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Monday, 16 June 2008
Page: 2135


Senator SCULLION (Leader of the Nationals in the Senate) (6:07 PM) —Madam Acting Deputy President, I rise today with some disappointment. The Wheat Export Marketing Bill 2008 and the Wheat Export Marketing (Repeal and Consequential Amendments) Bill 2008, as you and other people in this place would be aware, have attracted a great deal of attention. Those who were in this place early this morning would have seen firsthand the passion of those people who do not support the legislation—and, I am quite sure, through some of the Senate committee hearings. I would like to add my congratulations to Senator Sterle for having had such an even-handed approach to a very difficult task.

Australia has had a single desk wheat marketing arrangement that has served the Australian wheat growers well for over 65 years. It has been a system that has in effect ensured that a proportion of profits and efficiency dividends post farm gate has ended up back with the growers. The fundamentals of any single desk system are the principal producers—those people who lie at the heart of the wheat export system. Without the growers, without the producers, the wheat export system would of course not exist.

Changes to the arrangements have been resisted every single time. Over the years there has been a great deal of change to the single desk system and it has been diluted by further elements and deregulation. Every time deregulation has occurred, I think it would be reasonable to say, from a grower’s perspective, the world has become a little grimmer. This last act of deregulation, in this legislation, will again strip any benefits that are delivered through the arrangement, and we cannot see anything in this legislation that will replace them.

I want to make sure that everybody in this place understands and I want to make it absolutely clear—and I would like to commend Senator Minchin for his words; at least he is saying it the way it is—this legislation does not create a new single desk. Let us not pretend that the Labor Party is in any way right in saying, ‘We’re honouring our obligation; we’re creating a new single desk.’ This is a special sort of a single desk: a Clayton’s single desk. It is a single desk for traders, not for wheat. But I guess it is all in the semantics, isn’t it, Madam Acting Deputy President?

This will simply and purely be a licensing regime that will allow multinational wheat traders to enter the Australian market. The creation of Wheat Exports Australia will simply triage those people who wish to enter the market. There will be some probity issues to ensure they are the right sort of people to be in the game; some financial issues will be looked at. Of course, looking at the financial issues gives absolutely no guarantee whatsoever that when someone parts with their wheat they will ever be paid for it. In terms of the probity issues, I think the new minister set quite a serious precedent when he decided that the organisation Glencorp was a really good dog straight out of the box. That was their first decision.

Unfortunately, many will rue the fact that the genesis of the scrapping of the single desk was a mistrust of those people associated with the AWB. We are all aware of the circumstances with the Cole inquiry. But, when you have that level of mistrust, why would you throw the baby out with the bathwater? It is an overreaction and we should never have ended up in this place. Anybody that read the Cole inquiry report would know there was a whole suite of other arrangements that we could have put in place that would still have managed to give a much better balance than the legislation we are looking at today. In light of that, I do not think the very first decision on a new licensee being Glencorp—who were well known to have been involved in rorts throughout, not only in the oil for food scandal but in other United Nations programs—has given anybody any comfort that anything will change in the future.

Labor would have Australians believe that the single desk has created some sort of an impediment for growers to receive the best terms for their wheat. Of course, the facts are completely the opposite. Whilst Labor believes the single desk arrangements are worthless—or, worse, a cost to industry—our international competitors in the marketplace have an entirely different view. It is interesting, because those international players, our competitors, have no reason to offer a different opinion in the media. They have no real mischief to make by offering this different reason. But it is interesting to know that, during the negotiations for the Australia-US Free Trade Agreement, the Americans fought extremely hard to ensure that the single desk arrangements in Australia were part of the currency so that we could trade these things off. I wonder why that was! Quite clearly they saw it as something that benefited Australian growers, not United States growers. That is why they wanted it there as currency—a very, very important issue. Of course, we opposed this then for the reason that the single desk allowed us to some degree to compete against subsidies and what I have to say is a less than open and free wheat trade. While the subsidies are worth millions, the single desk is a collective marketing arrangement to give us some sort of capacity to counter the trade distorting influence that the subsidies deliver.

