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Wednesday, 15 March 2000
Page: 12871


Senator O'BRIEN (4:54 PM) —I can agree with a number of things that Senator Crane has said today. I certainly have the view that there are parts of the existing dairy industry which will blossom under the deregulated regime. I do not think, during all of the Senate references committee inquiry, the view was ever taken—certainly not from the committee's point of view nor from the point of view of the majority of witnesses—that deregulation would lead to the total collapse of the industry. Nevertheless, it was accepted by everyone that deregulation without an adjustment package would be a disaster for many sectors of the dairy industry. That is the reason the opposition are supporting this legislation. We are also mindful, given that deregulation takes effect on 1 July this year, that it is important for the timely passage of this legislation. The opposition, however, would not take the view that just any piece of legislation should pass, given that we are talking about something in the vicinity of $1.8 billion being levied against consumer milk over the next eight years to pay for the adjustment package, which is the subject of this legislation. Of course that should be given proper consideration. I think the officers of the department have done a very good job in the time that they have had available to them of putting in place, through legislative measures and sublegislative measures, the policy of the government. Unfortunately, the policy of the government has taken a long time to come together.

Listeners to this debate should be aware that the genesis of the timetable for this deregulation was established in 1995. It was decided in 1995 that the DMS scheme, a financial support scheme that provided compensation for the continuation of regulation of market milk in certain states, would be discontinued on 1 July this year. It was clearly known that the pressures were very strong, certainly in Victoria but also in other places, for the deregulation of the market milk market and of the industry generally. When this government came to power in early 1996, it had before it an agenda for the deregulation of the dairy industry. One would have thought, given the importance of this sector to Australian rural industries and to rural and regional Australia—what this government purports is one of its important constituencies—that this government would take it upon itself to drive the transition to deregulation, to establish policies to consider the impact of deregulation, to look at the impact on regional and rural Australia, to look at the impact on our export performance and to look at measures which might make the implementation of deregulation easier in the parts of Australia which inevitably would be worst affected by the deregulation measures. Did that happen? No. There was no action from this government.

We have the situation where the Australian Dairy Industry Council, representing dairy farmers, processors and manufacturers, has been forced to use its resources to put together what is essentially the package of measures, though obviously with some amendment, that is contained in this piece of legislation. It drove government policy because no-one in the government was driving it. It put to this government in April last year its proposal for an adjustment package. One would have to say that the Australian Dairy Industry Council has done a very good job for the constituencies that it represents. It took into account the issues that face the dairy industry and rural and regional Australia and came up with a measure which it thought would moderate the most severe effects of deregulation and provide an adjustment package which would enable the dairy industry to continue to grow and to remain a significant part of Australian rural industry, a significant exporter and an efficient industry.

The Dairy Industry Council put a package to the government in April last year, and it took the government until September to decide that they could support that package—with some changes, but it was essentially that package. In the context of that, what else was happening? The opposition proposed that there be an inquiry into the dairy industry to look at the issues; to lay them out for the government. Whatever the government knew, it was clear that there was not enough information on the public record to drive a public debate on this issue, given that we are talking about—and have been since at least April last year—a very large adjustment package which involves the implementation of a measure which is essentially a tax on the white milk market, the drinking milk market, which has to flow into the price effect for milk over the next eight years. It is a tax on milk.

The opposition is supporting it because there is no alternative. The driving of this policy by the industry was met with a response from the government which was essentially to say, `You come up with a package and, if we find it acceptable, we'll support it.' When the government found it acceptable, they said, `Now, you go and sell it to the states.' There is no question who was driving this policy. It was not the government; it was the dairy industry. Alongside that, the actions of the opposition, with the support of the Democrats—and Senator Crane and other government members of the committee—ultimately played an important part in laying out the facts and in taking to the dairy industry and the people of Australia the issues with which they would be faced from 1 July this year and for the ensuing eight years.

The opposition amendment moved by Senator Forshaw, which condemns the government, is supported by the facts. I reject Senator Crane's suggestion that somehow the government was doing its best to process this package. It clearly has not done enough. It has put the department in the invidious position of trying to meet the policy objectives of the government in the processing of this legislation in an extremely short time. It has also put the Senate legislation committee in an invidious position. Let me tell the chamber of the timetable for the legislation—and there are four bills; this is substantial legislation. The legislation was passed by the House of Representatives on 2 March. Under the processes of the parliament, it went to the Selection of Bills Committee in the Senate on 7 March, where it was referred to the Senate legislation committee, which held a hearing on 10 March, three days after the bill was referred.

It was necessary to hold a further hearing last night, at 6 o'clock, to take further evidence about measures which are not contained in the bill but which relate to the package to be implemented and for the committee to report today so that we could debate the bill this afternoon. The opposition and the Democrats have facilitated an early debate of this bill because we understand the need for urgency and we understand the need for the proposed timetable to be met if it is at all possible. We believe that it can be met. But it should be on the record that that is no thanks to the government. There are aspects of the package—and I think Senator Crane touched upon them in part—which are not, in the view of many members of the Senate committee, properly or adequately dealt with in the legislation.

