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Thursday, 11 October 2012
Page: 12072


Mr RAMSEY (Grey) (12:56): It gives me pleasure to rise to speak to the Wheat Export Marketing Amendment Bill 2012 and the consequent amendment. To cut to the chase, the amendment is to defer the winding up of the WEA, the Wheat Export Authority, until some other measures are taken within the reform and deregulation of the Australian wheat export industry.

I must say that farmers generally—not all of them, but generally—have welcomed the deregulation of the wheat industry, and younger farmers in particular are participating very strongly in what is now a fully deregulated market. There are around 40 exporters out of Australia now, and those who would suggest that there are still some constraints on the operations of those companies or their ability to set up business in the first place are not being strictly truthful.

This debate is not so much about wheat at all; it has now moved on and is about the grain handling chain and the path to export for all grains—not just wheat. In fact, we have reached a situation where what were government-protected and grower owned monopolies in the handling and port system of Australia have largely moved into other hands and are presenting impediments in the marketplace for other buyers and sellers. The coalition are urging the government to show a little bit of caution and hold back on winding up the WEA until we fix up some of these problems that are still within the industry.

The WEA was established primarily to approve new companies into the export market, and it has done so quite well indeed. In fact, I agree that it is doing very little at the moment; it is collecting a levy of 22c a tonne from growers. It is right to ask the question: why not shut it down? What is it doing? The problem is these issues of unfinished business. I am still involved in the wheat industry—I own a farm—and at the moment wheat is worth somewhere between $200 and $300 a tonne on average, and yet it is costing growers up to $90 a tonne to get it onto a ship and into that export market. So growers are intensely interested in the cost in the path to market for their products.

It is interesting to note—and we are fully aware of this—that there is a somewhat different opinion in Western Australia to the rest of Australia. It is worth, in the House's interest, pursuing why that is the case. At around the time that the single desk in Australia was wound up, the community-owned assets built up by farmers under government regulations and government protection for many years were passed progressively to corporatised bodies, and for most of Australia from there into privately owned institutions. In Western Australia the primary bulk handling company is still owned by the growers. In the rest of Australia those companies are owned by independent companies, and that is why we have a different opinion in the West from the rest of Australia on this issue—bearing in mind that I believe that sometime in the future there will be a push to corporatise CBH Western Australia and in the future the temptation to realise those assets could be as strong in Western Australia as it was for the rest of Australia, so Western Australia too will face the same issues, some of which are apparent at the moment.

One of the biggest bones of contention for those people operating in the export market is that the three regional monopolies control the market information. If as a grower I deliver grain to the local silo system and I have unsold product, I know where the unsold product is and the body that receives the grain knows where it is—in this case, these three regional monopolies. The three regional monopolies also operate marketing arms. In the case of most of Australia those marketing arms know exactly where those pools of grain are and other marketers do not. They have privileged information and this is the biggest issue the industry is grappling with at the moment. For instance, I come from the Eyre Peninsula region of South Australia which is entirely an export market. If I were a grain trader, to get grain off the peninsula I would need to engage a bulk carrier to move a load of about 40,000 tonnes. That bulk carrier needs to dock at the Viterra site which is a regional monopoly in Port Lincoln, and my grain must be delivered at some stage into the system. Whether or not I have sold to a different buyer becomes academic, because at some stage the grain has to enter the system. That means that buyers in the market have to be certain when they book shipping space, sometimes some months in advance, that they can fill the ship. If they have committed to the shipping program and later find they can only accumulate 15,000 tonnes or 10,000 tonnes then they are left with an unfilled order. They do not have the information to know where to go to accumulate extra tonnage, but their competitors do. Those that control the bulk handling system do have that information, so this is a very serious issue for the industry.

It is true that the Wheat Export Authority in their current form cannot fix this. They do not have the authority to fix it, but they are in an ideal position to become the authority that can fix it. When we talk about an unregulated market, which is basically what we have, we can throw our mind to the operations of other markets—the financial services sector, the banking sector, the superannuation sector. Sure, we have free and open competition, but we do not have it without any rules at all. In this case, we—that is, the coalition—are asking for the other companies to have access to that market information so they can accumulate their tonnage, so they can go to farmers and offer them prices on the same basis as their competitors. Talking about the marketing information that the bulk handlers hold, the WEA in their submission to the Senate inquiry into the operational issues in the grain export networks said:

This results in a significant marketing advantage to the associated accredited exporter of the bulk handling company. The committee will note a number of public submissions presented to this enquiry state that the retention of stock and quality information by the bulk handling companies creates market asymmetry, providing them unfair advantage in marketing and trading of grain and reduces effective competition in the market.