If the single desk was worthless or a detrimental factor to Australian growers competing internationally, as described by those opposite, why was it that the US wheat trade group was one of the very first bodies to come out and welcome the abolition of the single desk and the Labor legislation? On 6 March of this year, the US Wheat Associates President, Alan Tracy, said that the Australian system will lead to a genuine opening and his group is very pleased to see that—no surprise there. They are most delighted, absolutely delighted. As you can imagine, this is their wildest dream come true: the jewel in the crown of legitimate marketing arrangements in Australia that ensure that we can compete against this distorted market and the subsidies is being taken away and, not only that, they are giving it away. This is a fire sale. No longer are they going to say: ‘Please, can you bring the single desk to the Doha Round so that we can negotiate that with you? Maybe we can trade away some of our subsidies.’ No: you can have it for nothing. There will be more corks opening in the United States tonight than there will be on the other side. It is a genuine tragedy that such a great thing for Australian growers has been let go at an absolute discount price. It is completely irresponsible. To give away such a significant concession and gain nothing in return is bad policy. It is obviously good for our competitors but very bad for Australians.

It is worthwhile pointing out a number of the historic benefits of the single desk—the way the numbers appear to be going here they will be historic. First of all there was the premium price. It does not matter where you look; a whole range of surveys have been conducted as to whether, for example, it is part of the competition policy. There is a whole suite of them. I understand from the Speaker in the other place that there is everything from $5 a tonne to $70 a tonne, but whatever it is, it is a positive number; it is a benefit in terms of the premium having a single desk. Whilst Mr Rudd is not a chap who I would often go to for economic advice, I would like to quote a letter from the then Leader of the Opposition in which he made the argument that we have to hang on to the single desk because it has a great deal of economic feedback for the growers. Mr Rudd quoted a study from Econtech and stated:

... on the premium attributed to the single desk, that indicates that on the benchmark of Australian premium white grade for wheat, the single desk captures a premium of between $15 and $30 a tonne. The total annual value to Australian growers of this premium on Australian premium white is $80 million. On all grades the average premium attributed to the single desk is $13 a tonne and the total annual value of the premium on all grades is $200 million.

That is the now Prime Minister saying, ‘Look, there is great value in the single desk. It ensures that there is a better return of premium to our growers.’ As I said, he is not someone I would normally seek economic advice from, but he certainly put that forward. And Econtech, who are a very reputable organisation, have ensured that we understand completely that when we walk away from the single desk arrangements we are taking that premium off growers. Make no mistake about it: growers will be worse off under this legislation. There is a common thread; this legislation is not about growers. Interestingly, I think the word was only used three times in the entire legislation, because this is not about growers; this is about those people who are further up in the food chain—the larger sharks. This is about looking after our mates in the United States and about looking after multinational companies. I think that is a common thread. I recommend that all other senators have a careful look at this legislation, because it is not about looking after growers; it is about looking after people who seek to make more profits out of their enterprise.

One of the principles has always been that the single desk was, in effect, a buyer of last resort. Subject to quality, Australian growers were always guaranteed that any wheat that had been harvested would be bought or sold by the single desk operator. This is most important, particularly in big harvests when there is a carryover. People can quote certain years and say that it will not really matter. Perhaps in some years it will not, but over time we are going to have large harvests, we are going to have a carryover and we are going to have new wheat in the market as well as the wheat from the year before. When we had a single desk, the single desk arrangements were able to ensure that the returns to the growers, under both of those circumstances, benefited the growers. Of course, under the new arrangements there is no requirement for any trader to take any more wheat than they have an immediate customer for, and there is no way of selling a carryover crop when there is a new grain harvest to compete with. I certainly do not think that that suits growers. Again, the common theme is that that does suit the traders because they do not have any obligation to the growers. The growers finish at the gate. ‘See you, mate. Good luck. Now we are going to go and do the business; we are going to get into the blending.’ Of course, the blending will no longer have any real benefit to the growers. If you understand wheat marketing, the blending is where the money is made. Sorry, growers; I know you used to participate in that, but this is not your business anymore. The profit business is now all about the traders, and the traders must be loving this tonight.

As I have said, a number of growers are pretty disaffected with the legislation before us tonight. They used to talk to me about security. I asked them, ‘What do you mean by security? What sort of security?’ They said, ‘Well, you don’t really think; you just go and grow a crop. With the sort of inputs you’ve got today, you’ve got to go and borrow a bit of money. We have crop financing and it’s the security of crop financing.’ With a single desk—with the circumstances today—you can actually have an estimated price in advance. You can go with that estimated price to a bank, and it is a bankable asset. The bank will say, ‘How many acres? This is the approximation; this is your estimated price, so I will be able to forward you that money with a level of confidence in a process that has a lot of convention.’ Over a lot of time it has proved to be financially and ethically decent. It is a good process that has been going for a very long time. Of course, you can imagine that today, with the skyrocketing inputs that our grain and food producers in Australia have to deal with, it makes trying to get crop financing a very complex issue. Not being able to have that absolute guarantee of an estimated price will make it a lot harder. Without that guarantee, the growers will have to bear all the risk of growing the crop, and it will place a further burden on an industry that has not been burdened in this way for some 65 years—and, frankly, today that should not be necessary.

