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Monday, 26 March 2001
Page: 22921

Senator TROETH (Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry) (1:45 PM) —I thank honourable senators for their contribution to this debate. I would now like to sum up the debate. I understand that the opposition have some amendments to be moved. As we have not yet seen the final draft of those amendments, I would welcome their circulation as soon as possible so that the government and other interested parties have an opportunity to look at them in their final form.

The purpose of the Pig Industry Bill 2000, as we have all agreed, is to create a new pig industry services body that will provide for the integrated delivery of industry marketing, promotion and R&D functions as well as strategic planning and industry policy development functions. There is no doubt that the Australian pig industry is a rapidly growing and changing industry. The gross value of production for the pig industry is expected to reach some $850 million this financial year. Around 2,500 people are pig producers, with a further 9,000 people employed in pork processing and the manufacturing of smallgoods. The industry is very important to rural and regional Australia and, as everyone has remarked, it has undergone significant change in the last few years.

Rather than go down the path marked out by Senator O'Brien, who regarded this as a particularly political development, I would like to emphasise that the government over 1997-98 put some $24 million into the pig industry. There is no doubt that, amongst other things, this provided the infrastructure for the export surge that we have seen since. Negotiations were already proceeding quite strongly with agencies in Singapore before the unfortunate Malaysian pig virus, which put a stop to that country's trade in pork with Singapore. But the important fact for this chamber to note is that the opportunity was then provided for the expansion of efforts on the export front not only to Singapore but also to other countries, and that was in part provided by the willingness of both producers and processors to take up the opportunities offered by the government's provision of some $24 million.

Since then, we have seen many of the excellent abattoirs in Australia rise to export standard and improve their infrastructure, producers rise to the challenge of providing what the customer wants and, indeed, a general lifting of the game on all fronts so that the pig industry can now look forward to the future with renewed confidence. That is partly because of export development opportunities, but there is no doubt that it is also because of pressures on the domestic market from imported product. Both Australian pork producers and supply chain participants have been required to adjust to effectively compete with overseas producers. Consequently, the pork industry has created and seized its own opportunities to target high value export markets. That is where we should be in the future, and I am confident that that is where the industry is going.

In the last two years, for example, we have built exports of high quality chilled pork to Singapore from next to nothing two years ago to over $90 million today. We have also built high quality pork exports to Japan from $22 million two years ago to $43 million today. That is a remarkable effort by any industry, and I do applaud the participants in the pig industry for the efforts that they have put into that. It is a remarkable achievement and it matches the export gains of our best performing agricultural industries of recent years. Those have been pressures and they have been opportunities, but they have also caused the industry to re-evaluate its priorities and to reassess its approach to the management of industry issues and the delivery of services. The new industry services body, which will be known as Australian Pork Ltd, is a result of recognising that new industry environment.

The Australian Pork Corporation and the Pig Research and Development Corporation have been performing their designated functions to an excellent standard, but the industry has also recognised that industry services must be provided in a different way to more effectively and efficiently meet future opportunities and pressures to be faced by the industry. As a result of this legislation, the Australian Pork Corporation and the Pig Research and Development Corporation will be wound up. I feel that it is appropriate at this point to talk about how well those two organisations have served the industry to date and the good work they have in train. It is a credit to the board and staff of those organisations. Through my role as Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry, I have been particularly involved with the work of the Pig Research and Development Corporation and, in attending many excellent seminars throughout Australia, I have noticed how well they are educating pig producers and other people associated with the industry to perform their role in the future. It is very reassuring to know that most of the staff of those two organisations will be continuing to work with the new industry services body.

There is also no doubt that the restructure provided by this legislation and the formation of the new company has widespread and unanimous industry support. The creation of Australian Pork Ltd is the culmination of extensive consultation and more than 12 months planning by the industry in partnership with the government. Under the arrangements, all levy payers will be eligible to become registered members of APL and, therefore, will be able to have direct input into the management of the industry services body. Industry levy payers will have, for the first time, direct influence and involvement in their industry service provider.

In the preceding speeches, a great deal of emphasis has been put on the word `accountability'. Perhaps I could reassure senators that the proposed approach has three strong levels of accountability built in to ensure that this new body is responsible in its use of both industry and Commonwealth funds. Never before have pork producers had the opportunity for such a direct say in the management of industry affairs and the provision of industry services. The company will be required to prepare annual strategic and operational plans and will be required to report back to members on its ability to meet planned objectives and outcomes. The annual report will also be underpinned by an annual audit and by regular independent performance reviews. Members will have the opportunity to directly question the board about the achievements and the conduct of the company and to make recommendations about the business of the company. Members will also have a direct say in any proposals to change levy rates and influence the selection of directors as well as voting rights on a range of governance and industry issues.

Because Commonwealth funds are involved through levy payers' contributions and matching research and development funds, there must also, of course, be a level of accountability to government. The framework for the arrangements recognises this. That expenditure—that is, expenditure of industry levies and eligible R&D expenditure—currently amounts to more than $3.5 million each year. Accountability to government is therefore provided through the signing of a contract with the government. I expect that we will be exploring this in the committee stage. This will ensure that the board fulfils its industry and its public accountability obligations. The contract includes provisions for the company to prepare its strategic and operational plans, meeting specified requirements within four months after transition time. It also requires the company to have in place fraud control, intellectual property and risk management plans.

The contract also defines the purposes to which the marketing levy, the research and development levy and Commonwealth matching funds for research and development can be put. It specifies that an annual audit is required, that an independent performance review be conducted every three years and that copies of these reports be given to the Commonwealth. In addition, provision has been made for the chair of the company to meet regularly with the minister to discuss overall industry issues.

Finally, the company will be required to conform to the standards and requirements provided by the controls under Corporations Law. The board will be required to meet Corporations Law requirements for financial and fiduciary responsibility, and the company directors will be accountable in the normal manner as for any commercial company. If the company changes its constitution in a manner considered unacceptable to the government, if it becomes insolvent or if it fails to comply with the legislation or the contractual arrangements, the company may have its declaration as the industry services body revoked. All of these safeguards have been provided in the legislation to ensure that the company delivers what is expected of it by its members—the levy payers—and by government.

In conclusion, I strongly support the legislation, because it will deliver a new and more integrated and commercial approach to the delivery of marketing and research and development services. It will also deliver strategic policy and the management of pork industry issues. There is no doubt that there has been an extremely cohesive industry approach on these matters. Certainly, if there are any matters which require the attention of government, either the minister's office or my office would have heard about it. I emphasise that there has been a very well integrated and concerted approach by industry to deal with these matters, and that has come through in the way in which the legislation has been developed. This is an integrated and commercial approach and it will be driven and controlled by levy payers more directly than ever before. At the same time, there is strong accountability for performance built in as well as accountability to both levy payers and government. I commend the legislation to the Senate.

Question resolved in the affirmative.

Bill read a second time.

Ordered that consideration of this bill in committee of the whole be made an order of the day for a later hour.