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Tuesday, 14 October 2008
Page: 9068


Mr SYMON (5:14 PM) —I will probably not be as entertaining as the member for Kennedy, but I am here to talk about the price of milk, and I rise to support the Dairy Adjustment Levy Termination Bill 2008, which will amend the Dairy Produce Act 1986 to finalise the Dairy Structural Adjustment Program. This program has largely achieved its original purpose and it is the priority now to reduce the impost of this levy on the milk-buying public across Australia and certainly in my own electorate of Deakin.

This bill minimises levy collections over what is actually needed for the program, and ultimately it will close the Dairy Structural Adjustment Fund, which holds the revenue generated by the levy. The removal of the dairy adjustment levy will mean that the government will collect $20 million per month less from Australian milk consumers. This should hopefully occur in the first quarter of 2009, once the Dairy Structural Adjustment Fund becomes solvent—that is, there is still money going into it. At the moment the levy is collected on the retail sale of cow’s milk and broadly covers whole milk, modified milk, ultra heat treated milk—UHT—and flavoured milk, such as Big Ms and the like.

The proposed amendments in this bill will also reduce unnecessary levy collections and further imposts to households by reducing the levy termination notice period from 28 days down to seven days. The levy funded a number of measures to help dairy farmers adjust to the removal of state and Commonwealth government price support measures. The dairy adjustment levy has been imposed on milk consumers at the rate of 11c per litre of drinking milk since its inception in July 2000. Since then, around $240 million a year has been collected through the levy to provide payments to about 13,000 dairy businesses. Whilst the final payment was made to farmers in April 2008, the dairy adjustment levy has continued to pay off the interest on loans that the former government used to fund payments under the adjustment package.

Dairy farmers in Australia have now adapted to deregulation. Some did leave the industry with payments that the previous member spoke about; many are now in much better shape. When it comes to dairy, the state of Victoria is one of the larger agricultural employers. In fact, about 23,000 people work on or own dairy businesses and 60 per cent of them are in the state of Victoria. Currently 65 per cent of Australia’s milk production comes from the state of Victoria. Victoria’s production of milk increased by eight per cent over the last financial year.

And as we all know, increased demand and drought have forced milk prices up in recent years—a pricing phenomenon that we have seen across many items at the supermarket, such as fruit and vegetables and all sorts of other dry goods. And, as the member for Kennedy said, not all of that goes back to those at the farm gate. That is certainly an issue. He is quite passionate in pursuing that and puts it well.

As reported in the Australian Financial Review on 25 September this year, ABS statistics show that the price consumers pay for milk rose by 12.1 per cent in 2007-08. I am quite certain that that did not all flow back to the farm gate. The removal of the dairy adjustment levy will help offset some of this recent large increase in the cost of milk to the consumer. That is real money going back into the economy to be spent on other essentials for everyone’s day-to-day lives. It is very important to note that the government has requested the Australian Competition and Consumer Commission to monitor milk prices as the levy is finalised to ensure that consumers receive the financial benefit from removing the levy.

The price of milk is such a basic component of just about every household’s budget. It is not optional; it is a day-to-day need, especially for those households with children, where eight to 10 litres a week is quite a normal rate of consumption of milk. If fully passed on, the reduction in price of 11 cents per litre of milk should provide another dollar a week that can be spent on other basic necessities. To some people, a dollar a week may not sound like a lot of money, that is true, but to many others, whose entire income is spent on the basic costs of living, it is welcomed. If you were to save that, it would amount to $50 over a year. Again, that is not much to some, but is a help to the many people who are financially stretched between pay days or pension days. Of course, community groups and organisations that help those less well off will also benefit with this reduction in the price of a basic staple good.

In my electorate of Deakin in Victoria, the price of milk varies by large amounts, depending on the place of purchase and the brand and volume of milk. For instance, I regularly go grocery shopping. It is one of my little Saturday morning things I do when I can get out and about and I have a little free time. It is a task I enjoy because it allows me to keep an eye on what the real cost of living is in the area where I live; I think there is nothing better than pushing a shopping trolley around to find that out. At my local supermarket I can purchase a three-litre bottle of Home Brand milk for $3.19 or a two-litre bottle of Home Brand milk for $2.49. But, if I go to a convenience shop nearby, that same two litres of milk in branded form can cost $3.80 or more, although the product inside, I am sure, is exactly the same. The same supermarket I go to also sells one-litre cartons of Home Brand UHT milk for $1.09. A reduction of 11c a litre for a three-litre bottle of Home Brand  milk, if passed on to the retail consumer, in this case would take the price down to $2.86. In the case of a two-litre bottle of branded milk from the convenience store, it would be reduced to $3.58. And, in the case of the one-litre carton of Home Brand UHT milk, the cost would be down to 98c.

The important thing is that, wherever you currently purchase your milk from, it should be cheaper when this bill comes into effect next year. No matter what your income, that means a decrease in the weekly shopping bill, which means an increase in the rest of the household budget. I commend the bill to the House.