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Inter-State Commission Act - Inter-State Commission - Report of an investigation of - Report - Report - Tasmanian Freight Equalisation scheme, dated 29 March 1985 - Volume 2-Shipment of wheat to Tasmania


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The Parliament of the Commonwealth of Australia

AN INVESTIGATION OF THE TASM ANIAN FREIGHT EQUALISATION SCHEME

Inter-State Commission Report

Volume 2: Shipment of wheat to Tasmania

March 1985

Presented 18 April 1985 Ordered to be printed 23 April 1985

Parliamentary Paper No. 68/1985

’ " * i 1

• , '

INTER-STATE C O M M I S S I O N

AN INVESTIGATION OF

THE TASMANIAN FREIGHT EQUALISATION SCHEME

VOLUME 2 : SHIPMENT OF WHEAT TO TASMANIA

f e l f l M arch 1985

INTER-STATE COMMISSION

AN INVESTIGATION OF THE TASMANIAN FREIGHT EQUALISATION SCHEME

VOLUME 2: SHIPMENT OF WHEAT TO TASMANIA

MARCH 1985

Australian Government Publishing Service

Canberra 1985

© Commonwealth of Australia 1985

ISBN for set of two volumes: 0 644 03872 1 ISBN for Volume 2: 0 644 03874 8

Printed by Canberra Publishing and Printing Co., Fyshwick, A.C.T.

29 March 1985

The Honourable Peter Morris, MHR, Minister for Transport, Parliament House, CANBERRA. ACT. 2600.

Dear Mr Morris,

In accordance with s. 10(1) of the Inter-State

Commission Act 1975 (Cth), the Inter-State Commission is pleased to submit to you this two-volume report.

Volume 1 of the report concerns the investigation and consideration of the Tasmanian Freight Equalisation Scheme, as directed in your letter of 15 March 1984 . Volume 2 of the report concerns the investigation of the arrangements relating to provisions of the wheat

marketing legislation as it concerns Tasmania, as directed in your letters of 20 August 1984 and

