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Thursday, 27 March 2003
Page: 10474

Senator O'BRIEN (8:05 PM) —The Dairy Industry Service Reform Bill 2003 and the cognate levy bill, the Primary Industries (Excise) Levies Amendment (Dairy) Bill 2003, make fundamental changes to the delivery of Australian dairy industry services. A fundamental change in this legislation is the privatisation of the Australian Dairy Corporation and its registration as a Corporations Law company, known as Dairy Australia Ltd. The Dairy Research and Development Corporation will be abolished and its functions will be transferred to the company.

The reform bill gives the Minister for Agriculture, Fisheries and Forestry the authority to declare an industry services body to receive and expend industry levy funds and matching Commonwealth R&D funds. The industry services body will deliver the services currently delivered by the Australian Dairy Corporation and the Dairy Research and Development Corporation, with minor exceptions. The levy bill consolidates three existing industry levies into a new levy known as the dairy service levy. All payers of the dairy service levy will be eligible for membership of the company and will also be entitled to vote at periodic polls on the levy rate. The proposed industry service model is similar in character to that introduced by government in recent years in relation to the meat, wool, horticulture and pork industries.

The Senate recently agreed to the passage of legislation consolidating the delivery of services to the egg industry in a single industry services body. Labor has previously expressed concern about the consolidation of industry functions in single industry service bodies. Nonetheless, we have not opposed these changes because we have, on each occasion, received assurances of strong support from the respective industries. The changes before us come with the same assurance, delivered by the government and representatives of Australian Dairy Farmers Ltd and Australian Dairy Products Federation Inc.

In relation to previous industry structural changes, Labor has asserted the need to maintain accountability of expenditure for public funds. The privatised ADC will manage $35 million in levy funds and $15 million in matching Commonwealth research and development funding each year. The capacity for the parliament to scrutinise the expenditure of these funds is clearly degraded in the transfer from a statutory corporation to a Corporations Law model. In his second reading speech in the other place, the Minister for Agriculture, Fisheries and Forestry, Mr Warren Truss, said that the new company will receive levy funds and matching contributions so long as it remains accountable for them to both levy payers and the parliament. Appropriate accountability measures in respect of levy payers will be imposed on the company through the Corporations Law.

The reform bill provides for a funding contract between the Commonwealth and the company. This funding contract will impose a reporting requirement on the company, but that will require reporting to the minister only—that is, despite the assurance from Mr Truss that the company will be accountable to the parliament, there is no provision for such accountability in the bill. For that reason, Labor will move to include such accountability to the parliament in the reform bill. The company will, after all, be responsible for managing about $50 million per year in levy funds and matching payments. Thirty-five million dollars will be levied by the Commonwealth for the provision of dairy industry services and $15 million of public money will be paid to the company for research and development purposes.

The concern about accountability was a matter addressed by the shadow parliamentary secretary for primary industries and resources, Mr Sid Sidebottom, during debate on these bills in the other place. It is a matter that I have addressed with the minister's office, the department and the industry. I have been mildly concerned by the affront on the part of some industry representatives that the parliament might require some reporting to it on the expenditure of levy and matching funds. The proposed company will have special obligations as the declared industry services body for the Australian dairy industry. This company will have the privilege of expending very substantial sums of money levied by the Commonwealth and substantial matching R&D funding.

Accountability was a focus of the Senate Rural and Regional Affairs and Transport Legislation Committee during its recent inquiry into the provisions of these bills, as noted in the committee report presented earlier today. The amendments I will move on behalf of the opposition are consistent with the comments of Labor senators in the report of the committee. It is appropriate to note that some accountability measures introduced by Labor in this chamber in respect of changed pig industry service arrangements have been incorporated in the reform bill. These measures include the requirement that a declaration of an industry service body be tabled in each house of the parliament and published in the Gazette. I note and endorse the requirement that the minister table an annual report in relation to the administration of the Dairy Structural Adjustment Fund by the industry services body. Our concern about accountability is no surprise to the government and I look forward to its support for our simple amendments to strengthen the accountability regime.

