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Tuesday, 14 October 2008
Page: 9069


Mr BALDWIN (5:21 PM) —It gives me a great deal of pleasure to speak on the Dairy Adjustment Levy Termination Bill 2008. The timely termination of this levy is good news for all Australian consumers. It is also good news that the government is following the successful protocol that was established under the Howard government. The Dairy Industry Adjustment Act 2000, which was introduced in 2000 to ‘smooth the move into a deregulated industry’, has been successful during its eight-year reign. It was widely accepted by key stakeholders, including industry representatives, dairy farmers and Australian consumers. The coalition supports the Dairy Adjustment Levy Termination Bill, as the levy has effectively run the course that the coalition had set out for it in 2000.The act has been triumphant in its aim to be cost neutral to the Commonwealth and to smooth the way for deregulation of the dairy industry.

I was then and still am today against the deregulation of the dairy industry. Deregulation was brought about by the state governments, driven by the Victorians. But, given the decision had been made by the states, the Commonwealth had absolutely no alternative but to provide economic support. At the time of deregulation, I was not in this parliament—I came in in 1996, lost in 1998 and came back in 2001. However, on 28 September 1999, the then Minister for Agriculture, Fisheries and Forestry, the Hon. Warren Truss, announced the government’s decision to provide a $1.8 billion structural adjustment package. He said:

… the package would assist restructure of the industry by helping farmers improve their efficiency and competitiveness after deregulation.

I say he was correct in his assumption. The overwhelming success of the legislative package is a testament to the superior management capabilities of the coalition and their ability to plan successfully for the future.

As I said, I support the government’s move to now terminate the levy as soon as practicable. Additionally, I welcome the move to reduce the levy termination notice period from 28 days to seven days, as this will bring about consumer savings earlier and will work to avoid overcollection by the Commonwealth. It is paramount that unnecessary household costs do not burden Australian consumers. The move to terminate the levy should signal an 11c-per-litre reduction in milk prices to consumers. Inflation figures from the Bureau of Statistics show the price of milk rose by 12.1 per cent in 2007-08; the move to terminate the levy will help to counteract that increased cost to consumers.

These savings will be a welcome relief to Australian consumers, who are in the midst of increasing household bills, interest rates, and general grocery and petrol prices due to the Rudd government’s inability to successfully manage the Australian economy. I am regularly contacted by constituents in the Paterson electorate concerned about the rising costs of living and raising a family. More needs to be done to help ease the pressures associated with these living costs, and this bill is but a small step in the long and arduous road ahead. The Rudd government must show an unwavering commitment to listening to the voices of all Australians and addressing their burgeoning costs.

I must insist that, whilst I do support the cessation of this bill, the government does not act hastily in its termination. The government needs to remain transparent and accountable in its actions and ensure that it is seamless in its movements to minimise any potentially negative side effects of its termination to Australian consumers and dairy farmers alike.

As I stand before you and represent constituents of the Paterson electorate, an area with very strong agricultural ties and home to many dairy farmers, I welcome the news from the NSW Farmers Association chairman, Adrian Drury, that the price dairy farmers receive for their milk will not be affected by the change. The notion that these farmers will not be affected by the termination of the levy is especially poignant during this time of drought. I would like to take the opportunity to remind the Rudd Labor government that the termination of this bill is not an indication for the party to rest on their laurels and waver in their commitment to serving Australian farmers, as they remain the absolute backbone of our country.

Working in an industry that has already faced countless challenges such as drought as well as rising feed, diesel and maintenance costs, dairy farmers nationwide are struggling to stay afloat. One of my constituents, Bluey Watkins, a dairy farmer from the Dungog region in my electorate, says the constant stress and worry of rising costs is almost too heavy a burden to bear and, one by one, smaller, independent dairy farmers are being forced off their land to look for other forms of income. Bluey had hoped that maybe with the removal of the levy, rather than the entire saving being passed onto the consumer, the proposed 11c reduction in price could have been split fifty-fifty between consumers and the dairy farmers themselves—anything to ease the burden on this struggling industry. He adds: ‘As long as it doesn’t disappear into the government coffers.’ He has his suspicions that, while the price of milk may initially drop in the response to public pressure, it will not take long for the price of milk to rocket back once all has settled regarding the removal of the levy. But, then again, we have not heard of the ‘milk watch’ program that would be implemented by the Rudd government!

Bluey—who runs a herd of about 450 head of milkers—has advised me that, while the farm gate price he receives for milk has increased from around 30c per litre to 48c per litre over the last five years, the industry faces constant pressures from skyrocketing production costs such as: grain having increased from around $150 per tonne to $450 per tonne—it has tripled in price; diesel fuel having increased from around 90c per litre to more than $1.80—it has doubled in price; and fertilizer having increased from $450 per tonne to $1200 per tonne—it has almost tripled in price.

