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Tuesday, 23 April 1985
Page: 1404


Senator BUTTON (Minister for Industry, Technology and Commerce)(6.31) —I move:

That the Bill now be read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows-

Mr President, this Bill implements the Government's decisions on the restructuring of the Australian Wheat Board (AWB) and amends certain elements of the Wheat Marketing Act 1984 so as to conform with complementary State legislation or to correct minor irregularities.

The Wheat Marketing Act 1984 gave effect to wheat marketing arrangements to apply for the five year period from 1 October 1984. Under that Act, the terms of office of all Board members expire on 1 October 1985. No provision was made for the process by which grower members of the Board of the AWB were to be nominated for appointment after that date.

Since 25 October 1984 the AWB Board has comprised 15 members including two grower members from each mainland State. Following a recent review by the Minister of the Board's operations, the Government has decided on an 11 member Board comprising a full time grower Chairperson, 1 grower member from each mainland State, a Government member and four members with a high level of expertise in at least one of finance, marketing or industrial relations. Also, an alternate grower member is to be appointed from each mainland State.

As under the previous arrangements it will be the Minister's responsibility to select the Chairperson and the Government member. The remaining members will be nominated by a body to be named the Australian Wheat Board Selection Committee comprising an independent Presiding Member selected by the Minister, five members nominated by the Australian Wheatgrowers Federation (AWF), the AWB Chairperson and two nominees of the National Farmers Federation, including the President.

The Government's decision on the AWB restructuring reflects the broader policy objectives which have been set down to apply to all primary industry statutory marketing authorities (SMA's). That is, SMA's should have independence and flexibility, consistent with safeguarding the Minister's responsibility to Parliament, to allow them to respond effectively to the demands imposed by operating in a competitive commercial environment. This involves substantially relinquishing Ministerial controls.

Very significant changes have taken place in the scope and extent of the AWB's major functions during the currency of the five year marketing plan just ended. The Board has had to compete on oversupplied world markets to sell a wheat crop of up to 22 million tonnes compared with the previously prevailing 10 year average of 15 million tonnes. Predatory marketing and credit practices of some competitors have increased the difficulty of the marketing task faced by the Board. That task will become even more difficult should elements of the US Farm Bill become effective.

Whereas in the early years of the recent plan, the Board raised around $1 billion through the Reserve Bank to finance advance payments to growers, the Board now raises in excess of $3 billion annually, solely on domestic and international commercial money markets. The Board has become involved in extensive negotiations with the domestic and international banking community in relation to the raising of the very large sums of money involved, currency risk management on a major scale as well as commodity and interest rate hedging. The outcome of these operations has significant implications for grower returns and Government underwriting commitment.

In order to protect Government and grower interests, the Board needs to comprise the best available members with the experience and the skill to control and direct the Board's operations. It is not sufficient to have these skills only at management level. The Board must be in a position to direct management and this will only be possible in the increasingly complex and changing environment in which it operates, if it has a balance of the appropriate skills.

The legislation currently before Senators provides for the appointment of four specialist members with a high level of expertise in the areas of finance, marketing or industrial relations. As previously, it recognises the necessity of having grower members to safeguard the interests of producers in each mainland State.

The Minister regards the Selection Committee as a vital element in efforts to ensure that the most effective Board is appointed. The Committee will have an independent Presiding Member and the power to engage staff and consultants to assist it in its task. The Minister will determine selection criteria against which the Committee can objectively assess the suitability of prospective appointees and which must be addressed by the Committee before it puts forward its nominations.

The Committee will operate in a similar manner to the Australian Meat and Livestock Industry Selection Committee. Costs, estimated at $100,000 to select a full Board, would be met by the AWB. These additional costs could be expected to amount to less than 1 percent per tonne when spread over an average season's pool. In comparison to the potential costs of errors of judgment in the financing and marketing areas, the amount is inconsequential.

There has been some grower resistance to a reduction in grower representation on the Board from 2 to 1 from each mainland State. The Government has acted to ensure that the legitimate interests of growers in a State are protected by the appointment of alternates for the grower member from each State, allowing for full participation in Board decision making in the absence of the State member.

It was not possible in the Government's view, to reconcile a representational Board with safeguarding the fundamental interests of growers and Government. The Government considers that the structural imbalance which ten grower members would impart would militate against the Board acting in a corporate manner and reduce the effectiveness of decision making.

Claims by growers that they have lost control of the Board cannot be sustained. The Bill provides for a grower majority on the Board which is preserved at all times by the appointment of alternates. Growers also have a majority on the Selection Committee. There is a formal link between the AWB and the AWF through the consultative mechanism provided for in the Wheat Marketing Act 1984 giving growers the opportunity to be fully informed on Board policies. It is open to the AWF as the representative of growers to make representations to the Minister on any matter affecting Board membership and policy.

The formal consultation between the AWB and the AWF to which I have referred strengthens the liaison between the AWB and the representative body of growers, that is, the AWF. To avoid conflicts of interest which could arise, the Government does not intend to appoint a serving President of the AWF to the Board of the AWB.

In summary Mr President, in view of the increasingly complex and diverse marketing and financing responsibilities for the Board, the Government continues to believe that growers and Government can only be confident that the Board is achieving the best results if it includes a significant proportion of members with financial and marketing experience. It also considers that in appointing people to Board positions, full advantage should be taken of commercial practices to ensure that the best available people serve on the Board.

Mr President the Bill amends the current Commonwealth legislation so that it conforms with complementary State legislation with respect to provisions governing the delivery of wheat and the operation of the permit system for stockfeed wheat.

The delivery provisions in the Bill are similar to those contained in the now repealed 1979 legislation to be consistent with State decisions after the passage of the current Commonwealth legislation. This will facilitate the AWB's administration of delivery provisions of the national wheat marketing arrangements. Consistency is also required in relation to the eligibility of applicants for stockfeed wheat permits.

Mr President, I believe that the provisions of the Bill relating to the AWB structure will assist the AWB to effectively meet the challenges it faces in carrying out its functions in respect of the financing and marketing of the Australian wheat crop. The Bill also ensures consistency of approach with the States on matters affecting wheat receival and domestic marketing. I commend the Bill to Honourable Senators.

Debate (on motion by Senator Kilgariff) adjourned.