29 October 1984.

Yours sincerely,

iii

INTER-STATE COMMISSION

M G Everett

President

Η M Kolsen

Member

E W A Butcher

Member

CONTENTS

Page

SUMMARY OF REPORT 1

SUMMARY OF RECOMMENDATIONS 5

CHAPTER 1 INTRODUCTION

1.1 Terms of reference 7

1.2 The report on wheat marketing arrangements as a separate volume 8

1.3 Course and extent of the investigation 9

CHAPTER 2 WHEAT TYPES, PRODUCTION AND USAGE

2.1 Wheat types and their uses 11

2.2 Regional variations in types of wheat

produced 12

2.3 Usage of wheat in Tasmania 13

2.4 Prospects for increasing production of wheat in Tasmania 14

CHAPTER 3 TRANSPORT AND STORAGE OF WHEAT FOR TASMANIAN USE

3.1 Transport and storage of wheat on the

mainland 19

3.2 Bulk shipping of wheat to Tasmania 20

3.3 Introduction of a Range class vessel 22

3.4 Government wheat storage capacity in Tasmania 23

3.5 The wheat storage systems of Tasmanian users 26

3.6 Non-bulk shipping of wheat to Tasmania 28

3.7 Costs of constructing new wheat storage 29

3.8 A storage conference 30

CHAPTER 4 HISTORY OF GOVERNMENT INVOLVEMENT IN WHEAT MARKETING

4.1 Int roduction 33

4.2 World War 1 until the Great Depression 33

4.3 World War 2 36

4.4 After World War 2 37

4.5 Price variation according to quality 40

4.6 Price variation according to end use 40

4.7 Price variation according to place of

delivery to the purchaser 42

CHAPTER 5 THE DEVELOPMENT OF ARRANGEMENTS FOR FUNDING THE COST OF TRANSPORTING WHEAT TO TASMANIA

5.1 Introduction 47

v

5.2 The inception of the Tasmanian Wheat Freight Subsidy 47

5.3 The Third, Fourth and Fifth Plans 50

5.4 The Callaghan Report 51

5.5 The Sixth Plan 52

5.6 The 1978 report of the Industries Assistance Commission 52

5.7 The Seventh Plan 53

5.8 The 1983 report of the Industries Assistance Commission 54

5.9 The Minister's direction to the Inter-State Commission 56

5.10 The current (Eighth) Plan's Tasmanian Wheat Freight Subsidy arrangements 56

CHAPTER 6 CONCLUSIONS AND RECOMMENDATIONS

6.1 Introduction 61

6.2 The Tasmanian Freight Equalisation Scheme and the Tasmanian Wheat Freight Subsidy 61

6.3 The Wheat Marketing Act 1984 62

6.4 Uniform pricing of wheat 63

6.5 The Tasmanian Wheat Freight Subsidy: possible alternatives 65

6.6 Mainland and Tasmanian perceptions of the Tasmanian Wheat Freight Subsidy 66

6.7 From where and to what extent should wheat

freight costs be subsidised? 70

6.8 Should eligibility for the Tasmanian Wheat Freight Subsidy depend on end use? 75

6.9 The Tasmanian Wheat Freight Subsidy: who

should pay? 79

6.10 Expected cost and associated issues 80

6.11 Shipment of non-bulk wheat under the Tasmanian Wheat Freight Subsidy 83

6.12 Review of the Tasmanian Wheat Freight Subsidy arrangements 84

6.13 The relevance of s. 99 of the Constitution 85

APPENDIX I THE DIRECTION FROM THE MINISTER FOR TRANSPORT TO THE INTER-STATE COMMISSION ON THE TASMANIAN FREIGHT EQUALISATION SCHEME 87

APPENDIX II SECTIONS 26 AND 27 OF THE WHEAT MARKETING ACT 1979 (CTH) AND EXAMPLES OF COMPLEMENTARY STATE LEGISLATION 89

APPENDIX III SECTIONS 32 AND 33 OF THE WHEAT MARKETING ACT 1984 (CTH) AND EXAMPLES OF COMPLEMENTARY STATE LEGISLATION 97

APPENDIX IV NOTICE OF INVESTIGATION 107

APPENDIX V WITNESSES APPEARING AT PUBLIC HEARINGS BEFORE THE COMMISSION 109

vi

APPENDIX VI REPRESENTATIVES PARTICIPATING IN INFORMAL DISCUSSIONS WITH THE COMMMISSION 111

APPENDIX VII AUSTRALIAN WHEAT PRICES, 8 JANUARY 1985 113

APPENDIX VIII EXTRACT FROM A PAPER BY THE TASMANIAN DEPARTMENT OF AGRICULTURE ON POTENTIAL FOR INCREASED GRAIN PRODUCTION IN TASMANIA 115

APPENDIX IX PRIME MINISTER'S LETTER CONCERNING STORAGE OF WHEAT IN TASMANIA 119

APPENDIX X EXPORT AND DOMESTIC WHEAT PRICES, 1951-52 TO 1983-84 121

APPENDIX XI SUGAR PRICING 123

APPENDIX XII THE OPINION OF THE SECRETARY OF THE ATTORNEY-GENERAL'S DEPARTMENT 127

GLOSSARY 133

ABBREVIATIONS 136

vii

TABLES

Page

2.1 WHEAT QUANTITIES RECEIVED IN TASMANIA, 1982-83 AND 1983-84, BY TYPE 13

6.1 INDICATIVE BREAKDOWN OF COSTS FOR AN AVERAGE LOAF 77

6.2 ESTIMATED COST OF TASMANIAN WHEAT FREIGHT SUBSIDY, 1984-85, BY PORT AND VESSEL 81

6.3 ESTIMATED TASMANIAN WHEAT FREIGHT SUBSIDY LOADING, 1984-85, BY PORT AND VESSEL 82

VII.1 AUSTRALIAN WHEAT PRICES, 8 JANUARY 1985 113

X.l EXPORT AND DOMESTIC WHEAT PRICES, 1951-52 TO 1983-84 · 122

viii

SUMMARY OF REPORT

On 20 August 1984, the Federal Minister for Transport

directed the Inter-State Commission to extend its

investigation of the Tasmanian Freight Equalisation Scheme so

as to include the matter of the Tasmanian Wheat Freight

Subsidy arrangements under the Wheat Marketing Act 1979

(Cth), whereby the Australian Wheat Board meets the cost of

shipment of wheat by the Board to Tasmanian ports. Following

the enactment of the Wheat Marketing Act 1984 (Cth), the

Minister made the appropriate amendment to his earlier

direction.

In the course of its investigation, the Commission formed

the opinion that the Tasmanian Freight Equalisation Scheme

and the Tasmanian Wheat Freight Subsidy arrangements have

different objectives. Furthermore, the Tasmanian Freight

Equalisation Scheme is a discrete scheme, while the Tasmanian

Wheat Freight Subsidy arrangements are part of the broader

statutory wheat marketing arrangements. Accordingly, there

is no close relationship between the two schemes and they

have been considered independently.

Tasmania receives from the mainland between 85 000 and

95 000 tonnes of wheat each year. Of this, approximately

28 per cent is for human consumption, 25 per cent is for

industrial use, and 47 per cent is for stockfeed. A very

substantial proportion of wheat shipped to Tasmania is

currently shipped from Newcastle. The quantity of each type

of wheat that is shipped varies greatly, but a large

proportion of the wheat consumed in Tasmania is of high

quality.

