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Monday, 25 June 2001
Page: 25008


Senator BUCKLAND (5:27 PM) —The purpose of the bill before us is to amend the Dairy Produce Act 1986 with the aim of establishing a supplementary dairy assistance scheme. The bill was introduced in May of this year and referred immediately to the Senate Rural and Regional Affairs and Transport Committee for inquiry.

Prior to July 2000, the Australian dairy industry consisted of two sectors. These entailed the fluid milk or market milk sector and the manufacturing milk sector. They were both supported by governments at state or Commonwealth level. The government's milk marketing arrangements introduced from 1 July 2000 resulted in there no longer being any formal quantitative controls on the supply or price of milk sold for drinking. Fluid milk prices, supplies and products are now determined by market forces, although it seems that the market is still in a period of transition.

The Commonwealth government once provided support at the farm gate on a cents per litre basis to assist dairy farmers under the scheme of payments for manufactured milk as well as the levy on domestic dairy product sales, which ceased in June 2000. The Commonwealth government's response to deregulation of the dairy industry was the new dairy legislation that commenced on 1 July 2000. The new dairy industry adjustment package comprised three components: the Dairy Structural Adjustment Program, the Dairy Exit Program, and the Dairy Regional Assistance Program. I will come back to the Dairy Regional Assistance Program in a moment. It is becoming increasingly worrying to me and to others on this side that we continually hear about industries being offered exit programs and funding to exit. Many of those who exit the dairy industry will exit not only the industry but also generations of family farming. That is something that we need to take more closely into consideration when we come to the rationalisation of industry, be it rural or manufacturing.

Since the implementation of these policies, the evident outcomes have been major falls in farm gate milk prices in New South Wales, Western Australia, Queensland and South Australia, with minor falls noticed in Victoria and Tasmania. It is also evident that business profits per farm are expected to decline in all states except Tasmania, which is in line with the reduction in farm gate milk prices. I refer the Senate to the October 1999 report of the Senate Rural and Regional Affairs and Transport References Committee entitled Deregulation of the Australian Dairy Industry. In its introduction to the chapter on the social and regional impacts deregulation, the report states:

The social impact and that on regional economies was an issue of major concern in submissions and evidence. Many of the dairy farming communities are closely linked to the economic performance of their dairy industry—the industry underpins the economic sustainability of many regional communities.

The transfer of wealth from rural products to the cities was seen as an undesirable effect of deregulation. Profits going to family farms stay in the community ...

That needs to be highlighted because, as with all things with rationalisation, modernisation or regulations of this nature, there is an impact, and that impact, in large part, is human in nature. Not only small communities but also larger communities can suffer these effects. The committee report went on to state:

Dairy Farmers used the example of their plant at Bomaderry, NSW. The plant produces packaged milk and condensed milk for export, principally to Japan. The company advised:

Deregulation of market milk will probably mean that the milk packaging plant will become unviable as processors like ourselves are forced to rationalise to compete. The condensed milk plant will be in jeopardy because of the loss of the DMS scheme and also due to the fact that it would be difficult to support either of the two sections of the plant on their own. The closure of the Bomaderry plant would mean the loss of many jobs, which would compound the loss to the community due to the decrease in milk payments occasioned by farm-gate deregulation.

The real winners out of what is proposed and what is occurring will be the government. It is attempting to claw back hundreds of millions of dollars in tax from dairy farmer payout packages. The government is yet to demonstrate a coherent plan for the long term future of the dairy industry. If the bill passes through parliament, we will see $1.9 billion being committed by milk consumers to support dairy farmers as a consequence of deregulation of the industry. The government is seeking to get back the money that it is offering. The critical element of the package is the extra $20 million for the DRAP. That, again, is an admission by the government that it has grossly underestimated the impacts of deregulation on regional communities. Deregulation has devastated dairy farmers' incomes, devalued their farms and made it difficult for farmers and their families to obtain credit from financial institutions.

The Howard government has not provided a cent to support the industry and has as a result managed to claw back hundreds of millions of dollars in tax from the farmer package payouts. Dairy farmers are currently struggling with low prices, reduced farm values and, as I said earlier, the very unsympathetic banks who do not see them as a worthy investment any longer. The Howard government has failed to deliver a long-term plan. It has shown no leadership in this at all. Until we have a plan that properly directs the industry to the future, we have a very hard road to go down as far as the industry itself is concerned.

