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Tuesday, 14 October 2008
Page: 9072

Mr TREVOR (5:33 PM) —I thank the previous member, Bob Baldwin, for his contribution. I also take this opportunity to salute him for his haircut. I salute him also because of why he did it—that is, to raise money for prostate and breast cancer research. Congratulations, Bob. In 2006 I walked 584 kilometres over 15 days, from Mackay to Gladstone, among other things to raise money for prostate cancer research. I commend Bob for his efforts.

I rise today in support of the government’s Dairy Adjustment Levy Termination Bill 2008. It is with a great deal of personal interest and affection that I comment on this bill and the Australian dairy industry today. My personal interest—as well as my professional one, being a member of parliament—comes from the fact that my late father, Allan Trevor, grew up on his father’s dairy farm. It is this experience of being raised on a dairy farm that helped shape my late father into the man that he was, and I would like to consider that it was this experience that helped him pass on to me the many virtues that he needed in order to operate and to survive on that family dairy farm. These virtues were of course strength, resilience and a healthy respect for hard work.

In order to expand on this bill today, I feel it is necessary to comment on the original dairy industry adjustment package, which this new bill aims to terminate. Over the past eight years we have seen significant change in the Australian dairy industry. We have seen deregulation and competitive forces enter the industry and, along the way, we have seen individuals, families and whole communities change completely. I feel that we have all been a part of this process in some way even if it has been merely as the humble consumer, now spoilt for choice in the supermarket aisle, with some of us blissfully unaware of any of the changes taking place behind the farm gate.

In the late 1990s, the issue of deregulation of the dairy industry seemed a hot topic. It seemed the subject of many debates over several years, with a Senate Rural and Regional Affairs and Transport References Committee report into the subject tabled in 1999. The committee’s examination of and report into the deregulation of the Australian dairy industry concluded, back in 1999, that deregulation was inevitable and that, if not handled by the government, market forces would guide the deregulation process. We could see a commercially driven crash of the industry. The then government decided that, rather than see this crash and rather than see invisible market forces control this process, it was preferable to see government intervention to ensure what the committee report called a ‘soft landing’ for the dairy industry.

With the inevitability of dairy industry deregulation on its hands, the previous government designed and implemented the dairy industry adjustment package, the frontier of this planned ‘soft landing’ for the industry. The dairy industry adjustment package was announced on 28 September 1999 and included a $1.8 billion adjustment package for the industry, made up of four parts. Firstly, we had the Dairy Structural Adjustment Program, which was to manage the allocation of $1.63 billion in payments for the affected dairy producers. Secondly, we had the Supplementary Dairy Assistance program, which allocated an additional $139 million in further assistance. Thirdly, we had the Dairy Exit Program, which orchestrated a completely optional, tax-free payment of up to $45,000 for eligible dairy producers to leave the dairy industry. And, lastly, we had the Dairy Regional Assistance Program, aimed at providing $65 million to assist communities heavily reliant on the dairy industry to adjust to deregulation.

The year 2000 saw the enactment of the Dairy Industry Adjustment Act, as well as the introduction of the four programs that I have just mentioned. We also saw the introduction of the dairy adjustment levy. The dairy adjustment levy was an 11c per litre tax that was imposed on liquid milk sales as part of these sweeping deregulatory reforms and it aimed to fund the series of assistance packages that were to be offered to dairy producers. The levy and the deregulation process aimed to be completed within an eight-year period.

It is now eight years on from the very first days of the Dairy Industry Adjustment Act, and we are here today to discuss the Dairy Adjustment Levy Termination Bill, a bill that will conclude eight years of industry reform for the dairy industry. In order to achieve this conclusion, the Dairy Adjustment Levy Termination Bill amends the existing legislative framework and finalises the dairy industry adjustment package by, firstly, terminating the 11c per litre levy imposed on retail milk consumers under the original dairy adjustment levy.

The Dairy Adjustment Levy Termination Bill will also draw to a close two related mechanisms of the original act—the Dairy Structural Adjustment Fund, used to hold revenue collected from the levy, and the Dairy Adjustment Authority, which for the past eight years has been the statutory authority established to determine eligibility payments to those affected under the deregulation scheme. It is worth noting here that the last and final payments made to eligible farmers from the Dairy Structural Adjustment Fund were paid in April of this year and that since then the Dairy Adjustment Authority has substantially completed its important functions. I am informed that the authority will be in a position to cease operation and management functions by the end of 2008.