The Tasmanian Wheat Freight Subsidy has been part of

Australian wheat marketing legislation since 1953. It was

introduced so that Tasmanians would pay for wheat the same

price as that paid on the mainland. Under the 1984

1

legislation for the Tasmanian Wheat Freight Subsidy an amount

is added to the price of all wheat sold in Australia, whereas

under the 1979 legislation the additional amount was placed

only on the price of wheat sold for human consumption. The

fund raised by the price addition is applied by the

Australian Wheat Board to meet the cost of transporting wheat

from mainland ports to Tasmanian ports. The Australian Wheat

Board has estimated that in 1984-85 the cost of shipping

wheat to Tasmania will be $3.17 million.

In considering the Tasmanian Wheat Freight Subsidy, it

was necessary for the Commission to address a number of

issues. The first was whether the subsidy provided by the

arrangements should continue. If the subsidy were to

continue it was necessary to address the following matters:

the appropriate form and level of any subsidy; whether it is

appropriate to base the subsidy on the cost of shipments from

Portland and Geelong only; whether the subsidy should apply

to wheat for all purposes or only to wheat for human

consumption; whether the funds for the subsidy should be

raised by an addition to the price determined for all wheat

sales, or only by an addition to the price determined for the

sale of wheat for human consumption; and whether the subsidy

should be made by an item of appropriation from consolidated

revenue rather than by a price addition.

The Commission considered that, since the Tasmanian Wheat

Freight Subsidy is a part of the present wheat marketing

arrangements, the investigation pursuant to the direction

given by the Minister would need to be conducted within the

constraints flowing from those arrangements. While it is

possible to envisage that arrangements for meeting the cost

of transporting wheat to Tasmania could be substantially

different from those now applying, it would be impractical to

evaluate them without assessing their impact on the wheat

marketing arrangements as a whole. Such an evaluation was

2

obviously outside the Minister's direction. The Commission's

recommendations reflect the limited scope of the

investigation which was made in accordance with the

constraints implicit in the Minister's direction.

This report on the Tasmanian Wheat Freight Subsidy was at

the final drafting stage when the Secretary of the

Attorney-General's Department furnished an opinion which the

Commission had requested. The opinion relates to the effect

of s. 99 of the Constitution on the validity of some of the

provisions of the Wheat Marketing Act 1984 (Cth). In

paragraph 6.13 of this report the Commission considers the

implications of that opinion.

3

SUMMARY OF RECOMMENDATIONS

1. The arrangements for the Tasmanian Wheat Freight Subsidy

and the proposed Tasmanian Freight Compensation Scheme

should be considered as two quite distinct and separate

schemes.

2. The arrangements for the Tasmanian Wheat Freight Subsidy

should continue.

3. The Tasmanian Wheat Freight Subsidy should be applicable

to all wheat transported to Tasmania, whether that wheat

is used for human consumption, as stockfeed, or for

industrial purposes.

4. The cost of the Tasmanian Wheat Freight Subsidy should be

met by a loading paid by all purchasers of wheat for use

in Australia.

5. In the matter of the Tasmanian Wheat Freight Subsidy, the

Australian Wheat Board should be required to apply, and

limited to applying, funds to meet costs equal to the

costs of shipping from the least costly source which can

provide wheat of the type or types suitable for the

reasonable requirements of wheat users in Tasmania.

6. The method of calculating the subsidy should continue on

the same basis as at present.

7. The administration of the arrangements should remain the

responsibility of the Australian Wheat Board.

8. A conference should be arranged by the Tasmanian Grain

Elevators Board to consider a number of matters related

to the storage of wheat in Tasmania.

5

9. The subsidising of the shipment by the Australian Wheat

Board of containerised wheat to Burnie/Smithton and King

Island should continue as at present, but it should be

the subject of regular review.

10. The Tasmanian Wheat Freight Subsidy arrangements should

be reviewed at the same time as the Australian wheat

marketing arrangements are reviewed.

11. The recommendations of the Inter-State Commission should

be subject to the adoption of a constitutionally sound

basis for their implementation.

6

CHAPTER 1 INTRODUCTION

1.1 TERMS OF REFERENCE

By letter dated 20 August 1984, the Federal Minister for

Transport, Mr Morris, directed the Inter-State Commission to

investigate matters relating to wheat marketing

arrangements. The letter, to which the Commission will refer

as its terms of reference, was as follows:

I refer to my letter of 15 March 1984 directing the

Inter-State Commission to investigate matters relating to the Tasmanian Freight Equalisation Scheme ("the Scheme").

Pursuant to Sub-Section 9(4) of the Inter-State

Commission Act 1975 ("the Act") I now direct the

Commission to extend that investigation into the matter of the arrangements ("the arrangements") presently provided for under Sub-Section 26(3) and Section 27 of the Wheat Marketing Act 1979, whereby the Australian Wheat Board meets the costs of shipment of wheat by the Board to Tasmanian ports and whereby the costs of these arrangements are recovered by the Board.

