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Monday, 26 March 2001
Page: 22918

Senator BUCKLAND (1:26 PM) —The objective of the Pig Industry Bill 2000 is to streamline the current industry's management through merging and privatising the three pork industry bodies into one controlled organisation. That in itself is a sign of maturity and goodwill on the part of the industry in general and should be applauded. In August 2000 the Minister for Agriculture, Fisheries and Forestry, the Hon. Warren Truss, announced that the government had given approval for a new company, Australian Pork Limited, to join together the three industry and statutory bodies: the Pork Council of Australia, the Pig Research and Development Corporation and the Australian Pork Corporation. It was envisaged that a new single organisation would remove inefficient duplication in servicing industry needs and provide a single point of contact for pork producers as well as our domestic and international trading partners.

The Australian Pork Corporation, established under the Pig Industry Act 1986, is the statutory marketing authority for pork produced in Australia. It is funded by a promotion levy of $1.65 per pig slaughtered, payable by the producers. The revenue raised in 1999-2000 amounted to $8.24 million. Using `new fashioned Australian pork' as a vehicle for marketing and sales programs for the pork industry in Australia and overseas, the corporation is better positioned to provide other services to the industry, such as a central information resource in the form of a library and a statistical service that analyses international and domestic trends in pork production and marketing. It also provides a defence against unwarranted and unnecessary pig importations.

The Pig Research and Development Corporation's role is to invest and manage research and development funds on behalf of the Australian pig industry and the Commonwealth government, with the objective of improving the performance and sustainability of the Australian pig industry. It also serves to increase the industry's global competitiveness. We have seen signs that the industry is becoming more and more competitive and more efficient in its costs and production criteria. Support spans over 100 research and development projects that encompass long-term research and breeding and health issues within the pig industry, and the industry is provided with information and training packages on topics such as pig housing, management and animal health handling. The corporation's income is obtained from two sources: a levy rate on pigs slaughtered, which in 1999-2000 was set at 70c; and a Commonwealth government contribution of $1 for each $1 collected by the corporation, up to 0.5 per cent of the gross value of production.

The Pork Council of Australia is the third body to be incorporated into the new company and is representative of the Australian pork industry itself. It was founded in 1992 and represents 75 per cent of pork producers across Australia. It was established by producers to represent their interests before governments and industry bodies. The PCA is funded by voluntary membership. The cost of voluntary membership of the PCA is $1.50 per breeding sow. Its statutory obligation is to monitor how pork producers' statutory levy funds are used and to provide advice to government on the expenditure of funds to benefit the industry. The PCA is also a lobby group to government and to other industries on behalf of pork producers.

The working party of the pork industry restructure was established in 1999, where three alternatives for the industry to achieve a single industry organisation that incorporated policy, research and development and marketing functions were formulated. Like other speakers before me, I have recollections of the trauma that was facing the industry, particularly during 1998 and the lead-up to the last federal election, and the trauma was felt right down through the industry to the smallest of breeders. I believe this initiative will overcome the difficulties that were experienced at that time. The most interesting information to come out of this working party was that pork producers were no longer interested in continuing the current arrangements involving the three national bodies. There was overwhelming support from the industry to streamline these organisations into one body incorporated as a nonprofit company and controlled by the producers themselves. As I said before, I believe that step should be applauded for the maturity shown by the industry.

Apart from the overwhelming support for change in this industry, there are other factors leading to pressure for these changes to occur—for example, a stable or declining domestic market for pig meat, declining returns to producers, competition from imports and a small export sector. Consumption of pig meat has remained stable since 1994, but at the same time Australian pig prices have been falling in real terms since the early 1970s, as has been the case for other livestock industries. This indicates that there is a marked reduction in the cost of production. Again, that is something that should be applauded, but it does need our support to ensure that it is translated into greater sales and greater development for the pig industry.

Until recently, the pig industry has focused almost exclusively on the domestic market. The main export markets for Australian pig meat have been Singapore and Japan—and I understand they are expanding. This situation needs to change, and the new body will have a greater opportunity to develop new export markets. It will be a new body with one single head. The government has announced the go-ahead for a new company to take over the functions of the three existing bodies. The new company board will have nine directors, five of whom will be elected by the pig producers. Three of these will be appointed on the basis of their skills and their expertise. There will also be a managing director. I think that is a very important component of this. At least three of the nine-member board will be selected on the basis of their skills and expertise. Unless that was in place, there could be doubts as to the future efficiency of the new company.

