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Monday, 1 December 1986
Page: 3076

Senator WALSH (Minister for Finance) —(5.24)-I move:

That the Bill be now read a second time.

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

Leave granted.

The speech read as follows-

The purpose of this Bill is to provide legislation to enable plant breeders to apply for and to receive proprietary rights for new varieties of plants which they develop.

The Government's objective in introducing legislation for a Plant Variety Rights scheme is to stimulate plant breeding effort in Australia and to encourage the development of new varieties of plants for our domestic industries and for export. An important added benefit for Australian farmers and horticulturalists is expected to be an improvement in their access to new varieties from overseas. Through the proposed scheme Australian plant breeders are expected to improve their access to overseas markets for seed and nursery plants. These factors are expected to provide a significant boost to Australian agricultural industries and allow our farmers and nurserymen to compete more effectively on world markets. We can also expect an overall genetic improvement in our plant industries.

The proposed plant variety rights scheme would be similar in many respects to existing intellectual property rights granted under the copyright and industrial patents legislation but incorporating particular provisions for protection of food supply to consumers and the use of plant material in further breeding and research programs. The proprietary rights conferred under the proposal would provide plant breeders, both public and private, with a means to recoup some of the high research and development costs involved in breeding new plant varieties.

Plant breeding is expensive. It also takes a good deal of sustained effort by skilled and dedicated persons over many years. Because the results are uncertain it is also a high risk activity. However, if we are to maintain our high levels of productivity and competitiveness especially in international markets, if we are to develop new plant based industries and if we are to address new diseases of plants as they appear, Australia will need an active and sustained plant breeding program.

This Government has moved on several fronts to improve the resources available for research and development including plant breeding, and to improve their management. We consider technological innovation to be an essential element in maintaining and improving international competitiveness in the rural industries. Within the primary industry portfolio, the commitment to rural research through the Rural Industry Research Fund Scheme has been increased from $35 million in 1982 to $78.5 million this year. We have set the objective with industry of raising the respective industry and Government contributions to research through the RIRF scheme to 0.5 per cent of industry gross value of product within five years. We are now well on the way to that objective.

The Minister for Primary Industry has also set about improving the management of the research funds by introducing professionally selected councils and strategic research planning principles into their operations. The Minister expects that the reports the Government will receive from the research councils will be more relevant to Parliament and to industry.

Research and development in the private sector has been of particular concern to this Government. It had been let run down to perilously low levels under the previous administration. To redress that neglect my colleague Senator Button has led the Government's response with the introduction of a 150 per cent taxation deduction for private sector bona fide research and development expenditure. These measures are providing an incentive to new private sector investment in, for example, the plant, nursery and biotechnology industries.

In the Government's Economic and Rural Policy statement of 15 April 1986, the Minister for Primary Industry indicated that action on several fronts is necessary for Australia to maintain and to develop its rural industries. He outlined several new measures in that statement and several recent measures in support of technology development which are repeated here. He indicated that the Government had received a report on Plant Breeding in Australia following an inquiry by Professor Lazenby and would make a final decision on the proposal for a scheme of Plant Variety Rights.

PVR is a structural measure which provides the conditions for investment in plant breeding and development and which can be expected to improve the economic viability of our plant industries. PVR is expected to be most important for our nursery and horticultural industries but also to have potential to provide a significant boost for the grains, pasture and seed industries.

Introduction of PVR legislation has been recommended by the Industries Assistance Commission following separate public inquiries into Rural Research in 1976. The Apple and Pear Industries in 1985 and the Vegetable and Vegetable Product Industries in 1986. The 1985 Committee of Enquiry into the Grape and Wine Industries also concluded that PVR would be of considerable value to Australia's grape and wine industries through access to varieties and genetic material which would assist the industry in improving productivity and product quality.

The introduction of Plant Variety Rights in Australia is not however without some controversy. The issue has been the subject of considerable debate in Australia for well over a decade now. We must recognise that some sectors of our community are philosophically opposed to the concept of private ownership of plant material. The debate in Australia has occurred at a time when most other western democracies have introduced legislation for Plant Variety Rights. The Minister for Primary Industry continues to receive many representations both for and against the introduction of PVR legislation for Australia.