I want to note a matter concerning the restriction on so-called agri-political activity that the government proposes to place on the industry services body. The current levy principles and guidelines—that is, the guidelines that apply to all levies—say that statutory levies are not to be used to fund agri-political activities. The principle is reasonable; the problem is that the government has not worked out what that means. The current draft constitution—draft 4, I believe—says that, so long as the company is the services body, it must not knowingly engage in or support, directly or indirectly, financially or otherwise, political campaigning or political funding. The funding contract will further define the meaning of agri-political conduct but the definition in the current draft reads: being reviewed.

Unlike the constitution, which is now in its fourth draft, just one draft of the funding contract has been prepared. Prohibitions apply in relation to other industry service bodies, but the prohibition is not consistent from industry to industry. I am, frankly, not surprised. Some weeks ago I sought advice from the minister's office and the department on whether the proposed prohibition in the company constitution would be consistent with that in the Australian Pork Ltd constitution. I was told there was no such prohibition in the APL constitution, and the dairy arrangement would be breaking new ground. The department offered the same advice to the Senate inquiry. This is despite the fact that the APL constitution, available on the company web site, provides a very clear prohibition on agri-political conduct. It contains a four-part definition and provides what a director of that company must do if, in his or her opinion, the company proposes to engage in conduct which might constitute such activity.

The misunderstanding and confusion on the part of the government about the existence of the APL constitutional provision reflects the failure of the government to come to terms with all the implications of the new industry service models it has embraced in dairy and in other industries. It is reasonable to impose a ban on the use of statutory levies and matching funds for agri-political purposes, but it is equally reasonable to impose a consistent prohibition across industries.

I want to address what I see as a fundamental problem with the government's management of the dairy industry service reform program. The proposed start-up date for the company is 1 July 2003, a matter of some weeks away. The constitution and funding agreement—both documents that have to be agreed between the Commonwealth and the company—are not anywhere near finalisation. I understand negotiations on the funding agreement only commenced this week. No regulations have been prepared. Mr Truss, the responsible minister, said in the other place on 6 March this year:

I note the comments from the opposition that they have not yet got access to the proposed constitution of the new company and the memorandum of understanding. I acknowledge that. I do not have a copy of it either; it is in preparation.

The minister also said:

It is our intention ... to have the draft of those available to the Senate at the time that they are dealing with their inquiry into this legislation. To the best of my knowledge, there are no significant issues but it is reasonable that the House should have access to those sorts of matters in the context of dealing with the legislation, and it is certainly our intention that that would happen.

Mr Truss went on to say:

The house is entitled to a look at those documents, and it is certainly our intention to deliver in that regard.

Despite the minister's stated intentions, he did no more than deliver an early draft of the constitution, the first draft of the funding contract and no draft of the subordinate legislation. In respect of the proposed regulations, we are told that even the drafting instructions have not been prepared. It is Labor's contention that the minister has completely mucked up the introduction of the industry structure. Most importantly, in doing so he has let the industry down.

The opposition sought to deal with the legislation expeditiously but has been forced to confront unreasonable deadlines based on incomplete information. It is only the advice from industry that a delay to the establishment of the company is undesirable that has caused the opposition to agree to support its passage on the basis of the incomplete information from the government. There is a sense of deja vu about the administration of the reform proposal. Almost every industry reform process managed by Mr Truss has been the subject of the same disorganisation. We do not think it is good enough. We hope that the minister's conduct does not delay the commencement of the new industry structure or impede its effective operation due to the imperfect arrangements agreed in the current mad rush to finalise the arrangements. It is important to remember that the changes proposed in these bills did not evolve overnight. While the passage of the dairy industry legislation reform bill in October last year permitted the ADC to fund the development of the final model, the proposal is not unexpected. It is a mistake for the minister to blame problems on the timetabling of his own legislation.

The opposition will be supporting the legislation, subject to the passage of amendments which are in circulation. I expect that they will be passed and it is our hope that the government will accept them. I can do no more than stress again that this is a set of arrangements whereby we are effectively equipping a private company with the power to impose, through the mechanism of the parliament, a charge, a levy, on all industry participants with no exception. That is a serious matter and we take it very seriously. That is why we are insisting that the processes that are followed are proper, and that proper consideration is given to all of the matters that are relevant to this debate. I intend to address those matters further in the committee stage.