I also direct that the Commission shall examine

(1) whether the subsidy provided by the arrangements should continue; and

(2) if the Commission considers that the subsidy should continue, whether any other form of subsidy or

arrangement would be more appropriate and in

particular

(a) the appropriate form and level of any subsidy that it considers should be paid and its expected cost

(b) the method of calculating any subsidy

(c) the appropriate mechanism of administration including arrangements for adjusting the rate of any subsidy in the future

(d) whether the subsidy or other arrangement should in any way be integrated with the Scheme having regard for any modifications which the Commission may consider appropriate arising from its

investigation pursuant to my direction of

15 March 1984.

7

I also direct that these investigations be completed concurrently with the Commission's investigation of matters relating to the Tasmanian Freight Equalisation Scheme.

The Government has decided that, pending the completion of these investigations, the existing freight subsidy should continue to apply to the costs of shipping from Geelong or Portland, and be funded from an impost on all domestic wheat sales.

The original directions relating to the Tasmanian Freight

Equalisation Scheme (TFES) are set out in Appendix I.

Sections 26 and 27 of the Wheat Marketing Act 1979 (Cth) and

two examples of complementary State legislation (New South

Wales and Tasmania) are provided in Appendix II.

On 29 October 1984, the Minister made an amendment, in

the following terms, to his direction of 20 August 1984:

At the time that that direction was given the Wheat

Marketing Bill 1984 , which was intended to be the new legislative authority for these arrangements, had not yet been introduced into the Parliament. It was therefore necessary to frame the direction in terms of the 1979 Act.

Now that the Bill has completed its passage through

Parliament and received Royal Assent, which occurred on 25 October 1984, I am able to clarify my earlier

direction. I now advise that sub-section 32(5) and

section 33 of the Wheat Marketing Act 1984 should be read in place of sub-section 26(3) and section 27 of the Wheat Marketing Act 1979, in the second paragraph of my

direction of 20 August 1984.

Sections 32(5) and 33 of the Wheat Marketing Act 1984

(Cth) and two examples of complementary State legislation

(New South Wales and Tasmania) are set out in Appendix III.

1.2 THE REPORT ON WHEAT MARKETING ARRANGEMENTS AS A SEPARATE VOLUME

The Commission complied with the Minister's direction to

conduct its investigation into the Tasmanian Wheat Freight

Subsidy (TWFS) concurrently with its investigation into TFES.

8

It emerged during the course of the Commission's

investigations, however, that TFES and TWFS are based on

different objectives, and that, whereas TFES is a discrete

scheme, TWFS is part of a large and complex scheme for

marketing wheat.

The Commission discovered that many of the issues and its

findings and proposed recommendations relating to TFES were

of marginal, if any, relevance to TWFS. Similarly, the

Commission discovered that many of the issues and its

findings and proposed recommendations relating to TWFS were

largely irrelevant to TFES.

The Commission decided, therefore, to present its report

on TWFS in a volume separate from that reporting on TFES.

1.3 COURSE AND EXTENT OF THE INVESTIGATION

The Commission applied the same general procedure for the

conduct of the investigation into TWFS as it applied for the

TFES investigation.

In accordance with s . 11(1) (a) of the Inter-State

Commission Act 1975 (Cth), notice in writing was given to

twenty-three persons and entities who or which the Commission

considered would be directly and specially affected by the

investigation.

Pursuant to s. 11(1)(b) of the Act, advertisements

inviting submissions were published in appropriate

newspapers. Copies of two typical advertisements are

contained in Appendix IV.

Most evidence was obtained by way of formal written

submissions and formal public hearings conducted in

accordance with ss 11-18 of the Inter-State Commission Act

1975 (Cth).

9

The Commission began its public hearings at Canberra on

5 November 1984. Appendix V provides a list of witnesses,

the organisations they represented and the venue at which

they presented evidence.

Since the investigation involved the business operations

and the financial positions of a number of corporations,

firms and individuals, on some occasions the Commission

applied the confidentiality provisions in s . 12 of the 1975

Act. It was not necessary for the Commission to exercise the

power conferred by s. 13(1) of the Act to summon a person to

give evidence or to produce any document.

The Commission also held informal discussions with a

number of individuals and organisations, as listed in

Appendix VI. The Commission visited and observed operations

at Tasmanian wheat-handling and storage facilities and

businesses using wheat.

10

CHAPTER 2 WHEAT TYPES, PRODUCTION AND USAGE

2.1 WHEAT TYPES AND THEIR USES

In Australia, six major types of wheat are marketed. These

are:

(a) Australian Prime Hard (APH), which is limited to high

quality hard varieties of wheat, distinguished by

their milling quality and their balance of dough

properties in breadmaking. APH generally has a

minimum protein level of 13 per cent, which makes it

ideal for industrial uses such as starch production.

(b ) Australian Hard (AH), which consists of hard

varieties of wheat of proven breadmaking quality.

The protein content is generally within the range of

11.5-13.5 per cent.