Honourable Senators will recall that the Minister for Primary Industry in the previous government introduced legislation into the House for a Plant Variety Rights Scheme in 1981. His proposal was considered deficient in many respects and public consideration of the concepts proposed was sought. It was left to the Senate to act on that recommendation, and the Plant Variety Rights issue was referred to the Senate Standing Committee on National Resources. That Committee carried out a most detailed review of the Plant Variety Rights issue. It received submissions and heard evidence from a wide spectrum of society and subsequently tabled its report in May 1984. The major recommendation was that the Commonwealth consider the introduction of Plant Variety Rights in Australia. It made 22 other recommendations on improvements required in the 1982 Bill and on operations related to a PVR Scheme.

The Committee suggested that before any Plant Variety Rights legislation is drafted, the Department of Primary Industry closely examine evidence presented to the Committee which was critical of the 1982 Bill. That examination has been undertaken by the Department. This Plant Variety Rights Bill has benefited from the Senate inquiry and encompasses features which address the needs and the concerns about a scheme for Plant Variety Rights in Australia.

The Australian Agricultural Council for several years now has given general support to the introduction of a Plant Variety Rights Scheme. The Minister for Primary Industry raised the issue with State Ministers again at the recent meeting of Council as there have been some differences of attitude to PVR between States in the past. These differences reflect the strongly held view of some State plant breeders, especially breeders of cereal crops, that introduction of PVR would adversely affect the public plant breeding effort. It was in this context that the Government acted on the Senate Committee recommendation to establish an inquiry into plant breeding and options to upgrade the public plant breeding effort in Australia as a pre-requisite to any decision to proceed on Plant Variety Rights.

Professor Alex Lazenby, Vice Chancellor of the University of Tasmania, completed that inquiry on behalf of the Government. In his report to the Minister for Primary Industry, Professor Lazenby has strongly recommended the introduction of an unrestricted scheme for Plant Variety Rights. He closely examined a wider range of suggested alternatives to PVR but concluded that introduction of PVR legislation was the most appropriate way for the Government to stimulate both public and private plant breeding effort. He has made a number of other recommendations on co-ordination of the public plant breeding effort. Its funding arrangements and on marketing the products of publicly funded research which are under consideration in the sub-committee system of Australian Agricultural Council. The Minister for Primary Industry has already distributed the Lazenby Report to the Parliament and he will be discussing Professor Lazenby's recommendations on public plant breeding again with his State counterparts.

Despite these public inquiries and resulting reports there remains a good deal of community uncertainty about PVR and because some of the concerns are so strongly held by some people I want to address them now.

The main issues raised by the many people who have written to the Minister about PVR centre on its possible impact on Australia's third world neighbours, the management of world wide plant genetic resources, the ownership of essential food resources, market structure and consumer interests, and the effect on public plant breeding in Australia. All of these issues are important but we should recognise that they exist independently of the PVR issue. They are raised, however, as key arguments against the introduction of PVR legislation for Australia.

Australia already has active programs to address each of these issues.

For instance under the aid program, the Australian Centre for International Agricultural Research has been established with a $12.5 million per annum program of research assistance for developing countries. Australia also financially supports the agricultural research and plant breeding centres of the Consultative Group for International Agricultural Research (CGIAR) which are specifically working on the problems of developing countries. Under CGIAR, 13 well equipped research institutes have been established in developing countries to assist their development of suitable crop plants, farming systems and infrastructural support. They have been very successful.

It is claimed that Plant Variety Rights schemes in developed countries have led to the disappearance of land race cultivars in third world countries and their replacement by improved varieties requiring high levels of inputs at substantially higher prices. Whilst this is an issue of concern to all Governments I believe the use of new plant varieties has resulted from significant changes in agricultural technology world wide and particularly in developing countries. We cannot expect peasant farmers to improve their well being through use of new technology on the one hand and be the conservators of the world's plant genetic resources on the other.

I am told, for example, that India had 30,000 varieties of rice in common usage at the turn of the century but now uses only 30. No doubt the Indian rice breeders have used the best rice genes available to develop those 30 varieties now used and as a result India is largely self sufficient in rice despite its massive population increase since 1900.

