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Thursday, 21 June 2007
Page: 34


Senator O’BRIEN (11:04 AM) —It has come to this. The government pursues the ramming through of the Wheat Marketing Amendment Bill 2007 within a week of its introduction, without adequate consultation with growers or their representatives and without an opportunity for the parliament to examine it through a committee which would have the time to test the various aspects of the legislation and consult with growers and grower organisations, come to a view and make a recommendation to this place to deal with any potential flaws in the legislation and any potential unintended consequences. Usually, when the government rams legislation through the parliament with this haste, we find that we need to come back and revisit it because the government usually gets it wrong in some respect. The drafting usually does not encompass the knowledge that the industry has of itself, because, of necessity, the draftsperson is a specialist in drafting, not a specialist in the industry concerned.

And, as we have seen, not only has the legislation only been introduced a week ago but it has already been amended in the House of Representatives. So much for the control of the subject by the Minister for Agriculture, Fisheries and Forestry. After all of the disputes in the coalition party room, after all of the problems that existed there, one would have thought that the minister—having allegedly, with the assistance of the Prime Minister, thrashed the matter out—could have got it right when he produced the legislation for the House of Representatives. But, no, it had to be amended in the House of Representatives before it came here. Indeed, as far as Labor is concerned, it is still an inadequate legislative approach to the wheat industry.

This is a government that is regularly failing the wheat industry. It is a serial failure with regard to the wheat industry. The first failure was of course—


Senator Boswell —You’ve got to be joking!


Senator O’BRIEN —No, I am not joking. I will take that interjection from the buffoon from Queensland.


Senator Boswell interjecting—


Senator O’BRIEN —Well, it is very interesting that—


Senator Parry —Mr Acting Deputy President, I raise a point of order. I think the term used to describe Senator Boswell is unparliamentary, and it should be withdrawn.


The ACTING DEPUTY PRESIDENT (Senator Chapman)—I would agree. I ask Senator O’Brien to withdraw that term.


Senator O’BRIEN —I withdraw that term. The fact of the matter is that this government has failed the wheat industry and failed it on a regular basis. It failed when it introduced the current wheat marketing arrangements in 1997-99, when it went through the process of setting up the current model. It set up a flawed single-desk model which, frankly, is the basis of the difficulties that the industry faces today. And, despite many authoritative warnings, time and again, year after year, the Howard government ignored calls for reform. This model, which came into effect on 1 July 1999, converted the Australian Wheat Board from a government owned corporation to a private company—AWB Ltd—which was owned and controlled by growers, and AWB Ltd’s subsidiary, AWB International, was established to manage the export single desk. In doing that, the Howard government legislated a protected monopoly status for a private company.

This government’s second failure was when the Wheat Export Authority provisions were put into legislation. In our view it was designed to fail. When the single-desk model established the Wheat Export Authority it should have given it sufficient powers to oversee AWB and its subsidiaries. The Wheat Export Authority should have been provided with adequate powers to ensure that AWB’s corporate conduct was not only ethical but lawful. The Wheat Export Authority should have been able to act before AWB was allowed to engage in corrupt conduct in relation to the wheat for weapons scandals. The board of the Wheat Export Authority should have been sufficiently independent of industry and the executive, and appointments should have been based on expertise in business and marketing. These were failures inherent in the model that the Howard government established, and they resulted in a lack of transparency, a lack of accountability and major failings in corporate governance. The government ignored warnings about these governance failures from the national competition policy review in 2000 and from a Senate inquiry in 2003. It ignored multiple warnings from the regulator itself as well as repeated calls for reform from grower groups. Despite these warnings, the government failed to introduce any substantial reform for the Wheat Export Authority.

This government’s third failure was not to resolve the conflict of interest between AWB Ltd and AWBI, and many on the government side have been keen to raise that very issue over the last four or five years, so it is not an issue which has been unknown to the government. As I said, the problem was inherent in the model that the government established. It was identified by the national competition policy review in 2000, and that review recommended changes to remove the inherent conflict of interest. But the coalition ignored the recommendations, and the arrangement has persisted to the detriment of wheat growers.

Under the model, one of the key functions of AWB Ltd was to provide services to AWB International to enable it to manage the pool. A total of 77 separate services were provided, and there was no requirement that they be contestable. As a result, returns to growers from the pool have not been maximised because the cost of operating the pool has not been minimised.