(c ) Australian Standard White (ASW), which is a multi­

purpose wheat of intermediate grain hardness, with a

protein level generally between 9.5 and 12.0 per

cent. ASW has a wide range of uses, including

conventional panned bread, steamed bread, unleavened

bread and most types of noodles.

(d) Australian Soft (AS), which is low protein wheat

suited to the production of sweet biscuits, cakes and

pastry goods.

(e, f )

Australian General Purpose (AGP) and Australian Feed

(AF), which are wheats that fail to conform to the

standards of the above classes because of factors

such as test weight, weather damage or contamination

with foreign matter or seeds. Some AGP may be

11

suitable for milling purposes, but the poorer quality

wheats in these classes are marketed as stockfeed.

It should be emphasised that the above categories are

general classes and cannot always be treated as discrete

types. Consequently, for example, some of the higher quality

ASW may be suitable for breadmaking, or some varieties of AH

may serve the same purposes as APE or ASW at the top and

bottom ends respectively of its quality range.

The Wheat Marketing Act 1984 (Cth) does not distinguish

between the above six wheat types. The only general category

recognised by the legislation is ASW, and pricing

distinctions are drawn according to the use for which the

wheat is sold. Pricing is discussed in detail in Chapter 4.

As an example, wheat prices quoted by the Australian Wheat

Board on 8 January 1985 are listed in Appendix VII.

2.2 REGIONAL VARIATIONS IN TYPES OF WHEAT PRODUCED

The mainland States of Queensland, New South Wales, Victoria

and South Australia are able to grow wheat with sufficiently

high protein levels to satisfy their breadmaking

requirements. However, wheat grown in Western Australia is

generally the lower protein ASW variety and, because the cost

of shipping high protein wheats from eastern Australia is

prohibitive, Western Australian bread manufacturers use the

lower quality local wheats to make bread of a satisfactory

standard, using gluten as an additive. Starch and gluten are

produced in Western Australia from the better quality locally

grown wheats which, although adequate, are below the standard

of APH from New South Wales or Queensland.

Under a zonal system which applies on the mainland, a

loading to reflect transport costs may be added to the price

if the purchaser requires wheat from another zone. This

12

loading encourages use of wheat from within the purchaser's

zone.

2.3 USAGE OF WHEAT IN TASMANIA

Tasmania generally receives from the mainland between 85 000

and 95 000 tonnes of wheat each year. Of this, approximately

28 per cent is for human consumption, 25 per cent for

industrial usage and 47 per cent for stockfeed. In recent

years, the great majority of wheat transported to Tasmania

has been shipped from Newcastle in New South Wales. Table

2.1 provides a breakdown of wheat types received in Tasmania

in 1982-83 and 1983-84.

TABLE 2.1 WHEAT QUANTITIES RECEIVED

IN TASMANIA, 1982-83

AND 1983-84, BY TYPE

(tonnes)

WHEAT TYPE YEAR

1982-83 1983-84

APH 14 642 1 298

AH 8 290 12 410

ASW 76 877 48 846

AGP - 15 102

TOTAL 99 809 77 656

Source: Tasmanian Grain Elevators

Board.

As Table 2.1 indicates, the shipment of specific classes

of wheat to Tasmania is quite variable due to factors such as

seasonal production levels in both Tasmania and on the

mainland and demand for industrial wheat. Although

13

industrial users of wheat in Tasmania generally require APH,

in 1983-84 they were able to meet their needs from

weather-damaged APH which was formally classified as AGP.

In Tasmania, the major usage of wheat for industrial

purposes is in the manufacture of wheat starch and gluten.

The Associated Pulp and Paper Mills Limited (APPM) plants at

Burnie and Wesley Vale purchase their entire starch

requirements for fine paper production from Tasman Starches

Pty Limited, the sole Tasmanian starch producer. The

production of such high quality starch requires the use of

APH, which is obtained from New South Wales. None of the

gluten produced by Tasman Starches Pty Limited is sold on the

mainland, all of it being exported to the United States,

where the quality requirements of that market also demand the

use of APH.

A number of submissions to the Commission argued that

flour used in breadmaking must be ground from high protein

hard wheat, and that the minimum acceptable protein level is

11.0-11.5 per cent. This protein level approximates that of

AH and the upper range of ASW. It was further argued that

the most suitable wheat types for Tasmania's bread

manufacturers are grown in New South Wales and Queensland.

As stated in paragraph 2.1, poorer quality and damaged

wheat is generally used in the manufacture of stockfeed,

primarily for the intensive livestock industry. Such feed is

approximately 75 per cent grain, with wheat being the basic

grain for all poultry feeds produced in Tasmania. Wheat can

also be used as a feed supplement for livestock in times of

drought.

2.4 PROSPECTS FOR INCREASING PRODUCTION OF WHEAT IN TASMANIA

The Commission received a large amount of evidence relating

14

to the quantity and type of wheat which could be produced in

Tasmania. Among the material before the Commission was a

paper prepared by the Tasmanian Department of Agriculture, at

the request of the Commission, on the production and usage of

various kinds of grain in Tasmania. An extract from the

paper is set out in Appendix VIII.