This Government is most concerned about preserving genetic resources. With the co-operation of all States and the Commonwealth through Australian Agricultural Council a network of plant genetic resource (PGR) centres for our major economic species has been established across Australia and, with financial appropriations from the Commonwealth and the States, they are being progressively upgraded. This year $485,000 has been allocated by the Commonwealth for the establishment of a new facility at Biloela in Queensland for tropical field crop genetic resources. Australia also strongly supports the International Board of Plant Genetic Resources program of CGIAR and has joined the FAO Commission on Plant Genetic Resources. Australia has not accepted all the proposals before FAO on the International Undertaking on Plant Genetic Resources as we do not consider it in the best interests of Australia that FAO take control of our PGR collections nor the plant genetic resources of any other country.

To follow on the above example I am advised that India maintains a rice genetic resource centre containing some 34,000 accessions under the IBPGR network. Indian breeders also have access to the collection of some 56,000 varieties at the International Rice Research Institute in the Philippines.

Market operations, monopoly powers and resource ownership are addressed through the Trade Practices Act and the quite significant powers of the Trade Practices Commission. Much concern has been expressed that large multinational chemical companies are dominating the seed industry as a result of PVR schemes overseas. While several large multinational companies do have seed divisions we need to recognise that international linkages have been developed in many industries over the past twenty or so years. We should also recognise the large number of relatively small, often independently owned businesses in the seed trade.

The continued operations of a strong public sponsored plant breeding effort is also important in this context. The Minister for Primary Industry informs me that the public plant breeding effort overseas has benefited overall from PVR. In summary, the overseas experience suggests that in some countries (for example Denmark, the Federal Republic of Germany and the Netherlands) the effort in public breeding of finished varieties has been reduced and there is now greater concentration of public funds on basic breeding research. On the other hand, in other countries, including the USA, South Africa and Switzerland, there has been an increase in public breeding of finished varieties. In New Zealand, where PVR was introduced in 1974, public breeding organisations have welcomed PVR and are using it to obtain rights to newly developed varieties. In fact the introduction of PVR legislation has enabled New Zealand to develop an international plant breeding program and new export opportunities in seed and nursery products.

It is considered essential that Australia maintains a strong public plant breeding effort for our economically important crops to ensure we continue to have varieties well adapted to Australian farming conditions and plant products suited to our principal markets. We must recognise however that we just cannot afford the cost of public breeding programs for our minor crops and that we will continue to be reliant in this area on genetic resources from overseas and the programs of private breeders. This is particularly the case in our horticultural industries.

As I have already indicated, Professor Lazenby has put forward recommendations on improving the public plant breeding effort including improving its commercial perspective. Competition is certainly a key way to sharpen that perspective and many public breeders would welcome competition and more effort overall in plant breeding in Australia. Professor Lazenby has recommended Plant Variety Rights as the best way for the Government to improve the overall Australian plant breeding effort.

The main economic premise underlying the many recommendations for introduction of PVR legislation is that there are too few resources employed in plant breeding research and development. Professor Lazenby has detailed those deficiencies for us. Some can no doubt be addressed by more financial support from Governments. However there are real limits to such action in the current Budget context. We must also question the desirability of just more Government funding given that the current market structure has failed to encourage sufficient private investment into plant breeding except in the production of hybrid plants where private breeders are able to recoup the benefit of their investment. The extension of the principle of property rights to new plant inventions is recommended to us as the most appropriate measure to address the market deficiencies and is the basis of the plant variety rights legislation I have brought before you today.

I turn now to the main features of the Bill and the proposal for a Plant Variety Rights Scheme as the Government intends that it should operate.

The scheme will be voluntary and open to any plant breeder, public, private or home gardener, to apply for and to receive a right. It will also be open to overseas breeders to apply for rights. The Government intends that Australia apply for membership of the International Convention for the Protection of New Varieties of Plants which would allow Australian breeders applying for PVR under legislation in overseas member countries to be treated as if they were nationals of those countries. A reciprocal obligation would apply to Australia.

All species and genera of plants will be potentially eligible for the granting of rights. However no species will be included in the scheme at the outset. The Bill provides for a broad based Advisory Committee to be appointed and responsible for advising the Minister on the admission of species and genera and the technical administration of the Scheme. The committee will consult widely in its deliberations. The definition of a plant under the Bill does not include fungi, algae or bacteria.

