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Wednesday, 4 May 1994
Page: 191

Senator DENMAN —My question is directed to the Minister for Primary Industries and Energy. On 30 March he, along with the Minister for Trade, Senator McMullan, issued a joint statement in which he announced Australia's intention to withdraw from the international dairy agreement's milk fat protocol. Can the minister advise the Senate of any recent developments with regard to this action?

Senator COLLINS —The Australian government—

Senator Patterson —Give us a five-minute speech on it.

Senator COLLINS —This matter may be of no concern to Senator Patterson, but it is of considerable concern to the multi-billion dollar dairy industry in Australia. I must say that the industry is rather relieved at the result that has been achieved.

  The Australian government and the Australian dairy industry have been concerned for some time about problems with the milk fat protocol and the international dairy arrangements. The fundamental problem has been that the minimum price provision of the protocol has not been adjusted to take account of a significant structural change in the market—

  Senator Kemp interjecting

Senator COLLINS —Give us a break, Elmer, just for a minute. I will not be long. It has not taken account of a significant structural change in the market, particularly the decline in commercial purchases of countries of the former Soviet Union.

  Negotiations with our IDA partners have taken place over the last 12 months seeking a solution to the problem. Indeed, only last week at the meeting in Hobart I had an opportunity to discuss it with my ministerial colleague from New Zealand. The government was not prepared to see Australian exporters disadvantaged in the international market; nor were we prepared to condone the operation of unrealistic minimum prices.

  Against that background, and with the support of the Australian dairy industry, we sought a suspension of the minimum price to allow the market to adjust to the changes that had occurred. However, despite hard work and extensive consultations with our IDA partners, IDA members rejected our proposal at the March council meeting this year.

  Senator Gareth Evans, Senator McMullan and I announced on 30 March that we would be initiating action to withdraw Australia from the protocol. The IDA met again in Geneva on 2 May. In the light of Australia's decision to initiate withdrawal on the basis that the agreement was not working properly in the interests of those efficient international producers, the IDA reconsidered the options that we had previously presented.

  Senator Kemp interjecting

Senator COLLINS —I thought you got done like a dinner last night by Lavarch on Lateline, Elmer. I am very pleased to be able to report to the Senate that the IDA has now agreed to a 12-month suspension of the minimum price for butter fats to take effect from noon Geneva time on 4 May. This is precisely what Australia has been seeking and we are very pleased with this result.

  In the light of that decision, Australia will now remain a member of the protocol. This outcome is a very clear demonstration of how this government goes about its business. We are prepared to back our Australian industry in the international arena. We take our international obligations very seriously. We are prepared to stand and fight for our principles. I am pleased that we got the result that we sought on this occasion, because it is a very good outcome for the Australian dairy industry.