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Monday, 23 September 2002
Page: 4634


Senator ELLISON (Minister for Justice and Customs) (3:55 PM) —I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

EGG INDUSTRY SERVICE PROVISION BILL 2002

The Egg Industry Service Provision Bill 2002 provides for the establishment of an egg industry company limited by guarantee under the Corporations Act. The company, to be called Australian Egg Corporation Limited or AECL, will be responsible for providing services to the industry. These services will include generic promotion and the R&D functions that are currently provided by a sub-programme of the Rural Industries Research and Development Corporation (RIRDC).

These new arrangements will allow a more co-ordinated and commercial approach to the delivery of services to the egg industry. Importantly it will ensure that for the first time, all egg producers can be directly involved in the application of their levies to best effect.

The egg industry has experienced a difficult period since deregulation of State marketing arrangements in the late 1980s. Further pressures have resulted in recent years from Newcastle Disease outbreaks and changes to layer hen housing to meet animal welfare requirements.

Through a period of declining fortunes, egg producers have suffered from a limited ability to adopt a whole-of-industry approach to crucial issues. They have been unable to communicate to consumers about the health benefits of egg consumption and to benefit substantially from industry R&D.

Between 1989 and 1999 Australia's annual average egg consumption decreased from 146 to 137 eggs per person. The industry argues that this decline is due to a market failure in egg promotion. Whilst there are some producers large enough to carry out marketing and create brand recognition, this alone has not been enough to redress declining per capita consumption.

In 2001, the industry came to Government with a proposal to establish a new promotional levy, and to use the money generated to fund generic promotion. In addition, they wanted to establish a single industry owned company to manage promotion and industry R&D. The industry strongly argued that a national generic promotion program was needed to boost flagging egg consumption.

After an extensive consultation process, the Australian Egg Industry Association demonstrated that such a company was required, and that a majority of the industry supported the proposal. Having secured Government agreement for the proposal during June this year, the industry are now preparing themselves for a transition date of 1 January 2003.

Under the arrangements, all egg producers who pay the statutory promotional levy will be eligible to become registered members of AECL, and therefore will be able to have a direct input into the management and application of their statutory levies. Registered levy payers will be able to exert their influence through voting rights, appointment of board members, and input to the company's policy development and planning activities.

Integration of R&D, promotion and other industry services will enable the egg industry to be more responsive to the challenges it faces. The new company will also improve communication within the industry, with consumers and with government. This will especially be the case on issues such as food safety, animal welfare and disease management.

In terms of R&D, the new arrangements will see the existing egg sub-programme transferred from the Rural Industries Research and Development Corporation to the new company. The arrangements for this transfer are dealt with in a cognate bill, the Egg Industry Service Provision (Transitional and Consequential Provisions) Bill 2002.

The Bill

The Egg Industry Service Provision Bill 2002 provides for the new industry structure by enabling the Minister for Agriculture, Fisheries and Forestry to declare a company limited by guarantee as the industry services body.

Before the declaration can be made, the Minister must have entered into a contract with the industry services body detailing the arrangements under which the company will manage and administer industry levies collected by the Commonwealth and Commonwealth matching R&D payments. The contract can only be entered into if the Minister is satisfied that there are satisfactory accountability measures in place, including in the company's constitution.

Once the declaration has been made, the Commonwealth can make promotion and R&D payments to the company, as well as matching Commonwealth contributions for eligible R&D expenditure.

Accountability

There are a number of benefits associated with the new arrangements. More than ever before, levy payers will have a direct influence on the way in which their industry levies are utilised. Through their voting rights, members will hold the company's board accountable to the way in which they deliver industry service arrangements.

In addition, the new structure and levy will enable the egg industry to address the market failure which currently hinders egg promotion. By improving communication with consumers and boosting egg consumption, the company will promote the development and profitability of the egg industry.

While the model allows the industry to have a greater say in the management of its affairs, there will also be increased responsibilities. The distancing of government means the industry accepting responsibility for its activities and appreciating that there is no automatic recourse to government assistance when the going gets tough. In short, the industry will be responsible for planning its own future, strategically seeking priority outcomes, and managing for risk.

In terms of accountability to the Commonwealth, the new company will be bound by a number of measures. These measures will be outlined in the funding contract with the Commonwealth, and in the company's constitution. They include:

· comprehensive planning and reporting requirements, with copies of plans and reports to be made available to the Minister for Agriculture, Fisheries and Forestry;

· regular performance reviews to assess the company's efficiency and effectiveness in meeting planned priorities;

· regular meetings between the Chair of the industry company and the Minister for Agriculture, Fisheries and Forestry to discuss industry issues and to ensure that the Government's priorities for R&D are being addressed;

· a requirement for a mix of producer and specialist skills based directors on the board of the company including a specialist in corporate governance; and

· a requirement that the company remain separate from any industry agri-political activities. These sorts of activities should be conducted by the peak industry body, which is has not been included as part of the new company.

