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Thursday, 19 February 1987
Page: 250


Senator ZAKHAROV(12.36) —This is an issue which has been before the Parliament in some form since a 1976 recommendation by the Industries Assistance Commission. A Bill put forward by the previous Government reached the Senate in 1982 and was referred to the Senate Standing Committee on National Resources at that time. On my election to the Senate in March 1983 I became a member of that Committee. I already had some knowledge of the issue and proceeded to read all the previous evidence as well as studying submissions which came to the Committee during its 1983 hearings. Thus I claim to have a reasonable knowledge of the issues involved, better I suspect than most in this Parliament. The National Resources Committee reported to the Senate in May 1984 and Senator Georges and I dissented from that report. I wish to quote briefly from the beginning of that dissenting report.


Senator Hill —Are you going to vote against the Bill?


Senator ZAKHAROV —I will come to that later. The dissenting report said:

We do not believe that the evidence before us established a need in the sense of providing a benefit for most Australians. There are grave risks attached to any further limitation of access to any factor in the food production cycle. Marketing practices and the growing power of large transnational companies have already led to restrictions of access, particularly in Third World countries, but also in Australia. The introduction of PVR would, in our opinion, further restrict the rights of consumers and growers.

Thus we concluded that the implications of a PVR scheme can be summarised as possible financial benefit to a small group in the community, and probable disadvantages for a very large group of consumers and growers.

For the sake of brevity, I seek leave to have the major part of that dissenting report incorporated in Hansard.

Leave granted.

The report read as follows-

4. We believe that the introduction of PVR may have similar effects on the consumers of ornamentals but, by definition, nobody eats ornamentals and so the risks attached to PVR are not going to affect anyone's health or survival. Although we have some doubts as to whether PVR will stimulate growth and the export market for the ornamentals industry, that industry believes that it will (for example, Australian natives) and since our objections to PVR in the food-production industries do not apply to ornamentals, we have no objection to the introduction of PVR for that group of plants.

5. We note that the report makes no mention of the motivation of those giving evidence. When so much of the argument, on both sides, is backed up by insufficient hard evidence it is very relevant to look at the motivation of opponents and proponents of PVR. The private sector interests could have much to gain financially from the introduction of PVR. They also have the resources to present their case in the best light-staff, travel expenses, paid lobbyists. The opponents of PVR, on the other hand, have nothing personal to gain. As the report states: `These issues [possible impact on public sector breeding, genetic resources, Third World countries, market structures, ownership of food resources] should be of general concern, but this concern was almost invariably expressed by groups opposed to PVR' (paragraph 3.2). We believe this fact to be significant.

6. There are two main arguments which are advanced to demonstrate that PVR is necessary in order for Australia to obtain the following benefits.

A. Stimulation of plant breeding by Australian private breeders, particularly of open-pollinated crops.

B. Increased access to overseas varieties, particularly varieties protected by PVR in Europe, UK and the US.

7. Other arguments put forward were that PVR will:

C. `provide the opportunity for Australian plant breeders to gain access to overseas markets for their newly developed cultivars' (Evidence, p. S150);

D. `provide plant breeders with similar equitable rights already available to inventors and owners of copyright' (Evidence, p. S151); and

E. `bring Australia into line with the world's leading agricultural countries, which are often our main competitors on world markets' (Evidence, p. S151).

8. We propose to deal only with the two main arguments in any detail, since they are the stronger of those advanced in favour of PVR.

A. Stimulation of Plant Breeding

9. In the Committee's report, the claim that PVR will stimulate plant breeding is backed up by reference to European and UK experience, where there is some evidence that private corporations noticeably increased their plant breeding activities after the passing of acts granting PVR (e.g. Plant Varieties and Seeds Act 1964 in UK). The assumption of PVR proponents is that this increase in `private' breeding activity has had universal benefits. `Benefits' for whom? It is clear that the UK and US Acts have allowed large agricultural chemical corporations to make considerable profits out of plant breeding (Evidence, p. S1006). The evidence offered does not establish that there have been proven benefits to the consuming public or the growers. Some evidence suggests that there has actually been a deterioration in the flavour and nutritional properties of food which have been `improved' by breeding under PVR legislation (Shapiro 1983)

10. In the case of the US, which has had PVR since 1970, Dr L. J. Butler of the University of Wisconsin-Madison has been engaged in a very thorough study of the effects of the plant Variety Protection Act. He has found that there is no evidence that PVR `has triggered large investments in plant breeding research and development nor of large improvements in either techniques or in plant quality' (Letter 13 October 1983).

11. The BAE, which is favourably disposed to the introduction of PVR legislation (on the basis of its cost-effectiveness), has this to say about the argument for the presumed benefits of an increase in private plant breeding research: `This argument assumes that increases in the research effort would generate net gains to society. However, this point cannot be easily established by economic analysis' (Evidence, p. s38).