To be eligible for grant of a right the variety must be new. The new variety therefore must be clearly distinguishable from any other known variety. It also must remain true to type in future generations. The variety must have been developed by selected breeding of plants, by selection from humanly induced genetic mutation or by selection from natural genetic mutations but only in this latter case where some active intervention has occurred such that a new plant variety has resulted. It is not the Government's intent that the legislation apply to selections from a natural or wild environment or that it apply to varieties already known or available for sale in Australia. It is a scheme for new plant inventions.

The grant of a plant variety right would entitle the breeder to sell or produce the variety for sale, or to license others to do the same for a period of 20 years. The 20 year period is to be timed from the date of acceptance of the first application with respect of that variety. An application can be amended or withdrawn. The Bill also provides for rights to be transfered, for rights to be surrendered and for rights to be revoked for instance if the grantee does not meet conditions of grant or pay annual renewal fees.

As is the established practice with other forms of property rights, it is for the owner of the new variety to protect his or her rights should infringements occur. The Bill provides for action against infringements to be initiated in the Federal Court.

The grantee of a right is free to decide whether or not to licence a variety and whether or not to charge a royalty fee. The grantee would be obliged under the legislation to make the variety available publicly in reasonable quantities and at reasonable prices. In this respect the legislation is to be complementary with the functions of the Trade Practices Act with respect to trade in plant varieties with the exception of its main function, to grant an exclusive proprietary right over a plant variety.

The Bill contains quite extensive provisions designed to protect the interests of consumers, be they users of plants or their products. Farmers and home gardeners using a PVR variety will continue to be able to retain seed or other propagating material for their own use. Similarly reproductive material may be used for research and breeding purposes without infringing rights. Rights granted under the legislation will not extend to sale or plants with land, or reproductive material of plants as food, fibre or fuel. This will mean, for example, that a right granted over a variety of wheat will not extend to the use of that variety for bread making.

Provision is made for compulsory licencing of plant varieties by the Secretary of the Department administering the scheme should the reasonable requirements of the public with respect to the plant variety not be satisfied by the grantee.

The Bill also provides for a sample of the reproductive material of the variety over which a right has been given to be lodged at a designated plant genetic resource centre. It is the intent that this sample be available to the Register for reference purposes and to the Secretary for compulsory licencing purposes under circumstances which might include, for example, that no other material of the variety is available.

Appeals against decisions of the registration authority could be made to the Administrative Appeals Tribunal.

The Government proposes that the Scheme be administered by a technically qualified Registrar to be appointed within the administering Department and with responsibilities and duties for receipt and evaluation of applications, and entry to the register. The duties of the Registrar are set out in the legislation. The scheme is expected to require only a very small executive secretariat for its technical and administrative functions. The Registrar can be expected to draw on the extensive taxonomic expertise already available in Commonwealth, State and local herbaria and on overseas reference material.

The scheme is expected to cost approximately $700 000 in the first three years of operation. This includes the cost of employing two additional staff members (one technically qualified Registrar and one Clerical Officer), computing, production of a PVR Journal, membership of UPCV, plus equipment and operational costs. There are significant costs in establishing data bases of known varieties and their characteristics for each new species or general added to the scheme which can only be capitalized and amortised over several years.

Offsetting these costs, revenue received from applications and granting of rights, together with annual renewals over the initial three years is estimated at $150 000. It is anticipated that full cost recovery will be possible as the number of genera or species under the scheme increases, as the level of participation increases and the costs associated with its establishment decrease. The estimates have been based on experience with establishment of PVR schemes overseas and in New Zealand in particular.

It is proposed to review the effectiveness and impact of the Scheme after 5 years as recommended by the Senate Committee. This review should also establish future self sufficiency or the requirement for further Commonwealth support.

In conclusion Mr President, we have considered this issue from both sides of the House for several years. Many expert groups and individuals have debated the topic in forums such as the Senate Standing Committee on National Resources, the Industries Assistance Commission and Professor Lazenby's inquiry, all of which recommend in favour of Plant Variety Rights. The Department of Primary Industry has investigated the workings of Plant Variety Rights in other countries, and officers have closely examined all the evidence presented to the inquiries on this issue to develop a scheme which specifically meets Australian requirements. In the light of such evidence it is the Government's conclusion that the advantages of Plant Variety Rights for Australia outweigh the perceived disadvantages argued by the opponents to PVR and that we should proceed without further delay to introduce legislation for a Plant Variety Rights scheme for Australia. I commend the Bill to the Senate.

Debate (on motion by Senator Kilgariff) adjourned.