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Thursday, 21 June 2007
Page: 39

Senator MURRAY (11:24 AM) —The Wheat Marketing Amendment Bill 2007 seeks to amend the Wheat Marketing Act. In real terms it gives effect to three things: the Liberal Prime Minister’s promise to members of the National Party to keep alive their desire to return to a single desk; to provide time to work out a longer term solution to competing interests and philosophies concerning wheat exports; and to temporarily maintain a modicum of choice by letting the Minister for Agriculture, Fisheries and Forestry temporarily allow more than one entity to export wheat.

I note that the minister said in his second reading speech that it is the wish of Australian farmers to retain the single desk for wheat exports, but I am far from convinced that it is the wish of the majority of wheat farmers in Western Australia. Domestic producers of wheat predominate in the eastern states. The odd thing is that, although domestic wheat is sold in an open, deregulated, competitive market, it is claimed that a possible majority of wheat farmers in the eastern states want a single-desk export market. It is WA farmers who constitute the great bulk of wheat exporters, and they are of a different mind. A minority want total deregulation with an open, competitive market. Another larger minority want the retention of the single desk. My impression is that the rest, a somewhat silent majority, want a regulated market with a choice of a few licensed exporters.

According to the government, the majority of Australian wheat farmers spoken to by the Ralph consultation commission do want retention of the single desk. That interpretation is highly questionable. In any case, Australia is a modern, open-market, competitive economy. As a matter of public policy, monopolies are not desirable and need to carry strong public interest arguments for their imposition or retention. In my opinion, that argument has not been made for export wheat, particularly when all other grains and all other rural products are happily exported with a choice of exporters in normal open-market arrangements. If a single desk is not needed for all other agricultural products and all other trade products, why is it in the public interest for it to be retained for wheat?

This bill does the following. Schedule 1 provides a statutory Wheat Export Authority with wider information-gathering powers and provides the Minister for Agriculture, Fisheries and Forestry with the power to direct the Wheat Export Authority to undertake investigations that the minister considers to be in the public interest.

Schedule 2 extends the temporary transfer of the veto power over bulk wheat export applications from AWB International to the minister. The power sunsets on 30 June 2007 but will now be extended to 30 June 2008. This prevents the veto from reverting to AWBI while industry manages the 2007-08 harvest and comes up with an alternative single-desk body to deal with future harvests.

Schedule 3 commences on 1 March 2008 and amends the act to give the minister the power to designate a company as the holder of the single-desk export privilege under the act. This is achieved by inserting a new section in the act which will allow the minister to rescind the previous declaration and make new declarations.

Schedule 4 amends the bill to deregulate wheat exports in bags and containers. This removes the requirement for wheat exports in bags and containers to first have consent from the Wheat Export Authority. In its place, the exporters are required to comply with conditions of a quality assurance scheme being developed by the Wheat Export Authority. Penalties apply for noncompliance with that scheme. The deregulation of exports in bags and containers and the quality assurance scheme will commence as soon as details of the scheme are settled.

Schedule 5 commences on 1 October 2007 and is designed to change the governance arrangements of the Wheat Export Authority. It will become an agency under the Financial Management and Accountability Act 1997 and be renamed the Export Wheat Commission. Staff of the new commission will be engaged under the Public Service Act 1999. It will have a skills based commission of between four and six members, with all members appointed by the minister. At least one but no more than two commissioners must be appointed based on their expertise in grain production. These changes are part of the Uhrig reforms for the governance of Commonwealth agencies.

Schedule 6, which also commences on 1 October 2007, is to facilitate the transition of the WEA into the EWC, regarding administrative matters.

Several of the schedules raise significant issues for the Australian Democrats. Schedule 1 gives the Wheat Export Authority, now the EWC, and the minister better information-gathering powers. That would appear on its face to be a good idea. It is one of those amendments which the government can point to and say, ‘See, we have taken note of what the Cole commission recommended and we have expanded the minister’s information-gathering powers.’

I do not want to be cynical, but one of the things that were glaringly obvious from the Cole commission was not that ministers and their bureaucrats lacked the power to ask questions of the AWB but that they were unwilling to ask the questions and gather the information necessary. Having the power and actually using it to ask the hard questions are two entirely different things. It was again clear from the Cole inquiry that, for all intents and purposes, Westminster ministerial responsibility no longer has relevance. Foreign Minister Downer and Trade Minister Vaile both gave evidence to the inquiry, which made it clear that, although these matters stood squarely within their portfolio responsibilities, they considered themselves not even indirectly responsible for the failure to discover and expose the AWB’s crooked culture and actions. Where written evidence or suspicions of controversial matters made it to their offices, they—and by extension their personal and departmental advisers—argued that they were mostly not even made aware of it. If they were made aware of it, they did precious little about it.