Should the company change its constitution in an unacceptable way, become insolvent, or fail to comply with the legislation or funding contract, the Minister for Agriculture, Fisheries and Forestry will have the ability to temporarily suspend or terminate the payment of statutory levies. Alternatively, the Minister will have the option to rescind the declaration of AECL as the industry services body.

Not only will these requirements ensure that the company is using statutory levies for their intended purpose, they will also help to secure a successful future for the new company.

Conclusion

This Egg Industry Service Provision Bill paves the way for the industry to look to the future with a more commercially driven and consumer responsive approach. With this new company, the industry will have the capability to respond more effectively and efficiently to current and emerging industry challenges. Ultimately this will mean increased egg consumption and improved industry profitability.

I commend the industry on its unity in bringing this proposal to Government. Their initiative is another example of a maturing agricultural and food industry looking to secure its future. It provides me with great pleasure to be working with the egg industry in implementing the arrangements and I am particularly impressed with the extensive levels of consultation both throughout the industry, with stakeholders, and with government.

This bill, and the accompanying transitional bill, creates a turning point for the management of industry affairs, and for the potential for industry growth and development. It will establish a solid foundation for the industry to improve its position in terms of egg consumption and overall profitability.

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EGG INDUSTRY SERVICE PROVISION (TRANSITIONAL AND CONSEQUENTIAL PROVISIONS) BILL 2002

This bill accompanies the Egg Industry Service Provision Bill 2002, which provides for the establishment of an egg industry company limited by guarantee under the Corporations Act. The company will be responsible for service provision, including research and development (R&D).

Under the existing arrangements, egg R&D services are provided to the industry by the Rural Industries Research and Development Corporation (RIRDC). The egg sub-programme is funded through a statutory industry levy, and matching Commonwealth funding for eligible R&D expenditure. Under the new arrangements, provision of R&D services will be transferred to the new company, along with the assets and liabilities associated with the RIRDC egg sub-programme.

The Egg Industry Service Provision (Transitional and Consequential Provisions) Bill 2002 provides for the transfer, and for the Minister for Agriculture, Fisheries and Forestry to declare the time at which it is to occur. In order to prevent any financial disadvantage to the industry, the bill provides for the transfer of assets and liabilities to be exempt from stamp duty. For the purposes of GST law, the transfer of assets is taken to be consideration provided by the Commonwealth to the successor body for entering into obligations under the funding contract. As a result, the Commonwealth will be able to claim a refund on any GST imposed.

Once the assets and liabilities have been transferred to the company, their use will be governed by obligations and accountability requirements outlined in a funding contract with the Commonwealth. In addition, details of the new industry services body's accountability arrangements to its members and to the Commonwealth will be included in its constitution.

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DAIRY INDUSTRY LEGISLATION AMENDMENT BILL 2002

The purpose of this bill is to provide for an additional function of the Australian Dairy Corporation (ADC) to allow for

· the planning, facilitation and participation in the reform of the dairy industry statutory service provider bodies, the Australian Dairy Corporation and the Dairy Research and Development Corporation;

· the funding of these processes; and

· the Minister to issue directions to the ADC in specific relation to this additional function.

The bill also provides for farmers with entitlements under the Dairy Structural Adjustment Program or Supplementary Dairy Assistance schemes to access exit assistance through the Farm Help Re-establishment Grant scheme, following the ending of the Dairy Exit Program on 30 June 2002.

In relation to the provision for an additional function for the ADC, it is clear that significant changes over recent years in the market situation and corporate structure of the Australian dairy industry, particularly since deregulation in July 2000, have prompted the dairy industry to seek a rationalisation of industry statutory service delivery arrangements to better meet industry priorities and to improve service delivery functions.

To move forward this reform agenda, the dairy industry has approached the Government with a proposal for reform, which would see the two statutory service providers merge and become one Corporations Act company, directly accountable to levy payer members. As with the wool, red meat and horticulture industries that have undertaken similar reforms, a particular focus of the dairy industry proposal is on providing the industry with greater ownership of R&D and market development priorities, as well as enabling levy payers to have a greater direct input into the nature and direction of these key service delivery activities.

