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Tuesday, 24 September 1974
Page: 1310


Senator WRIEDT (Tasmania) (Minister for Agriculture) - I move:

That the Bill be now read a second time.

As the second reading speech is the same as that presented to the House of Representatives I seek leave to have the Bill incorporated in Hansard.


The PRESIDENT -Is leave granted? There being no objection, leave is granted. (The document read as follows)-


Senator WRIEDT -This Bill and the 2 complementary Bills, the Wheat Export Charge Bill 1974 and the Wheat Products Export Adjustment Bill 1974, provide for the implementation of a wheat industry stabilisation plan in respect of the 5 seasons beginning 1 October 1974 and for the continuing operation of the Australian Wheat Board as the sole marketing authority 'or wheat in Australia and for wheat and wheat products exported from Australia. As is the case with the existing plan, the Board's marketing powers will extend for 2 seasons beyond the duration of the stabilisation plan. This will enable continuity of the Board's operations to be maintained. It is necessary for complementary legislation to be enacted by each of the States as some aspects of the arrangements, in particular, the vesting of the ownership of wheat in the hands of the Board, the implementation of any wheat delivery quotas and the marketing of wheat within the State of production, rely on State law for their operation.

Honourable senators will recall that the previous wheat stabilisation plan, originally due to expire in 1972-73, was extended for 1 year, to cover the marketing of wheat of the 1973-74 season, pending review of the arrangements by the Government. Resulting from this review, the Government concluded that there should be a major revision of the existing stabilisation arrangements. In particular, we reached the position that the provision of a guaranteed price for a specific quantity of exports, with the price being adjusted according to certain cost movements from year to year, was not conducive to maximum efficiency in the wheat industry.

The basic aims of the proposed plan, which has been accepted by the wheat industry organisation- the Australian Wheatgrowers Federation- and the State governments, are reflected in this Bill and the complementary Bills. They are to give the industry some security against price fluctuations without distorting the underlying trend in market prices and without providing an unduly large and very often, unpredictable, net contribution by the Government to the industry over the period of the Plan.

The agreed Plan sets out to achieve these aims by, firstly, abandoning the concept of 'guaranteed price' and replacing it with a 'stabilisation price' related to movements in the international wheat market; secondly, cushioning sharp changes in export prices by moving the stabilisation price gradually into line with market prices; thirdly, providing definite limits to the extent to which the Government can be called upon to underwrite the plan; and, fourthly, providing a mechanism which could reasonably be expected to continue to operate indefinitely and not to require frequent renegotiation, although periodic review and new legislation would be necessary.

It was the Government's intention to introduce this legislation with the aim of having it passed by the Parliament by 30 June 1 974 and thus avoiding a reference to the Industries Assistance Commission. It was not possible to keep to this timetable because of delays in obtaining the agreement of all the States to the plan and the intervention of the double dissolution of Parliament. However, the Government considers that it is neither practical nor desirable at this point of time to refer the plan to the Commission. The recital to the Bill sets out the special circumstances and provides for a special exemption from reference of the plan to the Commission. The main features of the stabilisation proposals in this Bill and the complementary Wheat Export Charge Bill 1974 are as follows:

Stabilisation Price

This is to be set for the 1974-75 season at $73.49 per tonne f.o.b. or $2 per bushel and adjusted for each of the next 4 succeeding seasons by the application of the formula set out in sub-clause 29 (5) of the Bill. Subject to the financial limits which I will indicate, the stabilisation price will apply to all wheat exports of a season. Under all previous plans there was a limit placed on the quantity of exports in any season which would qualify for a guaranteed floor price.

Average Export Price

This is the average price, f.o.b. equivalent, contracted to be paid for all exported wheat.

OPERATION OF THE STABILISATION FUND

The Stabilisation Fund will commence with a credit balance equal to the amount to be contributed as charge on wheat exports of the 1973-74 season, estimated at $48m.

(i)   Industry Contributions to Fund

When the average price for all exports of a season is above the stabilisation price set for that season and above $55.12 per tonne f.o.b. or $1.50 per bushel, growers will contribute to the Fund up to $30m or $5.5 1 per tonne or 15 cents per bushel, whichever is the lower, subject to the growers' contribution not exceeding an amount which would bring the final price- that is, the average export price less the contribution to the Fund- down to $55.12 per tonne. If the aggregate of the growers' contributions plus the interest earning should at any time take the Fund to a credit in excess of $80m, the excess will be refunded to the Wheat Board for distribution to the earliest contributing pool.

(ii)   Payments from the Fund

When the average price for all exports of a season is below the stabilisation price set for that season, growers will receive from the Fund payments necessary to lift the average price for all exports of the season to the stabilisation price, subject to a maximum payment per season of $30m or $5.51 per tonne, or 15c per bushel, whichever is the lower; and the payment not exceeding an amount which will bring the final price- that is, the average export price plus the payment from the Fund- to $73.49 per tonne. A qualification is that should the credit of the Fund reach $80m, this restriction on payments from the Fund will not apply for the ensuing period of the plan.