The Australian Wheat Starch Producers (AWSP) expressed

the belief that

the growing of wheat in Tasmania has been inhibited by the subsidisation of freight from the mainland. The State was rated as the granary of Australia in the last century and in 1896 produced some 1 164 655 bushels

(31 703 tonnes) of wheat.

In support of their proposition that more wheat could and

should be produced in Tasmania, AWSP presented a very

detailed submission. In relation to the question of the

possibility of growing in Tasmania wheat suitable for baking

bread, AWSP stated

Tasmanian interests will argue that they can only grow soft English-type wheats which are unsuitable for bread baking and starch production. However, AWSP would point out that whilst these arguments may have had some

validity 40 or 50 years ago the same situation no longer prevails. Modern bread baking technology and the use of additives, gluten and improvers enable the skilled baker

to produce good commercial quality bread from these wheats.

AWSP referred to a recent paper by Mr J A Blackman of the

Plant Breeding Institute, Cambridge, United Kingdom.1 The

paper deals with recent trends in wheat breeding programs in

the United Kingdom, where yields of 7 tonnes per hectare are

now being achieved with non-bread-type wheats and only 10 per

cent less with good breadmaking varieties. The Blackman

paper indicates what can be achieved from a planned breeding

program using modern analytical screening techniques to find

those varieties best suited to the prevailing growing

conditions. Improvements in yield, baking quality,

15

sprouting, and disease resistance are all achievable through

improved methods of selection and increased understanding by

scientists of the genetics of quality.

Despite the evidence of AWSP and despite the longer term

possibilities suggested by the Blackman paper, the Commission

is of the opinion that there is no prospect of total wheat

production in Tasmania being dramatically increased in the

near future. The Commission is aware of, and does not wish

to discourage, the efforts of a number of Tasmanian wheat

consumers (the most active of whom, in this regard, is Golden

Poultry Farming Industries Ltd) who are seeking to encourage

the local production of wheat. It would, however, require an

enormous increase in production of wheat in Tasmania to bring

the State as a whole even close to self-sufficiency.

In recent years, the Tasmanian wheat harvest has been

between 2000 and 3000 tonnes annually. At the same time,

total annual shipments from the mainland have been between

85 000 and 95 000 tonnes, of which between 20 000 and 25 000

tonnes are used for human consumption. Of the 83 934

hectares currently used for growing crops in Tasmania, only 2

1293 hectares (1.5 per cent) are used for growing wheat.

It would require a massive redirection of resources into

wheat growing to produce wheat in the quantities required by

users within the State. Assuming a productivity yield of

1.5 tonnes per hectare, approximately 60 000 hectares of

farming land in Tasmania (that is, approximately 75 per cent

of the land currently used for growing crops) would be

required to produce the necessary quantities.

Such a redirection of resources would not be desirable.

The average gross margin to Tasmanian wheatgrowers is between

$115 and $179 per hectare. In the north-west coast region of

Tasmania, farmers can expect gross margins of up to $3500 per

16

hectare for some types of potatoes, $3100 per hectare for

cauliflowers, $1500 per hectare for baby carrots and $1000

per hectare for beans. In the southern region, growers can

expect gross margins of up to $918 per hectare for poppies,

$608 per hectare for peas, and $350 per hectare for malting

barley.^

There is, furthermore, the question of wheat type.

Current production within Tasmania is of low protein soft

wheat (AS), suitable for the manufacture of biscuits and

cakes but used in Tasmania primarily for stockfeed. Even

self-sufficiency in stockfeed production would be difficult

to attain. In a normal season, Tasmanian farmers require

between 33 000 and 43 000 tonnes of wheat for stockfeed, and

this amount increases dramatically during drought periods.

In the Commission's estimate, the maximum production

increase which might be achieved in the next five years is

2500 tonnes. Such an increase would double annual Tasmanian

wheat production. But total Tasmanian wheat production would

still be sufficient to meet only a very small proportion

(around 6 per cent) of current Tasmanian requirements.

The Commission concludes, therefore, that for the

foreseeable future almost all of Tasmania's wheat needs will

have to be met by wheat brought into the State.

NOTES

1. J A Blackman, Progress in Yield and Quality Improvement

in English Wheat, unpub. paper presented as part of AWSP

submission to ISC, Sydney, October 1984.

2. Government of Tasmania, Submission to the Inter-State

Commission, October 1984, Table 4.1, p. 11.

3. Government of Tasmania, Submission, October 1984, Table

4.2, p .12.

17

. i

.