Of course, as with any reform of this magnitude, investigations must be made into the viability, suitability and efficiency of what is being proposed and it is clearly important that, within these reforms, industry services are tailored to the new industry environment. This bill provides the funding mechanism for this process to take place by enabling the Australian Dairy Corporation to fund an investigation of the best options for reform, and thereby allowing Government and industry to work together to develop a proposal that meets all these requirements.

Additionally, the amendments provide for the ADC to fund the Commonwealth, the DRDC and industry's involvement in the reform processes to ensure a full consultative process takes place, along with the provision of advisers to assist in the investigation of the best options for reform.

While the Government has yet to consider a detailed reform proposal, it is clearly in the industry's interests to ensure that any proposal that comes forward has been fully analysed and rigorously examined by expert business and legal advisers. With the passage of this bill the work can begin in earnest, so that the Government can work towards industry's desired start date for the reformed bodies of 1 July 2003.

The Australian dairy industry continues to be an innovative, progressive and highly successful rural industry and its ongoing program of reform is to be admired. This bill will ensure that Government and the statutory authorities can assist the industry in meeting the challenges of the future and ensure the industry continues to grow and prosper—from the Australian farm gate to supermarket shelves throughout the world.

The bill also provides for farmers with DSAP and SDA entitlements to access exit assistance under the FHRG scheme. This is necessary following the cessation of the Dairy Exit Program on 30 June 2002. Currently only those farmers who are not holders of DSAP and SDA entitlements are able to apply for exit grants under the FHRG scheme. These amendments will enable this inequitable situation to be corrected by removing the impediments to holders of DSAP/SDA entitlement to access the Farm Help Re-establishment Grant scheme.

Importantly, the amendments provide the same level of access to the FHRG scheme as was available to DSAP/SDA entitlement holders under the Dairy Exit Program. The FHRG provides eligible entitlement holders with payments of up to $45,000 tax-free and access to a retraining grant of $3,500. The total amount of the exit payment will be based on an assets test and eligibility requirements applied under the FHRG scheme.

As was the case under the Dairy Exit Program, DSAP and SDA entitlement holders who are eligible for an exit grant will have this grant reduced by the amount of DSAP and SDA payments received, as well as having all future entitlements under the DSAP and SDA schemes cancelled. This is necessary to ensure that all farmers are treated equitably and that those with DSAP and SDA entitlements do not receive any unfair financial advantage.

The bill provides for the cost of these changes to the eligibility for the FHRG scheme to be funded out of the Dairy Structural Adjustment Fund from which the Commonwealth's dairy industry restructure measures are funded. It is expected that there will be little or no impact on the Fund given the requirement that all future DSAP and SDA entitlements be cancelled as part of the grant of exit payments under the FHRG scheme.

The Government is conscious that those farmers with DSAP or SDA entitlements may have to confront more general circumstances outside industry deregulation that will require Government assistance to exit agriculture with dignity and with realistic choices for their futures. For this reason, the Government takes the view that these farmers should be provided with access, on an equitable basis, to the current exit grant arrangements available under the FHRG scheme.

In conclusion, the Government believes that it is important to continue to support efforts aimed at ensuring the continued profitability and expansion of the dairy industry in Australia. These efforts not only relate to the possible reform of the dairy statutory bodies, but also extend to supporting those who, for a variety of reasons are unable to continue in the industry. These amendments signify the Government's continuing commitment to the dairy industry as a whole, to individual farmers and to their future.

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ACIS ADMINISTRATION AMENDMENT BILL 2002

The purpose of the Automotive Competitiveness and Investment Scheme (ACIS) Administration Amendment Bill 2002 is to make a number of minor amendments to the ACIS Administration Act 1999. These amendments are intended to allow eligible motor vehicle producers to claim ACIS uncapped production credits for the production of derivatives of passenger motor vehicles such as utilities, panel vans and pick-ups with effect from the date of commencement date of ACIS.

ACIS commenced on 1 January 2001 and is scheduled to end on 31 December 2005. The scheme encourages the development of internationally competitive firms in the Australian automotive industry by rewarding eligible production, strategic investment and research and development. ACIS participants earn incentives in the form of duty credits which can be used to offset customs duty on eligible automotive imports, or can be sold for use by another party.

Prior to the introduction of ACIS, the automotive industry received uncapped benefits for the production of passenger motor vehicles, utilities and panel vans through the Duty Free Allowance (DFA). In June 1997, when announcing future assistance arrangements for the automotive industry, the Government stated that the DFA would continue and that a new transitional assistance program would be introduced.

