Senator TROETH (Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry) (8:27 PM) —The Dairy Industry Service Reform Bill 2003 is the result of a dairy industry and government process aimed at providing the industry with greater ownership and control over dairy industry service arrangements. The bill provides for the conversion of the Australian Dairy Corporation into a company under the Corporations Act 2001, to be known as Dairy Australia Ltd, and for all of the assets and liabilities of the Dairy Research and Development Corporation, DRDC, to be transferred to this new company.

Dairy Australia is to be a Corporations Act company, limited by guarantee, with membership comprising voting members drawn from dairy levy payers, group A members, and non-voting members made up of the peak dairy farmer and processor bodies, group B members. Dairy Australia will be responsible for undertaking functions on behalf of the dairy industry similar to those currently undertaken by the ADC and DRDC. The bill provides for the current promotion levy, research levy and corporation levy currently directed to the ADC and DRDC to be rolled into one levy, to be known as the dairy service levy; for dairy levy moneys collected by the government to flow to the new company; and for matching Commonwealth research and development contributions in relation to eligible R&D expenditure by the company. Dairy Australia will also administer the Dairy Structural Adjustment Fund currently administered by the Australian Dairy Corporation. For this reason, the dairy adjustment levy will also flow to the industry services body but will be quarantined from other levy amounts.

The bill makes no substantial change to the operation of the Dairy Structural Adjustment Fund from its current administration by the ADC other than it is to be kept and treated as a trust. The Minister for Agriculture, Fisheries and Forestry will retain joint responsibility for the solvency of the Dairy Structural Adjustment Fund as is currently provided for under the Dairy Produce Act.

Dairy Australia, as the industry services body, will be required to conduct periodic polls of levy payers on the rate of levy. Details on the conduct of these polls including the timing of the polls will be set out in regulations. The staff of the ADC will continue to be employed by Dairy Australia following the conversion of the ADC. Also, DRDC employees will transfer to Dairy Australia. The bill provides for the fair and equitable treatment of all staff. A human resource management strategy is being developed in conjunction with the ADC and DRDC in relation to continuous employment provisions.

In relation to the amendments proposed by the opposition I must make it clear that reform processes of this nature are about handing control to the levy payers themselves and away from the government. It is for this reason that the bill makes the company accountable to its members for its activities and to all levy payers in terms of the rate of the levy. While the Commonwealth must be satisfied through the statutory funding agreement that the levy expenditure is appropriate, it is a requirement of the company to remain accountable primarily to its members as is required under the Corporations Act. For this reason the government is willing to support the amendments proposed by the opposition. The government is also willing to support the amendments proposed by the Democrats. The constitution of Dairy Australia sets out the membership structure of the company, therefore details relating to membership will be contained in the constitution of Dairy Australia and are not dealt with in the bill.

I can tell you that Dairy Australia's membership will comprise voting members drawn from dairy levy payers—group A members— and non-voting members will be made up of the peak dairy farmer and processor bodies—group B members. Group A members' voting entitlements will include one vote for every whole dollar of dairy levy paid in the financial year preceding a meeting of that company. These voting entitlements will be set out in the company's constitution and are in line with those of other privatised industry service bodies in the meat, wool, horticulture, egg and pig industries. The voting entitlements are similar to voting rights accorded to shareholders in private companies where the value of votes is linked to the shareholder's investment in the company. While Dairy Australia will not be a company limited by shares, the principles remain the same in terms of level of investment through levy payments.

In relation to voting entitlements of levy payers for the periodic levy poll as set out in the bill, it is intended that regulations governing this poll will reflect the voting entitlements for group A members of the company as laid out in the constitution. It is wholly appropriate that the investment of levy payers is reflected in the voting entitlements not only on company matters but also in relation to the poll to be conducted periodically on the rate of the levy. Finally, I would encourage all dairy farmers to examine the benefits of the new arrangements for them and also to consider becoming active members of Dairy Australia. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.