I now want to touch briefly on the question of the package as it relates to lessors and lessees in the dairy industry—that is, the owners of dairy properties and those who have operated them under lease for the past period and certainly at the critical time at the end of September last year. When the committee brought this matter on for inquiry, the only group which did not support the totality of the legislation was a group of people representing lessors in the dairy industry, particularly in the pooled milk states, such as Victoria and to an extent Tasmania. Those states where the bulk of compensation relates to milk which is not used for the white milk market but is used for manufactured products—butter, cheese, powdered milk, et cetera—feel that the package is inequitable, that it leaves them in a situation where they will not be able to hang on to properties in the dairy industry and that the compensation designed as adjustment payments for the dairy industry will, in many cases, go to people who had no long-term commitment to the industry and who are effectively treating the payments that they will receive from this legislation as a lottery or Tattslotto win, something that they did not expect to receive. In particular cases, those people had already determined that they would leave the dairy industry and were then finding, having made that decision, that a payment would be made to them from the adjustment package because they happened to be in the industry at the end of September 1999. I believe in some cases they may have been in the industry for only a very short period of time and may have had no intention of remaining in the industry for any foreseeable period in the future.

I do not want to be critical of the Dairy Industry Council. They have had a difficult job in preparing a package, negotiating a package with the government and seeking to refine that package, particularly in the light of the comments made by the Senate references committee on the treatment of sharefarmers and lessees. They have done a good job in difficult circumstances, but the fact of the matter is that the legislation committee had drawn to its attention anomalies which, in my view, are not adequately dealt with in the legislation and which do not appear to have been addressed satisfactorily in the drafting instructions for the ministerial orders which, we are told, will be made consequent upon this bill to flesh out the package for the purpose of its implementation.

I will be returning to that matter in the committee stage of this bill to make some inquiries of the Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry, who will be handling the debate for the government, and perhaps even to make some suggestions as to how that matter might be resolved. Some may ask: why isn't the opposition moving amendments now to correct that problem? Indeed, this is a matter that I have addressed directly with the Dairy Industry Council. The opposition's view is that this is complex legislation, and the relationship between the various parts of the package referred to in the legislation ought not be tampered with without great care lest there be unintended consequences from an amendment proposed in the short time the opposition had to consider any amendment to this legislation.

However, we would be proposing that the government accept finally its responsibility for dealing with this issue equitably and properly; that it look at the type of evidence which the Senate Rural and Regional Affairs and Transport Legislation Committee received; that it discuss with the industry alternative measures which might be put in place to deal with those concerns; that it consider the relevance of the measures in the bill to those circumstances; that it consider the case of the lessor-lessee arrangements, particularly as it relates to the non-premium milk component package; and that it perhaps take into consideration, for the purpose of assessing eligibility, issues such as the timing of the cut-off date, the period during which any lessee might have reasonably expected to have been in the dairy industry, given the lessor-lessee arrangement, and any capital contribution by the lessor as opposed to the capital contribution by the lessee. There were clearly differences in the evidence before the committee which, in some cases, might militate in favour of a change to the distribution of the adjustment package. And, obviously, using the expertise of the department, the government should consider how that might be addressed without making some unintended adjustment to other aspects of the package.

It may be that the Dairy Industry Council is prompted to say, `If you are going to do these things in one area, you might do them in another.' They are matters that the Minister for Agriculture, Fisheries and Forestry has to consider, but the minister has to take his government's responsibility for getting this measure right. We have to understand that this package—a measure involving $1.8 billion—is going to be implemented in this legislation and, once implemented, it would be very difficult, if not impossible, to change it by the time the first payment is made. The government needs to act and act quickly. If it believes that changes are necessary, it needs to advise the dairy industry and the Australian public that perhaps the bill is going to have to be amended—if that is the case—before people develop an expectation that they are going to receive payments as of 1 July when it might be found that the current proposal ought to be changed in some respects. The government has time to do that. Only the government has the time and the opportunity to do that. Just as the government has had the cooperation of the opposition in relation to the expeditious passage of this legislation, the government can expect that any fair and equitable proposal it might bring before the parliament will be given the same favourable treatment by the opposition—on the basis, of course, that it is fair and equitable.

I think it is appropriate, given the short amount of time that I have left, to say this: the government should not receive a pat on the back for what it has done with this legislation because, as I said, the government has been allowing this major policy issue to be driven by the industry without giving it much assistance. It has put its own department in the invidious situation of implementing a greatly delayed government initiative in a very short timeframe and in circumstances where delay would have been costly to the Australian dairy industry. The figures we were given were that, for every day of delay, we are talking about hundreds of thousands of dollars being lost to the dairy industry. The government should not be patted on the back.

The opposition has moved an amendment which condemns the government. I think the list of items in that amendment are all appropriate. The time that I have remaining this afternoon does not allow me to address them all. However, one that should be addressed in the last 60 seconds of my speech goes to this very issue of the impact of the levy on the price of milk for consumers. I think the government should act—and should have acted before today—to develop an adequate mechanism to ensure that consumers, as well as farmers, benefit from any fall in the price farmers receive for their milk in the face of price increases that have accompanied the removal of state based regulatory arrangements in the past. In other words, let us not have a deregulation which leads to all of the benefits going not to the farmers and not to the consumers but to the companies in the middle who take a price or to the supermarkets who may, because of their market position, be able to drive the price to them down but keep the price to consumers up.