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Tuesday, 14 October 2008
Page: 9085


Ms MARINO (6:24 PM) —For those of you who do not know, I am one of those dairy farmers and I was directly involved at all levels during the deregulation of the dairy industry in the south-west of Western Australia. I rise to speak on the Dairy Adjustment Levy Termination Bill 2008. The Australian dairy industry was deregulated on 1 July 2000. There was no doubt that there would be significant impacts on farmers and local dairy communities, as well as significant social and health costs.

The Dairy Industry Adjustment Program was designed to be cost neutral to the Commonwealth as well as to provide an orderly transition during deregulation and the subsequent restructure of the dairy industry in response to huge change. The then federal government made available an industry adjustment package worth $1.94 billion for rural adjustment, funded through a Commonwealth levy of 11c per litre on retail sales of drinking milk, called the Australian dairy adjustment levy. It was actually assumed that the consumer was likely to benefit most from the lower cost of fresh milk and greater choice.

The Australian dairy industry is now worth nearly $2.5 billion in exports alone. But tonight I want to focus on the impact on and costs to regional communities. In my area, immediately after deregulation occurred, the dairy farming community lost a third, 30 per cent or so, of their income—and that was overnight. Upon deregulation and in the subsequent years, numbers of farmers were forced by circumstance to exit the industry, and they and their families often had to leave their rural community. This put significant pressure on local small businesses, schools, community service organisations and sporting clubs.

In Western Australia, we have lost over half our dairy farmers, and many of those were young current and future farmers. As those in the dairy industry know, potentially one of the best places to develop your farming skills is on the family farm, more or less at your father’s boot, with your very experienced parents. Of course, young, innovative farmers bring an additional positive dimension to family farming businesses and are one of its greatest strengths. The loss of this intellectual property and experience to the dairy industry is very difficult to quantify. When the family farms were sold we often lost the families, sometimes two generations, from the small local community. We lost their combined spending in that community as well. In the initial stages of deregulation, in a small town called Brunswick in my electorate, I had one store say to me they lost $10,000 in the first week. We had business closures in that same small town, and I would have liked to have seen Brunswick developed as a case study for the effects of deregulation.

We lost two wonderful local families in Brunswick, people who, in spite of the additional cost, chose to support their local supermarket, their local supplier of dairy goods and dairy service equipment and their local school. One family had no option but to leave the district. That was a significant financial and social cost to the community of Brunswick, one that is very difficult to quantify to the likes of the Productivity Commission and the ACCC. The father of that same family was the man who used to take the young children at the local school to basketball, and he was their coach. He used to take them to hockey. He was always ready to be the taxi for that local community school. We also lost another family that, in the same way, contributed to all the small local businesses. These are the types of costs that were overlooked in this process. We lost really good community families, and that has had an enormous impact.

My own shire of Harvey lost millions overnight: with dairy one of the highest value-adding industries, the flow-on impact of those dairy dollar losses was severe. One of our local sporting clubs lost $30,000 a year in fundraising capacity due to the losses in the dairy industry. We saw a similar effect on service clubs, and they also lost their volunteers. In one very small community in the south, they were very concerned that they would not be able to run their fire service or their emergency ambulance service because these services were provided by farmers and also their labour and equipment were used to raise funds to keep these particular services operating.

Farmers themselves faced massive change. We did and still have depression, and we did have suicide. A lot of farmers whom I dealt with on a daily basis developed a bunker mentality. They had lost control of what was happening around them and they basically pulled up the drawbridge, looked at what they could control and stayed behind their farm gate. They felt huge loss. They lost control and they lost opportunity, and this came at a great cost. There was less money for their families, and their capacity to make good decisions was compromised in that early period. I was part of several groups that involved women, and I noticed the increased pressure on the women in those family businesses. The majority of those businesses are family owned and run. We found that the majority of the accounts within those businesses were managed by the women. They had to cope with having less money for the family and less money for the business, and they had to manage the family relationship breakdown that went with the pressures that accompanied dairy deregulation. They had the additional pressures of their sons leaving the farm, and often these same women were the ones who went out and took on work outside the farm to subsidise the farm during that process of change.

I spoke to local doctors over an extended period of time. Over two years there was a significant increase of stress related illness that went back to the trauma that people were feeling. I spoke to the local police as well. There was an increase in domestic violence. There were declines in employment in all dairy regions. Direct employment wages fell from $60,000 at farm and manufacturing level in 1999 to $37,450 in 2005—a 38 per cent reduction. There were 21,550 at a dairy farmer level and 15,900 at a dairy-processing level. I had people trying to support them through grief processes. Until about three years ago, one woman, if she came across me in a supermarket or a shopping centre, would put her arms around me and cry for the loss that they felt in having to sell their small family farm. I was involved in a number of groups, including the Women in Dairy, a national group, and the Milk Industry Liaison Committee, which, amongst a range of other things and involvement at all levels of the dairy industry, offered a huge amount of support and pastoral care for both our members and all of those families—women and men—who were going through such trauma.

In WA we have only 200 dairy farmers left. We have lost nearly half of our farmers and we now have milk shortages, particularly over summer. In spite of the issues faced by this industry, I am particularly proud of all of those in Western Australia who have come through this. In fact, I am proud of all Australian dairy farmers. I am proud of those who have aggressively pursued innovation and those who will continue to do so. But we have lost more since, particularly in the south-west—those who took on major expansions and huge debts and those who were told to get big or get out overnight. Dairy farmers in Australia are some of the most efficient farmers in the world. We are the second lowest cost producers in the world and we produce some of the best quality milk and innovative products. We compete internationally with highly subsidised markets.

I was interested in hearing earlier one of the members say that consumers come first. Essentially, that may be right, but I would say that consumers have to eat. Milk is a staple food. The dairy industry and dairy products are critical to Australia’s food security. I believe very, very strongly that Australians should have access to quality, fresh, locally produced food. The challenge for the government is to ensure that the industry has access to its essential needs. We know about the water needs, we know about the land and the industry necessary for ongoing commercial returns and we know about the challenges of ETS and sustainable practices. Farmers have been faced with huge increases in input costs—of fertiliser and feed. They have seen a tax on their water. There are drought issues, and diesel and maintenance costs. We need to ensure access to capacity building and health policies to meet those specific rural and regional needs.

The economic support of the dairy adjustment package has been a very important management tool for Australian dairy farmers. I am particularly keen, however, to ensure that the 11c a litre does actually come off the price of milk at the supermarket level and stays off. I believe that dairy deregulation simply increased corporate market power and profitability. We even see the majority of dairy processing now, in Australia, in foreign ownership.

I would like to acknowledge in this place farmers in Western Australia, including Matt and Sue Daubney and their innovative efforts with their Bannister Downs dairy, the Sorgiovanni family with Harvey Fresh, and those involved in the Challenge Dairy Co-operative. The dairy industry provides the economic and social backbone of many regional communities in Australia; that is often overlooked and undervalued. It is a major agricultural exporter. I acknowledge the hard work and the commitment of dairy farmers to their families, their businesses, their industry and their communities, and I thank all those who have committed endless hours and resources to helping their fellow farmers through the deregulation process.