The constitution of the APL was not available to me, but I see today that there are drafts, and I do intend to go through those and make comments if I feel that comments are necessary. But I think it is vital for us to examine those documents prior to doing more than giving tacit support at this stage. I have heard and noted previous speakers in relation to this but, not having had an opportunity to look at those before coming into the chamber today, I can make no real comment on the drafts.

The final report of the working party on the pig industry restructure has recommended that there be two classes of membership in the new company. There are producers who choose to pay only the statutory levies for research and development and marketing activities, and who do not pay the voluntary levy used to fund political lobbying activities. That is one area where I think we do need to examine the contract and the constitution to ensure that these people will not, in an overall sense, be disadvantaged. Small producers may find that the cost of additional levies is prohibitive to them, and I would shudder at the thought that, in some form, they could be disadvantaged by this. No doubt the industry have examined it themselves and feel comfortable with it. If that is the case, it deserves our support. The entitlements of the voluntary levy paying members would be: to have a say in future proposals to vary the statutory levy rates, to have the right to ask questions and be heard by the APL in general meetings, and to receive certain company information contained in financial reports and the director's annual report.

Producers who pay both the statutory and voluntary levies would have additional rights, including the right to participate in the appointment of delegates to represent them and vote at general meetings of the APL, voting rights to remove directors, and the right to call special meetings to amend the APL constitution. As one who has been around when meetings are held to monitor people's performance, I would be out there encouraging everyone to pay the voluntary payment as well as the statutory payment to ensure that their voice is heard and their will is acted upon. It is the voluntary and non-voluntary aspect of the new company's constitution that really does cause me concern. I think those concerns will be put to bed when I have the opportunity to read through the constitution. I would hate to think that there is a fear for any members within the producing group that, because they are not paying that voluntary levy, they may not be getting the same services and their concerns may not be addressed equally with others.

This bill follows two acts passed in 2000—the wool act and the horticulture act—which sought to transfer control over marketing and research and development activities from government to industry participants. Those acts provide for private control in relation to levies whilst retaining the element of public control in relation to the use of government subsidies. This bill extends to all the external territories and will also extend to acts, omissions and other things outside Australia. The bill provides for the minister, by written declaration, to transfer assets, contractual rights and obligations, liabilities, rights and titles or interests in land held by a statutory authority.

The main issue regarding this bill is accountability. The APL will receive the bulk of its income from the compulsory levy and public funding—hence the need for accountability. It will perform a public function for the pork industry and the wider community. The issue of accountability apparently will be detailed in the constitution. As I said earlier, since coming into the chamber I have now received a copy of the constitution, and I look forward to reading through it. Indeed, this issue was addressed by the minister in his second reading speech.

It is significant that we can give consideration to what is in the constitution, because it demonstrates a transformation in the vehicles of accountability. It is clear that the statutory authorities are accountable to the executive and to parliament. The APL will be accountable to the general public via the Corporations Law, to the stakeholder group via the constitution and to the executive via the funding contract, but it will not in itself be accountable to the parliament. This is not unusual, of course, in the context of privatisation. It does, however, reflect a compromise that resolves the tension between a private sector structure and public sector accountability.

Voting rights of members will not be direct but will be attenuated by the voluntary levy. In addition, assuming that the cell system is retained, voting rights will be further attenuated by the need for members to combine their herds into a cell of 7,000 sows. It could be argued that these features undermine the accountability of the APL. While producers make a direct contribution to the APL's marketing and research and development functions, they may not have the right to participate in setting directions and priorities. Small to medium sized producers will be reliant on external representative groups who pay the voluntary levy, and they will only be able to exercise that right indirectly. It is also important to note the connection between the voluntary levy and the political lobbying function. The right may inadvertently be lost if there is a split among the representative members, and their interest in commercial issues may also be vulnerable to political considerations. I trust that that will not be the case.

In conclusion, subject to the examination of the new company constitution and the contract with the Commonwealth, and finding no difficulties with those, I believe the bill should be supported. So I join with my colleagues in supporting the bill.