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Thursday, 5 December 2013
Page: 1045

Senator McKENZIE (VictoriaNationals Whip in the Senate) (18:07): Earlier this year Goulburn Valley food processor SPC Ardmona slashed its grower contracts, essentially halving them. There are over 160 growers within the Goulburn Valley in the central heartland of Victoria supplying SPCA, one of our iconic food processors, and over 870 people work within the food processor itself. The government documents I am referring to, reports nos 63 and 64, are those which were the accelerated reports into a safeguard inquiry conducted by the Productivity Commission into imported processed fruit products, specifically peaches and pears, and an inquiry into the import of processed tomato products, and we have gone on to have a successful antidumping action with respect to the processed tomatoes.

Today I briefly want to comment on some of the report and outline for the Senate why this is an important matter. Over the last few years there has been a severe deterioration in the financial performance of Australia's fruit processing industries coinciding with stringent competition from low-cost overseas producers. Since 2008, the overall value of processed fruit imports has risen from approximately $73.3 million to around $113.4 million, an increase of around 54 per cent. The processed increases has mainly occurred in pears. Like many other Australian manufacturers, SPC is facing significant challenges, including a high dollar, cheap imports and increasing energy costs. As a result, SPC chose to pursue under WTO rules a safeguard action. Within Australia that inquiry is conducted by the Productivity Commission. The report found that SPC Ardmona 's application for emergency assistance was not warranted. This is despite finding that there were critical circumstances. They highlighted within the report that the supermarket retailers' pricing and fruit sourcing strategies and private-label strategies had impacted on the success of SPCA, and similarly that technology aspects within the company itself were an issue. But they did not find that that critical emergency allowed them to apply the safeguards here. I am looking forward to the final report on 17 December, which will find in favour of SPCA's application and provide some much-needed legal assistance within the international trading framework for this business.

Since the Agreement on Safeguards was established in 1994, only one Australian application for assistance has been considered, before being rejected. Some might remember the pork inquiry some time ago. Our international competitors meanwhile continue to enact emergency safeguard measures. Between October 2011 and April 2012, 26 safeguard actions were taken by WTO members, including our international export competitors Brazil, Israel, Turkey and Indonesia. The commission's interim report admits to applying 'a high standard of evidence' to determine the case for provisional safeguard measures, referring to concerns with 'the poor quality of some countries' and the need to avoid being 'vulnerable to challenge by other nations'. This is highlighting that Australia is a member of the friends of safeguards group within the WTO, and I find that it is an issue that we are applying a higher level of standards than would normally be applied in these measures internationally.

It is important for Australia to continue our strong tradition of trade liberalisation, without using it as an excuse to not support local industry. While the commission recognised that 'serious injury' had occurred, they cited SPC Ardmona's business plans and contract arrangements as evidence that emergency assistance for the industry was not warranted, despite Goulburn Valley growers having to pull up over 750,000 surplus peach and pear trees. With a commercial lifespan of up to 100 years, the removal of these trees is having an immediate impact on industry that will be difficult to repair.

A lot has changed since Australia signed up to the GATT agreement in 1948, and I might agree with previous Director-General Pascal Lamy when he suggested revisiting the existing rules on preferential trade arrangements. Given the increasing global connectedness of international trade, it is difficult to prove that the importation of goods is the single cause of serious injury, which is one of the issues we are dealing with here. I seek leave to continue my remarks on both documents.

Leave granted; debate adjourned.