(iii)   Government support of the Fund

If, in any season, the Fund contains an insufficient level of industry contributions to meet payments required to be made from the Fund in that season, the Government will contribute to the Fund the moneys necessary to meet the deficiency, subject to any government contribution to the Fund being repaid to the Government from industry contributions in subsequent seasons of the plan period before those industry contributions are accumulated in the Fund; and the net government contributions to the Fund over the 5 seasons not exceeding $80m. The Government has agreed that any outstanding government contributions not recouped by the end of the fifth season will be written off. Provision for this has not been included in the Bill as it is considered that this is not a matter to be covered by legislation. But I state the decision of this Government in this respect for the record. Its effect is that the Government is putting at risk an amount of up to $80m over the 5 years of the plan.

Home Consumption Price

The home consumption price arrangements will continue on the existing basis except that the Bill in authorising the Minister to determine, in consultation with State Ministers, the price at which the basic wheat shall be sold by the Board on the domestic market, will do so on the basis that it will be a single price for wheat for all purposes. In other words, there is no provision authorising special pricing arrangements for wheat for non-human consumption, as is the case under existing legislation. The home consumption price hi each year commencing on 1 December will be adjusted from the base level of $70.41 per tonne or 191.6c per bushel, being the 1973-74 price, less the Tasmanian freight loading, according to movements in cash costs, and in rail freight and handling charges. In addition, continuing provision will be made for the Board to recoup in the home consumption price the cost of supplying wheat from the mainland to Tasmania, but on the basis that the Board will be empowered to take such steps as are practicable to recoup from Tasmanian interests the freight costs of the wheat equivalent of any products made from wheat of mainland origin and exported from Tasmania to the mainland. These arrangements are dealt with by clauses 32 and 33 of the Bill. Other important features of the Bill are:

Terminology of the Basic Wheat

The old term 'fair average quality' is being replaced by the term 'Australian standard white' and this basic wheat is now defined in the legislationsee clause 4 of the Bill. This is seen by the Wheat Board as representing an improved image for Australian wheat in the market place.

Membership of the Board

The Board will have the same membership as provided for in the existing legislation namely, a Chairman, 10 grower representatives, a finance member and one representative each of flour mill owners and employees- clause 8.

Directions by the Minister

The Minister will continue to have the power to issue directions to the Board in the performance of its functions. However, sub-clause 18 (2) has been included in the Bill to give effect to an undertaking given to the wheat industry by the Government that should the Minister direct the Board to sell any wheat on terms more generous than the Board has been prepared to grant on strictly commercial terms for that wheat, the Government will bear the full risk of non-payment in respect of the additional period involved in the direction.

Unauthorised Dealings with Wheat

Sub-clauses 21 (6) and 23 (1) (b) have been included in the Bill to strengthen the position of the Board in curbing dealings with wheat outside the Board. In particular, these provisions have been inserted with a view to meeting problems arising from the taking of leases of land on which there is a growing crop of wheat. They will close a loophole in existing legislation which has enabled circumvention of the long standing requirement that growers should deliver all their wheat production to the Board except quantities retained on farms for seeding and for the feeding of animals- see clause 2 1 .

Quota Arrangements

The Bill contains provisions- clauses 6 and 25- for the retention of the wheat delivery quota mechanism on the basis that it will be optional whether State governments make allocations of any State quotas, which may be applied in a season, to individual growers. However, the Bill continues the current requirement that in a quota season advances will only be payable by the Board on wheat delivered within a State up to the level of the quota determined for that State.

Borrowings by the Board

The Board will retain the authority- clause 36- to borrow from the Reserve Bank, through its Rural Credits Department, the funds required for first advance payments to growers and for its marketing operations. In addition it is being given a supplementary borrowing power which could be used to make progress payments to growers at an accelerated rate, to expedite repayment of seasonal borrowings from the Reserve Bank or to finance stock holdings for lengthy periods. It is envisaged that the Board will only be authorised to borrow commercially against fully secured outstanding debts. All borrowings will be with the approval of the Minister and a government guarantee of repayment may be given.

Annual Report

At clause 45 there is provision for the submission by the Board to the Ministers for tabling in Parliament of an annual report of its operations, accompanied by financial statements in a form approved by the Treasurer and certified by the Auditor-General. There is no similar provision in the existing Act, but other statutory marketing boards are required to submit reports to Parliament. The year covered by the report, to 30 November, is in line with the seasonal operations of the Board.

Conclusions

As I have indicated, the plan I have outlined has been accepted by the industry and all State governments. I am confident that when the legislation is put into effect by the Australian and State Parliaments, the wheat industry, which is such a large and important industry producing a staple foodstuff in worldwide demand, will have a sound basis on which to plan for the future. I commend the Bill.

Debate (on motion by Senator Young) adjourned.







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