growers Association; the West Australian Grain Growers; the Grains Council of Australia, representing AgForce Queensland; the Victorian Farmers Federation; the South Australian Farmers Federation; a number of individual growers; the Australian Grain Exporters Association; the bulk handling companies, CBH, GrainCorp and ABB; and wheat marketers including Emerald Group, Southern Quality Produce Cooperative and significantly the AWB itself.

In the words of the AWB Managing Director, Gordon Davis:

... the proposed wheat export accreditation scheme provided the opportunity to introduce competition and choice with appropriate regulatory protections into wheat marketing and to lower the cost of AWB’s services to wheat growers.

…            …            …

Wheat growers should be comforted by the fact that key elements of the old wheat marketing arrangements will continue in the new marketplace including pools and estimated pool returns which will enable them to plan with confidence, secure finance and sell their wheat in a competitive environment.

To quote the PGA Western Grain Growers in their submission to the Senate inquiry:

Competition [is] the key to the new wheat marketing arrangements.

The change proposed under the new Wheat Marketing legislation will bring significant benefits to the grains industry of WA. For the first time in 70 years, export wheat growers will regain control of their own business decisions, and not be dictated to by a centralised marketing entity.

Yes, there are other groups and growers who are opposed to change, and we respect their views. Change is never easy, and the single desk for export wheat is the only system most growers will have ever known. Many groups and growers believe that the current system has served them well and could continue to do so. But the hard, economic and political reality is that it will not, and my responsibility as the Leader of the Liberal Party is to tell it as it is. I again recognise and appreciate the efforts they have made to communicate their views. As I have said, we respect them, we understand them but we respectfully do not agree with a number of them.

Yet it now seems that many of those who have been very strong supporters of the single desk are acknowledging the momentum towards change and are being very constructive in making sure the new arrangements will work. To quote WAFarmers for example:

WAFarmers in accepting that changes are inevitable has taken steps to assist our members with the transition to the new marketing arrangements and has commenced negotiations with Australia’s leading independent grains manager, Emerald, to develop a specialist wheat pooling product. This action reflects WAFarmers commitment to representing the interests of Western Australian wheat growers under the new industry structure.

Under a deregulated system, new opportunities will be available from the innovation and diversification that will arise. We believe the time has come to introduce competition and choice into the wheat export market. We will seek to give all growers and stakeholders what they seek above all else, and that is clarity and certainty.

I foreshadow that the Liberal Party will be moving several amendments to the bill in the Senate. To ensure the new arrangements promote a vibrant and competitive bulk wheat export-marketing environment, individual growers must be provided with maximum flexibility and minimum red tape through unnecessary regulation. That is why we will be moving an amendment to allow individual wheat growers who wish to directly bulk export their wheat to an international purchaser to be exempt from the system. There will be growers who have already established such relationships with overseas traders.

The Labor Party has argued that such growers would probably be incorporated and thus could seek accreditation. But the issue is not incorporation. It is the accreditation. Why should an individual wheat grower wanting to directly sell his or her own wheat have to undergo extensive accreditation and reporting requirements, given that they alone are assuming risk? If we are to truly encourage those who take calculated risks, we should make an amendment for the benefit of these growers.

We will also be moving amendments relating to bulk-handling companies. In the proposed bill, bulk-handling companies will be subject to one form of regulation for the next 16 months, but then be subject to a more onerous, heavy-handed form of regulation after October 2009. Prior to October 2009, accredited exporters who are also the providers of port terminals will simply need to publish a statement on their website outlining the terms and conditions on which they will allow other accredited exporters access to their port terminal facilities. From October 2009, accredited exporters will be required to have a formal access undertaking accepted by the ACCC. The access undertaking is, for the purposes of this clause, in force as of the date the ACCC publishes its decision to accept it. Where the ACCC has not published a decision to accept an access undertaking by 1 October 2009, the accredited exporter will have its accreditation cancelled under clause 19 or, where the accredited exporter has not yet received accreditation, be refused accreditation under clause 13.

