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Tuesday, 14 October 2008
Page: 9062


Mr BIDGOOD (4:42 PM) —I rise to speak to the Dairy Adjustment Levy Termination Bill 2008. The Australian government is acting to help ease the financial pressure on Australian working families by reducing the price of milk for Australian consumers. The Dairy Adjustment Levy Termination Bill 2008 will remove the levy on Australian milk consumers that has been in place for the last eight years.

The structural adjustment package made payments to 13,000 dairy farmers who were in the industry in 1999. Farmers received their final payment under the same scheme this year. The objectives of the dairy industry adjustment package, introduced in 2000, have been realised, and it is appropriate to both wrap up the administrative arrangements and terminate the consumer levy as soon as is practical, as soon as possible. This downsizing reflects that the authority has substantially completed its functions and can now be wound up.

Deregulation of the dairy industry occurred in 2000. Structural adjustment payments were provided to dairy farmers over eight years to assist them and their communities to adjust to the competitive, deregulated trading environment. As the final payments to farmers under the dairy industry adjustment package were made in April 2008, closure of the program will not adversely affect payment rights of dairy farmers.

The abolishment of the levy, which stands at 11c per litre of milk sold, will be welcome news for milk consumers. By removing this tax on milk, the government is providing financial relief for Australian families when they do their shopping. We are the government that is taking practical steps to reduce taxes on working families. One just needs to look at the budget to see that we are delivering tax cuts for Australians. Tax cuts in the 2008-09 budget delivered by the Treasurer meant that those who earned $40,000 a year had a tax cut of $20.19 a week, and those who earned $50,000 a year had a tax cut of $19.23. The government’s education tax refund and increases to the childcare tax rebate are examples of tax relief delivered by the government to working families in the budget.

There is an ever-increasing financial impact of rising grocery prices, particularly for low- and middle-income earners, and the government recognise that. We are listening to working families, and we are taking practical measures to relieve the cost-of-living pressures that exist today. It is important to reiterate that there are no new payments to be made under the levy to farmers, with the last payment being made in April this year. The Australian Bureau of Agricultural and Resource Economics found that strong growth in milk prices in 2007-08, when farm-gate prices rose by as much as 48 per cent, had helped with recovery from the drought year of 2006-07, and the industry is in a good position.

After the removal of the dairy adjustment levy, the government will collect $20 million per month less from Australian milk consumers. The removal of the levy will take some pressure off soaring milk prices and inflation, which is good news for the people of Dawson and good news for the people of Australia. Australian Bureau of Statistics figures on inflation show that the price consumers paid for milk grew by 12.1 per cent in 2007-08. That was a sharp acceleration after the past few years when milk prices typically rose at an annual rate of three to four per cent. The government expects that the removal of the levy will be passed on to consumers. The government, in passing this bill, will ensure that any complaints or suggestions of anticompetitive conduct in relation to the removal of the levy will be dealt with by the Australian Competition and Consumer Commission. The President of Australian Dairy Farmers, Allan Burgess, agreed with the government’s position that consumers should get the benefit of this measure when he said that he believed retail milk prices should drop 11c a litre when the tax is lifted. Mr Burgess is quoted in the article ‘Milk price to drop as tax goes’ in the Australian Financial Review of Thursday, 25 September 2008. He said:

From an industry point of view, that would be our expectation—that other people along the supply chain do not capture the benefit, but that the benefit flows to the consumer, as we all agreed in 2000 …

In the same article Mr Burgess said that the industry had ‘undergone a major adjustment as a result of deregulation but emerged as strong and internationally competitive’. The government could have kept the levy in place and allowed funds raised from the levy to continue to raise funds, but the government has made a decision that consumers come first. The other side of politics needs to hear that message loud and clear: this government is clear and decisive that consumers do come first. The fund into which levy payments were made stood at a deficit of around $205 million in July 2008. It is expected to be in balance in the first quarter of 2009. Amendments to the act will allow the Commonwealth to stop the appropriation of levy funds into the Dairy Structural Adjustment Fund as soon as possible after the deficit of the fund has been eliminated and there will be no further calls on it. With the passing of this bill the Dairy Structural Adjustment Fund will be closed once it has a zero balance.

In conclusion, the adjustment fund has fulfilled its purpose. It is timely to terminate the 11c-per-litre consumer levy on fresh milk sales which has funded the program. The government is making a responsible decision in passing this bill. I do commend this bill to the House.

I would just remind the other side that we have clearly said that we are putting consumers first, and we are being very practical and pragmatic in everything that we do here. I know that the minister, who is beside me right now, has made it very clear that this is something which he is very happy about—the way that we are moving forward. This fulfils the overall agenda of looking after low-income families in our community and reducing inflation on the grocery bill that comes to the family table.

There is nothing more basic, nothing at all, than milk. I remember a time, when I was at school, when we used to have good old-fashioned milk. I tell you what: these good old-fashioned teeth are the product of that good old-fashioned milk. I personally—and this is a personal view, not a government view; Minister, I hope you forgive me for saying this—think that was good for our kids, good for our generation. It is good for fighting osteoporosis, particularly for ladies aged 50 and above, because one of the key causes of the increase in the incidence of osteoporosis is a lack of milk and cheese. It is a direct result of that. So there are a wide range of benefits of milk. What greater incentive is there for the family to drink milk than to reduce the price of milk per litre by 11c? Personally I would love to see milk reintroduced into schools and I would love to back our Australian dairy-farming industry by helping facilitate that—but that is my own personal view, and I make that clear, Minister! I do not want to go beyond that, so let everybody hear that clearly! But I believe that was a good policy. It is good to look after our children, and that investment in milk for our children in the generations past has resulted in lots of long-term health benefits.

The levy on milk was introduced by the previous government, and you have to give credit where credit is due: in 2000 the dairy levy was a necessary thing, and we on this side of the House recognise that. We recognise that. We are pragmatic and we say, ‘Okay; where there is a need, meet the need.’ But now that the dairy industry is coming back into its own and its needs and the aims of the levy have been met, we can now say, ‘Okay, it is in good shape and we can now save the Australian consumer 11c a litre on milk.’ I think that is very important to remember—that we need to pass that on. I am so encouraged by Mr Burgess when he says that there is an agreement, and I hope that people do keep their word and they do pass it on in good faith. That deal was made under a previous government, and we want to see that honoured under this government as well. I have not overstepped the mark there, have I, Minister!

In winding up, I would say that I have put forward the government’s logic and the pragmatism of this government—its ability to acknowledge when it is necessary for certain things to be done or bills to be passed. But, when the need for those bills has passed, it is time to move on, and what better way than to deliver an 11c-a-litre saving to every individual and every family in this nation. They can move on and drink lots more good old-fashioned milk. I commend the bill to the House.