In a bygone era, when the Westminster system of ministerial responsibility applied, they would have been for the high jump. This is not going to happen now, but at least AWB’s senior management and directors should be for the high jump. However, we were told in estimates by Commissioner Keelty from the AFP that ‘at the moment’ there was no indication that charges would be laid against any individuals involved in the scandal. As for the company, in light of what has happened the very last people who get the single desk back should be the AWB. By all means, let the company try to remake itself, but it should realise that it is on probation. If they can withstand the deluge of litigation that we have been told to expect, let them make their way in a market economy, not as a corrupt monopolist.

Before I leave this topic, I remind the Senate that the Democrats have campaigned long and hard for a code of conduct for ministerial staff so that there will be open and accountable channels of communication which are properly documented. The Cole inquiry provides further evidence that the need for such a code, also recommended by the Senate Finance and Public Administration References Committee, is even more pressing.

Schedule 2 extends the temporary transfer of the veto power, which was due to sunset on 30 June 2007, to 30 June 2008. This prevents the veto from reverting to AWBI while it manages the 2007-08 harvest. The problem is that this is a stopgap measure while the coalition work out a solution to two opposing views. In general, The Nationals consistently—but wrongly in my view—want to retain the single desk, preferably under the AWB, and the Liberals—rightly in my view—want a more competitive market with a choice of exporters under a licensed and regulated export system. There is no doubt that the AWB’s hold on the single desk should end.

As for the WEA, it does indeed need a shake-up. They have proved to be a malfunctioning statutory body. As a Liberal senator pointed out months ago, it is a model which is weak, unwieldy and confused in the face of corrupt corporate power like AWB’s. It has also just gone along with a sloppy DFAT governance attitude instead of doing the digging and questioning that was necessary. The WEA, with the AWB, bear the principal responsibility for the way Australia’s reputation—now as a supporter of corruption instead of an opponent of it—was trashed.

Schedule 3 amends the act to give the minister the power to designate a company as the holder of the single-desk export privilege under the act. This implies the long-term retention of the single desk or the ability to overturn a situation where there is more than one exporter and replace it with a single exporter, which is undesirable. I refer to the revised explanatory memorandum which has been tabled in this chamber. It says, with respect to schedule 3:

This schedule also provides that should, for any reason, AWBI or a related company still be the holder of the single desk privilege when the Minister’s power sunsets then the veto power will be permanently removed from it ...

If that is the consequence, it is to be applauded.

By the way, one big well-respected WA farmer complained to my office this week that AWB was not only a corrupt monopolist but incompetent too. He had not even been paid for the 2005-06 harvest yet. What is going on there? Have they got solvency problems as well?

The question will be: if legal and other claims that have been announced or foreshadowed put AWB under pressure, will they have enough money to pay all their farmer suppliers? The question will also be: could the possibility of litigation in the United States and Australia put AWB under solvency stress? If that ever happens farmers forced by the government—and, by extension, by the National Party—to export their crop through AWB, after this is known, would surely have a case for compensation from the government if things go really sour.

I welcome schedule 4 because, as opposed to bulk wheat, it introduces an open, competitive market for exports of bags and containers of wheat. So in a minute area of the wheat export market there is going to be an open market. However, in the whole scheme of things it is of little significance because bulk wheat probably constitutes about 99 per cent of wheat exports.

In May there was a positive Australian government response to Mr Cole’s 2006 bribery and corruption inquiry recommendations, but I complained about yet another example of a slow response to issues of integrity and accountability. The federal coalition government have earned themselves a reputation for poor accountability because of their slow responses to integrity matters. The official response came six months after Mr Cole tabled his report. With respect to their proposed changes to foreign bribery and tax deductions the response came a full 16 months after the OECD review of Australia’s implementation of the anti-bribery convention recommended such changes. The response to the OECD on a corruption matter was far too slow and was symptomatic of a tired government that looked dismissive of concerns that we needed to urgently improve our laws on bribery and corruption to improve our now tarnished international image.

I should remind you that this is a government that can write legislation curtailing civil liberties in 24 hours and which farcically recalled parliament solely for the purpose of changing ‘a’ to ‘the’ in a piece of legislation, but, when it comes to necessary bribery and corruption law changes, just meanders along. Fortunately things are now moving along and there is some progress.

I have not yet had a good look at the legislation, but the International Trade Integrity Bill 2007, introduced last week, creates new offences for breaching United Nations sanctions and for giving false or misleading information about imports or exports affected by United Nations sanctions. It creates new penalties of up to 10 years in jail for individuals. It imposes on individuals and companies severe fines that can be set by the value of the offending transaction. It gives government agencies the power to obtain information about suspected evasion of sanctions so they can be referred to law enforcement agencies. It strengthens laws on bribery of foreign officials, it makes tax laws consistent with foreign bribery laws and it narrows tax deductions for payments to foreign officials. To me, that sounds like useful progress.

