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Agriculture, Fisheries and Forestry Legislation Amendment Bill (No. 1) 1998



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Bills Digest No. 37  1998-99

 

Agriculture, Fisheries and Forestry Legislation Amendment Bill (No. 1) 1998

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Contents

 

 

Passage History

Agriculture, Fisheries and Forestry Legislation Amendment Bill (No. 1) 1998

Date Introd uced: 12 November 1998

House:  House of Representatives

Portfolio: Agriculture, Fisheries and Forestry

Commencement:  Schedule 1 of the Bill, which relates to the repeal of the Dried Vine Fruits Equalization Act 1978 , commences on 1 January 1999. The other provisions commence on Royal Assent.

Purpose

To:

• terminate the Dried Vine Fruits Equalization Scheme; and

• substitute reference to the National Meat Processors' Association with reference to the Australian Food Council's Processed Meats Forum.

Background

Dried Vine Fruits Export Equalization Scheme

The major amendment proposed by the Bill is the termination of the Dried Vine Fruits Equalization Scheme (the Equalization Scheme). Dried vine fruits comprise sultanas, currants and raisins.

The Equalizati on Scheme requires, for each season's production, the Australian Dried Fruits Board to determine for each type of dried vine fruit each exporters average export return and an industry return for all export markets. Where the average export return of an exporter is greater than the industry return, this amount is then multiplied by the tonnage to which the sales relate and is paid into a trust fund, the Equalization Trust Fund. Where the industry return exceeds the average export return, this amount is then multiplied by the tonnage to which the sales relate and is paid from the Equalization Trust Fund to the exporter. In effect the Equalization Scheme averages export returns received for dried vine fruits.

Historical Rationale for Dried Vine Fruits Equalization Scheme

The Equalization Scheme was established in 1978 under the then Fraser coalition government. The then Minister for Primary Industry, the Hon. Ian Sinclair, gave the following reasons for the introduction of the scheme:

Without an industry commitment to equalisation, the industry's marketing circumstances carry the inherent risk of substantial diversions of fruit from export to the more attractive but limited Australian market, beyond the capacity of that market to absorb and still maintain a reasonable level of return to growers. Should that happen, the likely end result would be a significant fall in overall return to the industry and a corresponding fall in grower incomes.

The Association (the Australian Dried Fruits Association) has become increasingly concerned that the voluntary commitment to equalisation will not withstand a developing climate of competition between dried vine fruit packers in South Australia, where the one packing house not participating in voluntary equalisation is located. The Association has therefore asked that the Government secure equalisation by placing it on a statutory footing. Having regard to the possible adverse consequences for grapegrowers, including growers in the related wine grape producing industry, and for important regional communities if overall industry income were diminished because of abandonment of equalisation, the Government has acceded to that request.(1)

Major Reviews of the Dried Vine Fruits Equalization Scheme

In July 1988, the then Treasurer, the Hon P. Keating, requested the Industry Commission (IC) to inquire into the dried vine fruit industry. The IC was requested to identify and report on the significance of factors that may facilitate or impede the development of the industry, or in any other way affect its competitiveness and efficiency.

On 1 September 1989, the IC released its report on the dried vine fruit industry. The report made a number of findings on the effects of assistance provided to the dried vine fruit industry, including that:

• the dried vine fruit equalisation scheme in effect subsidises exports by taxing domestic sales.

The IC considered three options for future dried vine fruit industry assistance arran gements: retention of existing measures; modification of existing measures; and fundamental reform. The IC was of the opinion that:

• retention of existing measures would continue to penalise efficient and innovative producers and marketeers of dried vine fruit and tax Australian consumers to subsidise exports, and

• modifying the existing assistance arrangements would be difficult because the close inter- relationships between many of the arrangements makes it difficult to assess how effective modifications might be.

The IC favoured fundamental reform of the existing assistance arrangements for equalisation. The IC recommended that statutory equalisation provisions be withdrawn at the end of 1994.

In the October 1989 issue of the Australian Dried Fruit News , which is the journal of the Australian Dried Fruits Association, the Association came out against the IC's recommendations. The Association's principal criticism of the IC report was that it failed to substantiate the case for the drastic changes to the industry's marketing arrangements. The Association argued that the IC had relied heavily on unsubstantiated assertions, assumptions that could not be relied on, and the projections of its economic model which the [IC] conceded were incapable of predicting the real effects of its proposed reform package. The Association also submitted that the lack of authority of the report was illustrated by numerous qualifications, variables not accounted for and the frequent reliance on the word may.

Major Legislative Changes to the Dried Vine Fruits Equalization Scheme

In its original form the Equalization Scheme averaged domestic returns and export returns from sales of dried vine fruits. The Dried Vine Fruits Legislation Amendment Act 1990 removed the arrangements for the equalisation of returns from domestic sales and provided for the equalisation only of export returns.

Rationale for Termination of Dried Vine Fruits Equalization Scheme

The termination of the Equalization Scheme follows an industry/federal government r oundtable held in February of this year where it was agreed the current scheme was no longer appropriate and should be terminated.(2)

The Minister in the Second Reading Speech to the Bill states:

The industry now contends that, in the prevailing market circumstances, equalization arrangements are inappropriate, and mask market signals and inhibit industry and marketing innovation. The industry peak body, the Australian Dried Fruits Association has requested the termination of the scheme.

Main Provisions

Ite m 1 of Schedule 1 repeals the Dried Vine Fruits Equalization Act 1978 . The affect of the repeal is to terminate the Equalization Scheme.

The effect of item 2 of Schedule 1 is to ensure that equalization occurs, despite the repeal of the Dried Vine Fruits Equalisation Act 1978 , for a season starting on 1 January 1997 or 1 January 1998.

The major amendments proposed by the Bill to the Pig Industry Act 1986 substitute reference to the National Meat Processors' Association with reference to the Australian Food Council's Processed Meats Forum (AFC). The AFC replaced the National Meat Processors' Association as the Australian meat processors' peak representative body.

Endnotes

1. House of Representatives, Parliamentary Debates ( HANSARD ), 15 November 1978, p. 2824.

2. Parliamentary Secretary to the Minister for Primary Industries and Energy, Media Release , 22 May 1998.

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Ian Ireland

27 November 1998

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