The government’s fifth failure was the failure of accountability. It ignored Senate recommendations—unanimous cross-party recommendations—on things such as the regulation of boxed and bagged wheat back in 2003, reforms to governance and the WEA’s oversight of AWB International, and measures to address the conflict of interest. These were unanimous recommendations from the Senate Rural and Regional Affairs and Transport Legislation Committee, which included members of the coalition, and the government and the National Party minister ignored those recommendations. We are now seeing an attempt to remedy another of the failures, which was the regulation of boxed and bagged wheat. Only now, after almost eight years of operation of this scheme, are we seeing that there is a move to deregulate boxed and bagged wheat, which, as I say, was recommended four years ago.

The wheat for weapons scandal and the damage that that has caused Australia as a trading nation is, in every way, a direct responsibility of this government in the way that it has failed to equip the regulator to oversee AWB Ltd and AWB International. Over a period of seven years, between 1998 and 2005, there were dozens of warnings received by the highest level of the Australian government from official agencies, including the Australian UN mission in New York, the Canadian government, the United Nations, Australia’s US trade commissioner, the Department of Foreign Affairs and Trade and the Iraqi Provisional Coalition Authority. But the Howard government failed to take any action and preferred to accept AWB advice that the allegations of corruption were unfounded.

We then saw the Cole commission, which the government successfully corralled so that it could not focus on the government’s failings, but Commissioner Cole did make a critical recommendation in relation to wheat marketing. His report stated:

... that there be a review of the powers, functions and responsibilities of the body charged with controlling and monitoring any Australian monopoly wheat exporter. A strong and vigorous monitor is required to ensure that proper standards of commercial conduct are adhered to.

The government still has not responded in any adequate way to that recommendation. To all intents and purposes it has ignored Commissioner Cole’s recommendation. The Prime Minister has acknowledged the need to address the Wheat Export Authority’s powers to oversee wheat marketing but, in terms of what is in this bill, I would say that the changes are minimal.

Last month the Prime Minister referred to the critical opportunity for the government to take a strategic decision in relation to the AWB and wheat marketing generally. It was an opportunity to prove to Australia’s farming and investment community that he actually had a plan for the wheat industry, but pretty clearly, from this legislation, we see that the government only has a plan for the next election. And, in relation to that, it will be very interesting to see what the industry is going to do with the model that the government puts forward.

Isn’t it interesting that when the government has come forward with a piece of legislation which says, ‘Well, we really aren’t going to be in a position to tell you what we’re going to do until after the election; we’re really not going to be in a position’—


Senator Johnston —That’s what you’re saying!


Senator O’BRIEN —No, it is not what I am saying; it is what you are saying. The dishonesty of the government’s position in this debate is manifest. The government is putting down a piece of legislation which effectively says, ‘In the event that a yet to be formed body cannot be formed by 1 March to manage a multibillion-dollar export market, with all the arrangements in place to do that, we are going to revert to AWB.’ That is what the bill says.


Senator Boswell —No, it doesn’t.


Senator Adams —No, it doesn’t.


Senator O’BRIEN —I think you should tell the truth, because that is what the bill says.


Senator Johnston —No, it doesn’t!


Senator O’BRIEN —We will test the coalition on that issue during this debate


Senator Boswell —You don’t understand it.


Senator O’BRIEN —Frankly, there is a bit of a con going on between the National Party and the Liberal Party in relation to this debate.


Senator Johnston interjecting—


Senator O’BRIEN —Clearly, Senator Johnston has been conned, because he does not understand what the legislation says. It is interesting that Senator Johnston has not said a word in these debates. He is a senator from Western Australia—a senator from a state that exports a whole lot of wheat—and he has never said a word in these debates, but he wants to interject because the government are embarrassed about this. They want to rush this thing through the parliament. That is why they did not want an inquiry. The government wanted this thing through the parliament without an inquiry because they did not want growers to have a say. They did not want an inquiry to embarrass them. They did not want the dispute within the party room to go on—which it would have because the inquiry would have showed that there are serious deficiencies in this piece of legislation.

The only part of this legislation that has any urgency at all, considering we have waited years in relation to the deregulation of boxed and bagged wheat, is the extension of the veto power to be held by the minister on the basis that it should not refer to AWB. Frankly, in the original bill, that is exactly what would have happened on 1 July. So there has been a concession made to part of the argument in the coalition party room in amendments that have now been made to the original bill—that is, that AWB cannot have the veto power. But it can have the single desk. Indeed, that is what the legislation says. If government members say that that is not the case, they have not read it—they do not know it. All we are depending on is the suggestion that something will happen after the election—something which has not been defined, something which may well be different things in the minds of different members of the coalition party room. It certainly has not been spelt out to wheat growers and it certainly has not been spelt out to the community.