12. Even if it were shown conclusively that PVR has increased private breeding overseas1, Australia's situation is not parallel. There has been a long history here of strong direct government intervention in the economy, which is exemplified by the existence of large numbers of government-financed plant breeding research agencies. Unless the activities of these agencies are severely restricted subsequent to the introduction of PVR, the small size of the Australian market would certainly restrict the opportunities for profit-making from private plant breeding aimed at this market. Given the long, successful history of government plant breeding and improvement in Australia and given the unconvincing nature of the evidence tendered concerning the likelihood of benefits of increased private plant breeding in Australia, it would be an act of the most wilful vandalism to diminish the plant breeding activities of agencies such as CSIRO or State departments of agriculture (See Evidence, pp. S1002-1003).

13. Taking these arguments to their logical conclusion, there is the risk that a Government committed to `small government' and privatization of the economy may remove all potentially profitable research from the government sector.

14. An alternative, equally undesirable outcome is suggested by the Free Access to Seeds Committee which quotes Byron Beeler, Vice-President of Ciba Geigy (Canada):

Personally, I see research divided into the discovery phase, and the exploitation phase. I believe that most of the discovery work in plant breeding such as genetic resistance to disease . . . will continue in public institutions. Conversely, I believe that the exploitation of the research can best be done by private enterprise.

(Evidence, p. S970, our emphasis)

The practical result of such division of labour is to lower the investment needed by companies to develop patentable varieties.

B. Access to Overseas Varieties

15. The second supposed benefit advanced by the supporters of PVR legislation is also not supported by convincing evidence, that is, the claim that with PVR the Australian seed and nursery industries will have vastly increased access to overseas varieties.

16. The DPI document `Restriction of Access to Overseas Varieties' (Appendix 3) lists instances where Australia has been refused access to plant varieties (on the basis of our lack of PVR) which, according to the Department, are held under patents in overseas countries.

17. In all of the instances listed there is a lack of documentation (listing of patent nos., etc.), to support the Department's contention that these varieties have been refused to the Australian industry because of the absence of PVR here. As the Plant Diversity Protection Committee has pointed out, in its further supplementary submission to the Senate Committee, neither the DPI document nor any of the other instances cited of restriction of access to overseas materials give details as to `where, and to whom, and under what legislation, exclusive rights were held' (Attachment to letter, 8 October 1983).

C. Export of Australian Cultivars

18. The other arguments for PVR offered by the Industry Committee for Plant Breeders Rights raise as many questions as they purport to answer. The ICPBR gives, as the rationale for its claim that PVR will give access to overseas markets for cultivars newly-developed in Australia, the potentially `favourable position [of Australia] to produce high quality seed of a wide range of crops suitable for overseas production' (Evidence, p. S150).

19. In the very next paragraph evidence is offered that some Australian seed companies have already successfully exported cauliflower seed to the UK and parts of Europe.

20. We suspect that it is international seed companies rather than Australian ones which would take advantage of our `favourable position' to grow seed crops for re-export to other countries under PVR; in that case, very little benefit would accrue to our national economy. The transfer-pricing techniques and other restrictive trade practices of multi-national corporations have been well documented by various UN studies. The effect of these practices is to leave very little added value in the country subjected to them.

D. Rights Equivalent to Patent and Copyright

21. Next, to argue for PVR on the basis that it provides plant breeders with rights already available to inventors (through patents) and owners of copyright is to assume that the benefits of a patents and copyright law are self-evident. However, this is not the case.

22. Mandeville et al. have reported that `this study leaves little room for doubt that the benefit/cost ratio for the patent system in Australia is negative, or at the very best, in balance' (Mandeville et al. 1982, p. 213). The authors also state that `there is no economic justification for extending patent monopolies by lengthening the term, or by widening the grounds for either infringement of patentability (for example, Plant Variety Rights or computer programs)' (Mandeville et al. 1982, p. 213). Earlier in their study, the authors showed that over 90% of recent successful Australian patents are held by overseas patentees (Mandeville et al. 1982, p. 69). This lends weight to our contention that the overseas-based multinational agricultural corporations have most to gain from PVR in Australia (See also Evidence, p. S82).

23. As stated in evidence to the Committee: `at least 90% of patents taken out by foreigners or transnational corporations in developing countries are not used: their purpose is to prevent local manufacturing substituting for imports' (Evidence, p. 1239).

E. International Agricultural Competition

24. This argument cannot logically stand on its own without the foregoing arguments A to D.

25. At least some of the ills which PVR claims to be able to cure are embedded in the marketing system rather than at the point of production. A prime example is the take-over by the tasteless, tough tomato, Floridade, produced for easy transport and packaging, with no regard for the needs of the consumer. In the export sphere, the balance of payments against countries which are potential markets is one significant factor restricting the market.

Conclusions and Recommendation

26. We cannot agree with the majority report's recommendation that wide-ranging PVR legislation be enacted.

27. WE RECOMMEND THAT ANY PVR SCHEME BE RESTRICTED TO ORNAMENTALS AND THAT OTHER MEANS BE INVESTIGATED (FOR EXAMPLE IMPROVED MARKETING PROCEDURES) TO OVERCOME THE DIFFICULTIES CLAIMED AS THE RATIONALE FOR PVR.