There has been a lot of debate about the growers’ sentiment: who are you supporting? I acknowledge and we recognise and respect that our colleagues in the coalition have a different view from us on this matter. It is interesting that when you move around the community, and if you are on a committee, you recognise quite clearly that the industry and the communities are split on this matter. I respect their views on that. In the coalition, yes, we are split on it, but at least we respect the wider community’s views and values.

An overwhelming number of growers—about 70 per cent—wish to keep the single desk and the remainder do not. Whilst I wish well those who do not support the single desk, and I respect their views, it is the view of the National Party that we would always support the majority of growers. It is interesting that that is not only our view but also the view of the Prime Minister, Mr Rudd. Again, in a letter to growers, on 8 February last year, he said:

Labor will continue to support the single desk while we are convinced that there is strong economic value in the single desk for growers and the Australian economy ...

And he did a very good job of pointing that out to us a minute ago through the Econtech report. He has built a very succinct argument that we have certainly got the economic value there. He also said that Labor would continue to support the single desk while ‘it retains the support of growers and the community’. The Prime Minister has built a great argument. He said: ‘There’s the economic value; we’ll hang on to it,’ and ‘Whilst it maintains the support of growers, we’ll hang on to it.’ Unfortunately, he has walked away from that. The government are on the record as saying that they are strong supporters of the single desk and that it remains Labor Party policy while ever growers support it. Growers still do support it, so I do not understand—and nor do the growers—why the Labor Party are now moving away from what was intrinsically an absolutely fundamental part of their policy.

So what has changed? Labor are refusing to poll growers. Instead, they are forcing this flawed legislation through against the wishes of growers. But I think everyone accepts that you do not have to poll them—there is no point. Everybody knows—whether it is the Ralph review or just simply the people who have turned up here today—that, right across the board, we are split. But 70 per cent of growers believe that it is very important. We cannot support a bill that goes against the wishes of growers. We cannot support legislation that is designed to allow multiple multinational companies to enter the market with the sole aim of making money out of the trade. That is a very laudable outcome. I love making money. I love to support businesses that make money. But it is all about getting a decent share. Do the growers get any benefit from efficiency dividends and profitability past the farm gate? Not from this night onwards. This money should be retained by growers or reinvested into the industry, as is the process under the grower owned and controlled single desk.

Labor said that they had a plan for Australia’s wheat marketing, but I think they just had an idea. As we often have, in this case they will learn that a thought bubble is very hard to transfer into legislation that works. There will be a great tragedy here tonight. I hope I am wrong, and I know those on the other side are hoping the same, but I think most growers in this country know that this aspect of deregulation will mean that growers will be worse off than they are today. That is why we are not supporting this legislation.

The warning bells over this legislation started to ring loudly when both the Western Australian and New South Wales ministers for agriculture said, ‘Pull up; slow down. This needs to be given more thought.’ The Wheat Export Marketing Alliance was fantastically and courageously put together by Mr Blight, but what did the minister say? He said, ‘Sorry, we’ve got a fundamental approach to this. That wasn’t a Labor election commitment.’ It does not matter what your Labor commitment was; this is bad policy. There was an opportunity for the minister to take advice from industry leaders and come up with another approach, but he gave it short thrift on the basis of, ‘That’s not part of our policy.’

Today we had the second protest rally of growers here in Canberra. I am not really sure what we are going to tell them in the future, but at least we can say that we tried. I wonder why the government does not care about them. They are not just growers. They are communities. They are women and children. We saw them here today. They are genuinely concerned about their future. Are Labor really interested in supporting the wishes and aspirations of those people who want to make money out of the growers—the traders and the bulk handlers? This legislation seems to indicate that that is the case. The Nationals will not support this bill, and we urge all senators to think long and hard about who should own and benefit from this industry. What I and the National Party want to do is maximise the return to growers—not to multinational grain traders.