We are talking about families that have farmed their land for generations being forced to abandon their heritage and livelihood as they are priced out by the supermarket giants. We hear all too often in the media about the tragic statistics regarding high rates of bankruptcy, depression and even suicide amongst our struggling farmers. As a nation we need to acknowledge the enormity of this issue and the dire consequences it is having for countless Australian families.

Again, in my own electorate of Paterson, Mr Bob Koppman, a former dairy farmer, was forced off the land and out of the industry simply because of the fact that the cost of production far outweighed the sale of the product. When I spoke to Bob recently, he advised me that there was so little regulation of costs within the industry that the independent producers barely had any chance to maintain a viable and profitable operation. Being forced to sell their properties and move away from industries that have often been family businesses and operations for generations is a tragic result for so many hardworking Australians.

During my time as the member for Paterson, over a period of 12 years on and off, I have seen the dramatic reduction in the number of primary producers in my electorate, all falling victim to rising costs and a flailing industry. The Dungog, Gloucester and Nabiac region was one of those regions dramatically affected by dairy deregulation. What the dairy farmers of the Paterson electorate cannot understand is the total monopoly of the large supermarket chains on all Australian agricultural products, and in particular fresh milk.

How is it that you can walk into a supermarket and get an enormous price variation on a two-litre bottle of milk—for example, $3.95 for the Pura brand compared to $2.39 for the Woolworths Home Brand? Yet at present the farmers are only getting around 50c per litre for their milk—almost what it costs them to produce it. These margins are not sustainable for any commercial operation. I would like to give you some further examples, similar to those I quoted when I spoke on other dairy bills years ago in this House. Why is it that at Woolworths a one-litre bottle of Coke costs $1.96, a one-litre bottle of water costs $1.99 and milk costs $1.25? A two-litre bottle of Coke costs $1.99, a two-litre bottle of milk costs $3.95 or $2.95—it depends whether you take the Pura or the Home Brand—and a bottle of water costs $2.93. It takes far more to put milk into a bottle and supply it to the consumer than either Coke or water.

It is the supermarkets who are reaping the rewards, and they are doing it on the backs of our hardworking farmers around this country. The supermarkets have an obligation to their shareholders, I acknowledge that, but they also have an obligation to their suppliers, the dairy farmers. Without the dairy farmers in Australia, where are the supermarkets going to get fresh milk? These farmers have worked for many years on the land and provided quality products for our supermarkets. The supermarkets, in turn, have made large profits from the agricultural sector. These people, our Australian farmers, do not want welfare. They do not want handouts. What they want is a fair day’s pay for a fair day’s work. If supermarkets continue to ignore this and continue to look after just the shareholders, instead of suppliers like my farmers, then a large proportion of dairy farmers are going to be wiped out and it will not be long before we are all drinking imported UHT milk.

As I said, two litres of generic milk retails for $2.39 and two litres of branded milk retails for $3.95, yet the dairy farmers get a very small piece of the pie—less than 20 per cent of the end price—for doing the largest part of the work. The supermarket tendering process is unfair and the amount of power the supermarkets have makes them a considerable force in this country. That power has been to the detriment of our farmers, and our dairy farmers are hurting like never before.

Ultimately, consumers need to feel secure that the removal of the dairy adjustment levy will not hurt their hip pockets and the weekly grocery bill. The government needs to ensure that the removal of this levy reduces the price of milk at the cash register for all Australians and that the full 11c reduction per litre is passed on to consumers. The now infamous Labor government’s attempt to monitor the prices in the fuel industry has been widely acknowledged to be more likely to increase prices for consumers at the pump. Ensuring the removal of cheap Tuesdays is effectively hurting working Australians even more. Fuelwatch became farcical as it became clear to the Australian public that watching fuel prices did not bring them down, especially in the towns that I am talking about where you only have one petrol station. There is not much point logging onto a computer to see what the price is when there is only one place in town.

I hope that the Rudd Labor government will be able to ensure a more effective means of regulating milk retailers and protecting the hard-earned budgets of everyday Australians. On behalf of the constituents of Paterson electorate, I demand that the Rudd Labor government ensures that the Australian Competition and Consumer Commission regulates this reduction in milk prices for consumers and guarantees these savings for all. We do not want to see a ‘milk watch’. We do not want to see prices go sour. We want to see the consumer benefit, not the middleman and the supermarkets.