The government has failed in what it has been attempting to do in a number of areas. It has failed to deliver a long-term plan to the industry. We need a government to show leadership when an industry that is so vital to so many small communities is under siege as it is now. We need the leadership from government, and this government has failed to provide it. We need the government to show some leadership and prepare the industry to meet the substantial environmental challenges it faces in many communities. That again is not happening. The government does not seem to understand the vital role it has to play in helping regional communities. It suggests that it is giving money to assist but in fact it is doing it over such a time frame that it is really bringing the money back into the coffers. It is a gift at a price.

The committee that looked into this made a number of conclusions. It was firmly of the view that if deregulation is effected on 1 July 2000 there must be an adequate and effective restructure package in place. To date that has not been the case. That package needs to be in place in order to ameliorate the immediate effects on farmers' incomes and the long-term regional impacts. The package must comprise three elements. There needs to be compensation for loss of income. That is a reasonable thing: if the industry is to be restructured, there must be a package there that is properly structured to give compensation to those who will not be surviving the newly framed industry. There needs to be appropriate compensation for the loss of asset values, particularly where a quota is concerned, and there needs to be a regional adjustment component appropriately developed in conjunction with the states. Unless those things are in place, it would appear to me that we have an industry that is just going to drop out of the system and leave Australia short in what has been for many years very important for all.

The government has done nothing to stimulate further research and development in the dairy industry. As one who has been through many restructures with industry, I believe that a large component of the research and development must rest with the industry, but there must be suitable financial incentives and packages for that industry to investigate new methods, better systems, new products and better marketing plans. The government has fallen short in that area as well.

We need the government to do something about ensuring that its latest package is fair and equitable. On my reading, I believe there are a number of discrepancies that leave the package as somewhat unfair and inequitable to a number of communities and a number of dairy farmers and their supporting industries. The concerns I raise are not just those that I have found myself. They are not just from emails, as Senator McGauran suggested about comments made by my colleague Senator Hogg this morning. All things have to be weighed up, as I am sure my colleague would have weighed up those emails. The comments of the farmers to the inquiries must be listened to and acted upon. I would be the last to suggest that I would be an expert of any sort in this place on the dairy industry. My knowledge does not go very much further than the supermarket and the cold storage section. But I do know enough about relying on experts—in this case those people who have been working in the industry and have had the family business passed down through generations.

The farmers feel, and have expressed, great uncertainty in their lives as a result of the government's poor handling and the incompetence it has shown in this area of deregulating the industry. It comes out very strongly in the comments from the farmers that they feel very let down by the degree of incompetence. The farmers are concerned, too, about the ageing of the dairy industry, and the exodus of young families and young people away from the farm and away from the smaller communities to seek opportunities in larger cities and larger regional centres. This is something that is expressed not only in the dairy industry but in the rural farming industry more generally. We hear ministers, such as Minister Minchin today, get up and tell us how proud they are of the creation of jobs. But for each job that has been created they need to tell us how many jobs have disappeared because of changes that have been brought about by this government. We need both sides of the story. I do not think there is any joy in telling us that.

Supermarkets' margins on products have widened, but they are not being passed on to the farm gate or the farmer, the one who is producing, and that is creating a lot of difficulties. Hence we go back to the difficulties that dairy farmers have in taking hold of opportunities that in years gone by may have been available to them through the banks; they no longer have the ability to borrow money to diversify or, in fact, go elsewhere. The national competition policy is an area that the farmers themselves are very concerned about; it has caused very grave concern to all those who are involved. Likewise, they have concerns with the ACCC, which prevents them from collectively bargaining on the price they receive for their produce.

Farmers really are suffering as a result of what this government is doing to the industry, and the amendments that have been put forward by Senator Forshaw go some way to addressing that suffering. The other amendments put before me I have not had a good look at yet in order to cast a fair comment on them. But certainly those amendments put forward by Senator Forshaw, on behalf of the Australian Labor Party, I believe merit the support of this chamber.

The personal impact on the families of dairy producers, I have been through. However, one family losing out in the industry reflects on the whole community, going through to their buying products from the local grocery store and their buying goods and services from the local stock trading post; rather, they go to the larger areas where they can get better prices, and so those support industries suffer also. It flows through to the closing of banks and the difficulties that this creates for farmers in dealing with their banks. These farmers have had massive reductions in prices at the gate, which have resulted in great slumps in local land prices. (Time expired)