G. Georges...A. O. Zakharov

Endnote

1. Even the evidence cited by Mr P. W. Murphy, former Controller of Plant Variety Rights in Great Britain, is to say the least, tenuous. In an address given to the 14th Ordinary Session of the UPOV Council, Geneva, October 15, 1980, he had this to say of private plant breeding in the UK: `It is very difficult to get figures from companies indicating their investment programmes in plant breeding . . . but here again the British Association of Plant Breeders collected certain information which showed that there had been a 500% increase in investment in plant breeding over the last five years. This is a very substantial increase. Unfortunately we do not have access to the actual figures . . .'

(Evidence, p. S201).


Senator ZAKHAROV —I thank the Senate. The views contained in that dissenting report remain pretty much my position. Unfortunately, this a very complex issue which I believe is not well understood by most parliamentarians on either side of politics. In saying that I am not being critical, but that very complexity guarantees that busy senators and members with many pressing issues on their agendas have tended to neglect this issue. It has also been clouded by the steam and heat generated on both sides of the debate, but particularly by those who see PVR as a solution to Australia's export problems and a panacea to the ills of the rural sector.

At the outset I outlined the history of this legislation which shows that it is not true, as has been claimed in some of the huge volume of letters I have received opposing PVR-interestingly, I have not had one recent letter supporting it-that this Bill, the Plant Variety Rights Bill, is being rushed through Parliament without sufficient opportunity for public discussion. The general public for its information, like most members and senators, is dependent on the Press and on activists over the issue. There has been very little Press interest in PVR until recent weeks. Indeed, there was virtually none, unfortunately, when the Senate report was tabled. From memory, only the Australian Broadcasting Corporation approached me, as the author of the dissenting report, in the years between mid-1984 and late 1986 when this Bill was introduced.

The Senate Committee advertised for submissions but most people lacked the time and confidence to make a submission, even when they could make a very valuable contribution. The large lobby groups, and particularly the industry groups, had the advantage of time and resources to put into a submission. It is a very great pity, some would say a tragedy, that a major effort by a large number of informed and committed people to contribute to knowledge on this issue has come at the very end of the parliamentary process. It is also a pity that the Australian Democrats, who clearly have a strong and united view of the Plant Variety Rights Bill, were not a part of that Senate inquiry. Clearly, I have very grave reservations about the consequences of this Bill but, of course, I will not vote against it. I am willingly bound by the democratic decisions of my Party and its parliamentary Caucus. Our Party is democratic, we come to democratic decisions and we stick by them.


Senator Archer —What will you say in the electorate?


Senator ZAKHAROV —I have explained this to people in the electorate time and time again in recent weeks and they have understood. They understand the difference between my Party and the parties on the Opposition benches. But I feel bound to express my concerns which are shared by many others in the community who have no axe to grind. This is an important issue but I do not share the apocalyptic fears of some of the Bill's opponents. For example, I do not share the belief expressed in some letters that I have received that PVR is more dangerous than nuclear weapons.

In this speech I hope to present a realistic assessment of some of the dangers inherent in the legislation. Others are included in the report, part of which I have had incorporated in Hansard. First, I will point to the safeguards included in the Bill, safeguards which were absent from the two previous Opposition Bills. I want to emphasise that this legislation is much superior in both clarity and safeguards to the previous Government's 1982 Bill or to Senator Hill's private member's Bill. This Bill takes into account the recommendations on safeguards of the Senate Standing Committee on National Resources. Indeed, it goes further.

I give due recognition to the willingness of the Minister for Primary Industry (Mr Kerin) to consult within and without the Australian Labor Party and the Parliament, particularly by his setting up of an independent inquiry under Professor Lazenby. Unfortunately, that inquiry's terms of reference were confined to relatively technical matters and, I believe, did not give sufficient regard to the consumers of plants and their products and to the possible alternatives to PVR which could improve incentives to breeders, such as were put forward by Professor Gladstone, one of Australia's foremost plant breeders, and by my colleague, Mr Peter Milton, MHR.

What are the safeguards in this Bill? I will refer to the main ones as I see them. The grantee of a plant variety right will be obliged to make the variety available publicly in `reasonable quantities and at reasonable prices'. An amendment to the Trade Practices Act will enable this to be enforced. Thus it possibly will be no easier than it is now to restrict the market. The success of this safeguard depends on the interpretation of `reasonable' and the will of any future government to take action under the Trade Practices Act.

I believe that clause 39, which refers to demand, may prove too inexact, particularly in view of claims made here by the Opposition at times that demand is not there if people buy the alternatives offered. Of course people will buy what is available if there is no alternative. Most of us are forced, however unwillingly, to buy the tasteless tomatoes which are bred for their carrying qualities, because the true tomatoes are not available in shops. That is not to say that there is no demand for good tomatoes.

The Minister in his second reading speech has proposed a review of the effectiveness and impact of the Bill after five years. It is unfortunate that that review could not be included in the legislation. I seek leave to continue my remarks later.

Leave granted; debate adjourned.