As the legislation stands, bulk-handling companies will operate entirely under their own terms for a period of 16 months in relation to port access. Why should the bulk-handling companies then be subjected to heavy-handed regulation under part IIIA of the Trade Practices Act if no problems have arisen with the system? It is estimated that the requirement for access undertakings under part IIIA of the Trade Practices Act will, from 1 October 2009, cost bulk-handling companies between $1 million and $2.5 million per year in compliance costs, effectively a tax on business which will in turn, of course, adversely impact growers. This is a significant cost that will undoubtedly be passed back to growers, with the effect of reducing grower profits. It will also lead to a disincentive for bulk-handling companies to invest in the improvement and maintenance of infrastructure.

The bulk-handling companies should be given the opportunity to prove themselves in the new bulk wheat-exporting environment. If no problems arise then there is no need to impose heavy-handed regulation upon them, and I ask the government to seriously consider the broad merit of the amendment which I foreshadow. If problems do arise, the minister must be provided with the ability to act decisively, including with the imposition of a part IIIA access undertaking. We believe the new system should be reviewed after two seasons to ensure that any changes can be implemented well before plantings begin in 2011. The review should begin by 1 January 2010 and be completed by 30 June 2010. While changes would not be able to be implemented for the 2010 season, they would be well and truly in place for 2011, providing growers with more security. I also foreshadow that we may move some minor amendments relating to the objects of the act and transport issues arising from previous legislation.

Those of us who live in capital cities must understand and never forget that, the further you go from the Opera House or the Melbourne Entertainment Centre to the regions and rural Australia, there are millions of Australians, and more than 20,000 wheat farmers, who feel at times that they live in a different kind of Australia. It is important we appreciate the resilience of our farmers, who are the best in the world. They have done it tough in recent years. In fact, they have done it bloody tough. Wheat production is expected to be up 23 per cent in the 2007-08 growing season to 13.1 million tonnes. This is still 39 per cent below the five-year average. Looking to the 2008-09 season, ABARE predicts a bumper harvest of 25.9 million tonnes. We will all keep our fingers crossed and hope that they are right.

Australian farmers also face price fluctuations, rapid increases in input costs—especially fuel, fertiliser and chemical costs, which are currently crippling. And they face unfair competition in the form of trade barriers and subsidies for their overseas competitors. Australian farmers face challenges and live a life many of us could not to provide us with food we literally could not live without. The coalition is proud to represent the majority of electorates based predominantly in rural and regional Australia. We understand that not only our economy but our values and our beliefs as a nation have been shaped largely by the labour and land intensive industries in agriculture, fishing and forestry and mining and a rural lifestyle that has given this generation a legacy that we too often take for granted.

We understand the critical importance of ensuring the viability of rural Australia for our ongoing economic prosperity, the viability of essential industries, the preservation of our heritage and down-to-earth Australian values, minimising the growing pains on our biggest cities and, arguably, our national security. We are proud of the more than $30 billion which we in government spent on specific programs that have supported regional Australia since 1996. We are also proud of the economic prosperity and stability we provided to our farmers and their communities throughout our time in government, including in the worst drought in 100 years. We are also immensely proud of the work achiev-ed by the coalition in securing important free trade agreements and progressing WTO reforms. We will keep working to ensure Australia continues to stand up for the interests of our farmers and those in critical negotiations.

Australia’s farmers have endured fire, flood, drought, economic adversity, unfair trade barriers and Labor governments. Hard though it may be to accept change, these reforms, with some amendments to wheat marketing, will be to the overall benefit of Australia’s wheat growers. If it is good for them, it is good for Australia. I know that this will be neither universally accepted nor supported by all of Australia’s wheat growers. Change is never easy. This change is very hard and will be very hard for many wheat growers and marketers in this country. But this is all about certainty, it is about clarity and it is about a future which is vastly different from the world in which the single desk was created and which served Australia’s wheat growers and marketers for much of the 20th century. It is now time for change. We respect those who do not support it, but we do not agree with them.