..· ' - ' ■·- Vc

CHAPTER 3 TRANSPORT AND STORAGE OF WHEAT FOR TASMANIAN USE

3.1 TRANSPORT AND STORAGE OF WHEAT ON THE MAINLAND

So as to provide a basis upon which to contrast the Tasmanian

situation, the Inter-State Commission sets forth the

following brief description of mainland practices of

transporting and storing wheat.

When wheat is harvested on the mainland the farmer

determines the amount he or she will need to retain for seed

and on-farm feeding, and for stockfeed to be sold under

permit. The remainder is then delivered to the local storage

facility of the Australian Wheat Board (AWB). In most cases,

this storage facility is situated on a rail line and the

wheat is transported by rail from that place to a port of

export for the zone. In South Australia and Western

Australia, bulk-handling farmers' co-operatives provide the

storage used by the AWB; in the other mainland States,

government bodies are responsible for the receipt and storage

of wheat.

Prices at which the AWB may sell wheat are fixed, in the

manner discussed in Chapter 4, free on rail (f.o.r.) at ports

of export. If a purchaser requests the AWB to supply wheat

from another zone, the AWB may add a loading to the price to

reflect any additional transport costs incurred. Interzonal

transportation of wheat does nevertheless take place.

When wheat is transported between mainland points,

whether interzonal or not, it is almost always transported by

rail or road. The Commission is aware of only one instance

in recent years of sea transport of wheat between mainland

points: from a South Australian to a Victorian port.

It is possible to purchase wheat from the AWB direct from

local storage. Should a quantity of wheat be purchased

19

direct from local storage, the AWB determines the amount of

transport costs, if any, avoided by not having to transport

the wheat to the relevant port for the zone. The AWB then

deducts this amount from the price charged to the buyer. It

is, moreover, possible under recent amendments to wheat

marketing legislation (see paragraph 4.7) to purchase wheat

for stockfeed directly from growers. In such circumstances

the price may reflect transport cost savings.

Whatever the kind of sale involved, the buyer usually

bears the cost of transporting the wheat to the point of use

and, in addition, any post-purchase costs of storage pending

use.

In general, mainland wheat storage and distribution is

export oriented, whereas in Tasmania the system is geared to

receival and distribution for local consumption.

3.2 BULK SHIPPING OF WHEAT TO TASMANIA

Prior to the 1950s Tasmania's wheat requirement was shipped

in bags, with the major portion originating in South

Australia. Since the 1950s, wheat shipped to Tasmania has

been mainly carried in bulk. (Some wheat is still shipped in

bags for use on King Island, and there is shipment in

containers of Western Australian wheat to Burnie/Smithton.

Non-bulk shipping of wheat is discussed in paragraphs 3.6 and

6.11 . )

In August of each year the AWB calls for tenders for the

bulk shipment of wheat to Tasmania. Contracts are awarded in

November. The Australian National Line (ANL) is the only

shipping line to have shown consistent interest in the bulk

shipment of wheat to Tasmania, and it has been awarded the

contract every year since 1957. (William Holyman and Sons

Pty Ltd held the contract prior to 1957.) ANL has been

awarded the contract again for 1985 and it seems likely that

20

the line will continue to be the successful tenderer. When

tendering, ANL takes into account the likely delays in

loading wheat at the mainland port.

From 1957 to 1978 the MV North Esk, a bulk carrier of

2014 dead-weight tonnes (dwt) operated by ANL, was the

principal means of shipping wheat to Tasmania. In 1978 the

North Esk was withdrawn as being uneconomical.

In April 1976, in anticipation of the North Esk being

taken off the Tasmanian run, a report on future wheat

shipment to Tasmania was prepared by a joint study group.1

The joint study group comprised representatives of ANL, the

AWB, the Tasmanian Grain Elevators Board (TGEB), the

Tasmanian Transport Commission (TTC), and two persons

representing consumers. In the report the most economical

means of supplying mainland wheat to Tasmanian customers was

considered. The group favoured the use of a 3210 dwt

cellular container ship owned by ANL, but in the event this

ship was not available and the group agreed that a 15 000 dwt'

bulk carrier should be used for the transport of wheat to

Tasmania.

θέ>βθ i

When shipments commenced in 1978, ANL ships of the Lake

class of 16 000 dwt and with a cargo capacity of 15 000

tonnes were used. As a result of the use of larger ships tiie

number of voyages was reduced and shipments of wneaif

consolidated.

gninisp

j Isidini

siά£Î 9 o i

Unlike the North Esk, the Lake class ships cannot

. .sdioq owd

negotiate the Tamar River and unload wheat into the silo at

Launceston. They discharge wheat at Hobart and Devonport,

and at Beauty Point (near the mouth of the Tamar opposite

Bell Bay). The wheat landed at Beauty Point is moved"^o the ., , , od noidoubsi

Launceston silo by road.

iiiso yllsmion

21

3.3 INTRODUCTION OF A RANGE CLASS VESSEL

The use of the Lake class vessels is likely to cease in the

near future because ANL considers that these vessels are

becoming uneconomic for operation on the Australian coast.