Surely all sides of politics agree that we want open and fair and vigorous competition in the marketplace. For the bulk handling companies to make the assertion that it is not in the growers' interest to have this information in the marketplace I find very difficult to comprehend. It does not matter what you are selling—if it is real estate, cars, washing machines or even Tim Tams—you want the world to know that you have some Tim Tams, washing machines, cars or real estate to sell. You do not want to keep it a secret, but at the moment that is the case. That information is held tightly by one company. You can understand why growers are frustrated about this.

We have an opportunity, before the WEA is finally wound up, to give it some new instructions and get this cleared up before we remove the last vestiges of regulation. I believe that the message is getting through somewhat to the bulk handling companies at the moment. I believe there are moves afoot to try and establish a code of conduct. I believe they are recognising that growers have a genuine interest. But if we signal that this parliament has lost interest in achieving this outcome, I think we will take away the pressure to continue on the reform path. If that is the case, we will be dragged back here within a few years to reinstitute something similar to the WEA to do exactly what we should be asking it to do now. In this case, the coalition are saying: hold off for a couple of years and give the industry a chance to sort it out, and we will sit down with the industry and come up with the new guidelines in which it can operate. If the bulk handling companies have moved that far in the interim period that we do not have a problem then we will not have any work to do, will we? But to just wash our hands of it and say that this parliament no longer has any interest in the issue is abandoning our farmers.

Those who say that this is a stalking horse to bring back the single desk could not be more wrong. This is not about the single desk; this is about having properly functioning bulk handling and port authorities around Australia. It has nothing to do with the particular commodity. It is the fact that all of these products have to be funnelled through the one set of infrastructure. There is a similarity in Western Australia that I know the member for Brand will be very familiar with. We had a High Court case within the last two weeks wherein Fortescue Metals had a win to say they will be able to use Rio Tinto's railway lines. They will be able to put their trains on existing infrastructure. This is a very big move, and it has been in the courts for a number of years. There are great similarities here, because in the end farmers pay for all the infrastructure. They do not want to have to go out and invest in a whole heap of new infrastructure to allow new companies to operate in the same space.

There are some other loose ends to be tied up too. There are cases, particularly in South Australia, in the industry that I know the best. There are changes, and the ACCC has made some moves, but we have had a system where all companies have had to book places on the shipping stem for their export program. All companies have been charged a fee of $5 a tonne; but, in the case of the company that actually controls the shipping stem, if they default, they pay the $5 to themselves. It is a nice little deal if you can get it. After all, if you buy a monopoly you expect to be able to operate like a monopoly. There is some movement in that area, because the ACCC said we have to go to a full auction. I am looking forward to seeing how that operates. But it is yet to be proven.

There are concerns among the growers about upmarket access, about delivery fees—because of course if you deliver to a private operator and then it has got to come out of his private storage and go back into the bulk handling authorities, there are extra receiver fees. So all these things are extra impediments that make it harder for the competition to operate.

Not everything is bad. Like I say, I think there is some movement in the industry. But I do not think now is the time to just walk away, for this parliament to wash its hands and say, 'We don't want to have anything more to do with the Wheat Export Authority. Twenty-two cents a tonne—sure. I do not like paying any fees out of my wheat either. Growers are particularly incensed about the number of levies they have to pay. But 22c a tonne is certainly not one of the big ones. And I am getting no feedback from my growers about that particular 22c a tonne.

It is interesting: in this debate, as we have gone through the period of deregulation of the wheat industry, the grower representatives of the wheat growers in South Australia were some of the strongest allies of the Western Australians in the abandonment of the single desk. This was where the strongest voice came from. It made sense because, as has been said in other speeches, South Australia and Western Australia are pretty much totally export markets. But those same grower representatives—many of them friends of mine—are coming to me now and saying, 'No, it's different this time.' I understand the Western Australians have a different point of view because of the reasons that I outlined at the beginning of my speech. They still have grower control of the bulk handling company. But I ask them to have some understanding for the rest of Australia and also to realise that maybe their control of that bulk handling company is not forever and they can face exactly the same issues, for other operators trying to get into the market, as the rest of Australia is facing at the moment.