With the last payment to farmers already made in April of this year, one could ask the question: why hasn’t the government moved to cease this 11c per litre levy already, rather than continuing to impose that cost on consumers? The answer to that is that the initial costs of the program and the initial payments made to farmers under this scheme were made using funds borrowed by the former government—that is, funds that were borrowed under commercial credit terms—and those funds of course attracted interest. Due to this fact, as of July 2008 the fund had a deficit of approximately $209 million. The continuation of the collection of the levy will have this deficit paid out by the first quarter of 2009.

The fund was always intended to be self-funded by the 11c per litre levy and not to be a drain on the public purse. Once the fund has reduced this debt level completely, the minister will move that the levy be terminated. In doing so, the government has allowed for improvements in the original legislation to minimise any large-scale overcollection of the levy by the government. This will be achieved by the government reducing the levy termination notice period from its current 28 days to only seven days, allowing for 21 fewer days that the levy is collected and imposed on Australian consumers.

The Dairy Adjustment Levy Termination Bill 2008 will also change the methodology by which the Minister for Agriculture, Fisheries and Forestry can forecast the new termination date and the date at which the fund should be completely repaid, as the minister will now be able to take into account accrued revenue—that is, levy fees paid by the consumer but not yet passed on to the adjustment fund. This cycle generally takes around 60 days. By allowing for accrued revenue to be calculated in the debt pay-off figure of the fund, we will see a termination in the levy much sooner, saving the Australian consumer money.

At 11c per litre, the time frame at which the termination of this adjustment levy will come may not seem important to those in the community who think that 11c per litre of milk is not a huge burden to bear. I believe that every cent counts in the household budget these days and that it would not be proper for any government to continue collecting a tax whose sole purpose had expired. As I stated yesterday in my comments on the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008, households and families today are under increasing financial pressure. We have already witnessed a 12.1 per cent rise in the price of milk from 2007 to 2008, so this levy reduction will be welcome news to many households across Australia currently doing it tough.

Collectively, throughout Australia, this 11c per litre levy generates approximately $20 million in revenue per month—so, when viewed nationally, we are not talking about small change. By passing the Dairy Adjustment Levy Termination Bill 2008 we will be saving Australian households a further $20 million per month in taxes, and this is especially significant given the recent need to boost demand within our economy and deal with the global economic crisis. I do note that, should the old termination time frames have stayed in place regarding the termination notice period and the method by which accrued revenue is treated, the government could have expected to collect an additional $50 million that would not be needed to pay off the fund’s balance. This is a government—my government—that believes that this $50 million belongs to the Australian people and not to the government.

Of course, the Australian Competition and Consumer Commission will be keeping a very close eye on the retail price of milk to ensure that, once this levy is removed, it is the Australian consumer that will benefit from a price reduction in the cost of milk and not other interested businesses along the supply chain looking to profit without any benefit to households. However, I share this view with members of the dairy industry itself, with Australian Dairy Farmers President, Mr Allan Burgess, also expecting retail milk prices to fall by 11c per litre after the levy is removed. I note with interest Mr Burgess comments on the deregulation process, stating that after undergoing major adjustment the industry has emerged as strong and internationally competitive.

My electorate of Flynn is home to some dairy-rich communities, including the famous township of Monto, which hosts the Monto Festival to celebrate, among other things, its rich dairy farming heritage. I was a proud sponsor of the event this year and look forward to attending the next Monto Festival.

I guess it is fitting that in the original deregulation act back in 1999 the word ‘adjustment’ featured many times, in the naming of the legislation and in its components. The word ‘adjustment’ does imply a sense of being a temporary measure, as we could not live in a world of adjustment, or limbo, forever. It instead has been a cathartic experience for all involved over the past eight years of deregulation, and I would like to take this opportunity to say thank you to everyone that has been involved in the process in any way: from the staff of the Dairy Adjustment Authority to the farmers, their families and the communities themselves. I know that at times this has not been an easy road to travel but you have attacked it with the very best of the Australian spirit. As the industry has changed forever and a new dawn rises on an era of Australian farming, those farmers and their families truly have earned a place in our history as both agricultural and economic pioneers. Given the government’s thoughtful approach and strong leadership on this issue, I commend the Dairy Adjustment Levy Termination Bill 2008 to the House.