ACIS was announced as the new transitional assistance program in April 1998. ACIS was subsequently modified to embody two elements—an uncapped element, and a capped element. The uncapped element was meant to be equivalent to the DFA, and is equal to 15 per cent of the value of production of passenger motor vehicles (PMVs) sold in Australia and New Zealand, multiplied by the current PMV tariff rate.

The current ACIS definition of passenger motor vehicles unintentionally excludes utilities, panel vans and pick-ups. As a result, motor vehicles producers are only eligible to claim capped payments for the production of these vehicles. Modulation means that the production of these derivative vehicles receives a lower rate of payment than if they were paid from the uncapped element. This is clearly inconsistent with the Government's 1997 stated intention to continue the DFA.

This Bill corrects an oversight in the original legislation and makes specific provision in the ACIS Act for the production of utilities, panel vans and pick-ups to attract uncapped incentives, from the scheme commencement date, in line with the Government's original intention.

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STATES GRANTS (PRIMARY AND SECONDARY EDUCATION ASSISTANCE) AMENDMENT BILL (No. 2) 2002

This bill confirms the Government's commitment to school education and improving the outcomes for all students. On 7 December 2000 this Parliament passed the States Grants (Primary and Secondary Education Assistance) Act 2000 (the Act), the principal Act for Commonwealth funding for schools for the 2001-2004 quadrennium, which included provision for capital funding of government and non-government schools.

This amendment is to provide capital grant funding amounts for government and non-government schools for the years 2005 to 2007.

Specifically, the bill amends Schedule 3 and Schedule 5 to the Act to insert maximum capital grant funding amounts for government and non-government schools for the calendar years 2005, 2006 and 2007.

Schedules 3 and 5 to the Act set out funding amounts for the capital grants program, for government and non-government schools respectively, for the period 2001 to 2004.

This amendment is foreshadowed in the Act in Note 1 to Schedule 3 and Schedule 5, which states “Amounts for 2005, 2006 and 2007 will be inserted by an amending Act.” The bill will permit approval of capital grant funding amounts for future program years beyond the four year funding period 2001-2004, extending to the years 2005, 2006 and 2007, in keeping with long standing program administrative arrangements.

The bill inserts funding figures for the years 2005, 2006 and 2007 for the capital funding of government and non-government schools, thereby providing authority under which I can approve capital projects in government and non-government schools in the out years.

In both the government and non-government sectors planning is now taking place for capital projects in schools in 2005. State Governments and non-government block grant authorities which administer the capital grants program in each of the sectors make recommendations on capital grants. When approved by me or my delegate these could commit Commonwealth funding up to two years in advance of the current program year.

As the planning and approval process for capital projects and capital grants requires long lead times and payment for individual projects can run over a number of years, it is necessary for program administration to provide, in 2002, authority for approval of projects into the 2005 calendar year. In 2003 it will be necessary to approve projects into the 2006 calendar year and in 2004 it will be necessary to provide authority for 2007 projects. I cannot approve projects until the figures for the out years are included in the Act.

In 2002, a number of capital projects, that include 2005 funding will be due to commence during the end of year school break. In line with long-standing administrative arrangements in October this year my Department will provide me with a Schedule of capital projects for non-government schools. Government school capital project approvals will also require this forward commitment of Commonwealth capital funding.

All individual project assessments and funding recommendations are made by State education departments for government schools and by non-government block grant authorities for non-government schools according to criteria set by the Commonwealth. I then approve recommendations from these bodies.

Over 250 major capital works are funded annually in each of the two sectors as well as more than one thousand minor works projects.

The bill will appropriate approximately $898 million for capital funding over the 3 years, 2005, 2006 and 2007. Of this, $667 million is for government school capital works and $231 million is for non-government school capital funding. These amounts are subject to supplementation as prescribed in the Act.

In the 2001-04 quadrennium, schools will receive almost $1.3 billion in Commonwealth funding under the Capital Grants Program. Of this funding, $936 million will go to government schools and $357 million to non-government schools. This effectively means that over 72% of capital funding will go to government schools, a sector with 69% of enrolments.

Any delay in funding approval through the non-passage of this bill will cause disruption to the building plans for schools in all States and Territories.

Speedy passage of the bill is necessary to ensure that these important projects for schools are not delayed.

I commend the bill to the Senate.

Ordered that further consideration of these bills be adjourned to the first day of the next period of sittings, in accordance with standing order 111.

Ordered that the Dairy Industry Legislation Amendment Bill 2002, the ACIS Administration Amendment Bill 2002 and the States Grants (Primary and Secondary Education Assistance) Amendment Bill (No. 2) 2002 be listed on the Notice Paper as separate orders of the day.