If I understand correctly, it appears the government will not be amending the Criminal Code to insert an offence recommended by Commissioner Cole as ‘acting contrary to United Nations sanctions that Australia has agreed to uphold’. Instead, they will amend the Charter of the United Nations Act. Apparently, the government do not consider it ‘fair or useful to subject individuals to 10 years imprisonment for unintended actions or unforeseen consequences, unless these resulted from recklessness’. Whether that is right or wrong, it was not too fair or useful for AWB executives and management to bring Australia, all its exporting companies, Australians generally and Australian farmers into disrepute internationally, either.

Under the government’s plan, there still seems every possibility that AWB resources and people will be used to motivate a new single desk. In my opinion, not one director who was on the board at the time of these calumnies should still be there. They should all be got rid of. The argument is that the single desk guarantees farmers, collectively, getting the best price, but that is patently wrong and defies the benefits which open markets bring to every other sector and product. The single desk is an anachronism whose time is up. For instance, in Western Australia, CBH can and will do a good job and can and will get a good or better return for farmers in that state than AWB has. Competition between grain bulk handlers will be good for business, will be good for farmers and will be good for the economy. When Mr Howard made his AWB announcement to the coalition party room, I sent this message to Australian Associated Press:

I understand the Prime Minister told his Party Room that: “If the industry does not have its plan together by March 1 next year, the government will reserve its right to have alternative arrangements. The decision means the Agriculture Minister Peter McGauran retains the veto on wheat exports out of Australia.”

This is a holding position that keeps the veto out of AWB hands but does not resolve the position in the longer term.

I believe the Prime Minister has enough support in the Senate to change the present wheat export single-desk system. His real difficulty lies with a divided Coalition Party Room.

On fiduciary, legal, commercial, prudential, competitive, efficiency and other grounds AWB must not be allowed to retain or regain the veto. Nor must a single-desk continue.

The temporary system that resulted in the recent grant of two extra licences to export wheat (44 other applicants were unsuccessful) showed that multiple exporters of wheat is a plus not a minus. Two successful applicants out of 46 was too few, and too low a tonnage, but it was at least a start to a more competitive market.

The single desk must go. Forcing those who don’t want to sell to AWB to do so, defies the basics of a free market—freedom of choice and open competition.

The claim is that most farmers only want to export through AWB. I have had extensive feedback on WA farmer—

that is, Western Australian Farmers—

views, and attended two WA farmers meetings chaired by Mr Ralph, and made an effort to assess the views of many hundreds of wheat farmers, not just those who spoke.

In my view only a minority of all WA wheat farmers want to retain AWB as the single desk for bulk wheat exports, and only a minority want total deregulation. All farmers would be happy to see the small bagged and container wheat export market completely opened up to multiple exporters. The vast majority of WA farmers (who are the vast majority of all Australian wheat exporters) want a regulated licenced wheat export market with more competitors they can sell to. AWB can be one of those (if they can survive fore-shadowed litigation).

That is the end of the message I sent to AAP at that time. Our whole market economy is based on competition. Why are all other markets in Australia open to competition, but not this one? Why are all other agricultural markets in Australia open to competition, but not this one? Why are all other grain markets in Australia open to competition, but not this one?

I have been sympathetic to the view of the shadow minister, and to Labor’s view, that a further inquiry is necessary in this area. The problem with the Ralph consultation committee —and they had some very able people on it—is that they were not able to conduct an inquiry. It was a listening exercise. In my view, the Senate and the parliament should be required to review public policy issues that surround this matter. In the meantime, it is up to political parties to make their position clear. I am here making the Democrats position clear. I understand The Nationals position. The Liberal Party’s policy is unclear to me—although I know what individual members of the Liberal Party feel—and the Labor Party’s position is also unclear. If it is the case they have not made up their mind then I think they should be clear that that is the case. However, if it is the case that they are enjoying the division in the coalition, they have to step aside from that and come to a decision as to whether they want a single desk, a partially deregulated market or a fully open market. I hope the shadow minister will be able to make Labor’s position a little clearer to me than it currently is.

In conclusion, the Democrats will support this bill in full, but we regard it as a temporary measure. The veto on exporters should not be returned to the AWB or any commercial body, whether or not the government in future decides on a single desk. It must not go back to the AWB or any commercial body. The Democrats welcome measures to introduce an open, competitive market for wheat exporters of bags and containers of wheat, and that must remain. With respect to bulk exports, we urge the government to introduce a regulated market with a choice of a number of licensed exporters.