We have given a contingent notice to split this bill so that the issue of the veto power can be dealt with and the rest of this bill can be set aside, because frankly it is not urgent, and we still believe that growers deserve the opportunity to have some proper input into this through the processes of a committee—controlled by the government, I might add—of the Senate that has looked at this and other issues on many occasions and on most occasions has come up with unanimous findings.

So we have question marks about what we consider to be flaws in the quality assurance schemes for boxed and bagged wheat. Although there are claims of grower support for this bill, the strength and number of submissions Labor has received indicate that the government does not have anywhere near a united industry position or grower support for the position it has put forward. We have concerns about that. It is worrying that we are being told that there is some possibility of an entity with grower support developing but there is no test in the legislation to determine whether that is actually the case. There is no proper ministerial accountability and there is no transparency of the reporting process in the legislation. And I say again, despite the PM’s promises, AWB can resume control of the single desk as the single seller—albeit without the veto power but still with the single desk—if there is no exercise of a determination under new provisions of the act to determine that there is another organisation that can take control of it. So all a National Party minister, if the coalition were to win the next election, after the election needs to do is nothing. What will happen? AWB—‘nominated company B’—will be the entity which controls marketing.


Senator Adams —No, it can’t—you haven’t read it.


Senator O’BRIEN —I have read it. If Senator Adams does not believe that then Senator Adams is being conned.


Senator Johnston —Rubbish; you just can’t understand it!


Senator O’BRIEN —I am very happy, because it is not me that is saying that; it is grower organisations around the country—who have had a limited chance to look at it—who are saying that. Frankly, if you think they are going to be conned by this sort of bluster in the chamber, you are absolutely wrong, Senator Johnston. Let’s be absolutely honest about this: this process is all about getting this legislation out of the way to resolve disputes in the Liberal Party and the National Party in party rooms to get through to the next election. That is all this is about. There is nothing in the government’s proposal which has any real support from growers. They have not been given a chance to give it support because they have not been given a chance to understand it. What did the Prime Minister say? In the House of Representatives on 22 May he said:

... only a small minority of that 70 per cent favoured the single desk remaining in the hands of AWB. That is a conclusion that the government completely shares and endorses.

Then they put this piece of legislation up that will achieve just that. Despite the Tuckey amendment in the House of Representatives, which prevents the AWB regaining the veto power, the key point is: AWB can still be the single-desk holder. It can still be the company which has the exemption from export controls conferred upon it by section 57(1A). The only difference is that it will not have the veto power.

But of course it is possible that some other company may take control of the single desk. This legislation also indicates that that company would have the veto power. This legislation provides no guarantees or protections to ensure that the new entity, the designated company, would not simply behave in the same corrupt manner as AWB did. Talk about slipshod legislation! Here we have a government that allowed the wheat industry—and I am not blaming growers or their representatives for this—to get into a situation where it became the focus of Australia’s greatest trade scandal, and the first piece of legislation that the government puts through fails the test of proper accountability, scrutiny and transparency. It sets up a model which can visit upon this country similar or the same arrangements for the future, and it does that by ramming the legislation through the parliament, denying a Senate committee the opportunity to look at it and guaranteeing that it will be passed today—and then, hopefully, the focus will go off the government.

We will be moving amendments to this legislation. I want to make sure that the Acting Deputy President is aware that we require this debate to go into committee. I also have a contingent notice of motion, which needs to be dealt with during the second reading debate on this matter, which goes to the question of splitting the bill. As I said, we are quite happy to pass legislation which deals with a provision preventing the veto power reverting to AWB. We have been prepared to give that expedited passage. We are not happy with the rest of this legislation and, therefore, we believe that it ought to be split. In any case, because we have been denied a committee reference on this matter, we will be taking time to obtain absolute clarification on the meaning of the bill and any provisions that we have concerns about.

In terms of other contributions, during the committee stage of this debate we will be taking the time to elaborate on some of the matters that I have raised in my second reading contribution. The fact is that this is an appalling piece of legislation in the way that it has been drafted, it has been handled appalling by the government and it is a travesty being foisted upon wheat growers and the Australian community.