ANL proposes moving from the Lake class vessels to Range

class vessels. This proposed change is in accord with the

general trends in shipping.

South Australian Co-operative Bulk Handling Limited

summed up the trend in its publication A Silver Milestone:

Shipping companies, facing escalating fuel prices as the energy crisis intensifies, are being increasingly attracted to bigger ships because of their low cost/tonne

to transport grain over a given distance.2

ANL anticipates that the Range class vessel Flinders

Range will be introduced into the Tasmanian trade some time

during 1985. The Flinders Range has six holds varying in

capacity from 4500 to 5700 tonnes each. This feature will

enable a more effective segregation of wheat types than do

the four holds of Lake class vessels.

Some witnesses suggested to the Commission that the fully

loaded Flinders Range may have difficulty in docking at the

wheat berths in Hobart and Devonport. The relevant harbour

authorities have assured the Commission that, subject to

tidal movements, there will be no difficulty in that vessel

gaining access. It would, however, be desirable if some

initial unloading of wheat could take place at Beauty Point,

to enable the vessel to manoeuvre more easily at the other

two ports.

The greater capacity of the Flinders Range will provide

the potential for a consolidation of shipments, with a

reduction to four voyages per year instead of the six

normally carried out by Lake class vessels.

22

The use of the Flinders Range should allow economies of

scale which, in turn, should result in lower freight rates.

ANL has indicated to the AWB that on the Flinders Range any

tonnage over 15 400 tonnes could be shipped at $18.50 per

tonne. For a full load of 24 500 tonnes, this represents an

average freight rate of $28.80 per tonne. Allowing for

normal fluctuations in the size of wheat shipments, it could

be expected that an average rate would be in the vicinity of

$30 per tonne, compared with the current rate of around $35

per tonne (see paragraph 6.10).

If the potential for reducing freight rates is to be

fully realised, however, then the Flinders Range will have to

be loaded at close to capacity for its voyages to Tasmania.

This will be possible only if facilities in Tasmania are

adequate to receive and store the grain.

For reasons stated in paragraph 6.7, one-port discharge

is not practicable.

3.4 GOVERNMENT WHEAT STORAGE CAPACITY IN TASMANIA

The Tasmanian Grain Elevators Board has three traditional

silo complexes (assemblages of round, vertical concrete

cells) with a total storage capacity of 30 100 tonnes. This

storage comprises 8400 tonnes at Hobart, 11 100 tonnes at

Launceston, and 10 600 tonnes at Devonport. In addition, at

Beauty Point there is horizontal storage (wharf storage

sheds) which is used for transit only and has a capacity of

4000 tonnes.

The TGEB storage normally has sufficient capacity to

receive the tonnages of wheat carried by Lake class vessels

(although extra demands which arise during drought conditions

stretch this capacity). Co-ordinating wheat shipments with

wheat usage and storage capacity requires, however, fine

management.

23

Mr N S Bridge, Chairman and Manager of the TGEB, said in

evidence to the Commission,

I prefer to say we have to run our wheat stocks down to

critically low levels before we can bring in a complete new shipment. We do a tightrope act every vessel.

The move to larger shipments and fewer voyages, which the

introduction of the Flinders Range could bring about, would

put even more pressure on the TGEB storage system. When

asked whether it would be an easier 1 balancing act1 for the

Board if there were more storage available in Tasmania, Mr

Bridge responded,

Yes, of course it would. We are not against having more storage. We are concerned about the fact that the users of wheat in Tasmania would have to pay for it, when we

have been able to accommodate the 16 000 tonner over the last three or four years and now have a 27 000 tonner

thrust upon us with the implied criticism that, if we do not use all of it, it is going to cost an extra $5 a

tonne to get freight.

Mr Bridge and other witnesses indicated that a further

8000-10 000 tonnes of storage would be required if the

Flinders Range were used to its full capacity to carry wheat

to Tasmania. The consensus was that such storage should be

at Devonport (6000-8000 tonnes) and Hobart ( 2000 tonnes).

The Board advised the Commission that it has at varying

times used horizontal storage to store quantities of grain

that could not be stored in the silo complexes. The Board

has the necessary equipment to handle horizontally stored

wheat but it considers it is easier to handle wheat when it

is stored vertically in silos.

It appeared that the TGEB views on storage were due, in

part, to its belief that there was insufficient horizontal

storage available to meet possible future requirements. The

Commission has made inquiries about the availability of

horizontal and other alternatives to vertical storage.

24

The Commission has received written confirmation from the

Marine Board of Hobart that there is more than adequate

horizontal storage available in Hobart for the storage of

wheat. Likewise, on a visit to the port of Devonport, the

Commission was advised by an officer of the port authority

that wharf shed space was available and had in fact been used

in the past for the storage of wheat. AWB representatives

advised that some grades of stockfeed wheat could be landed

straight onto a wharf, perhaps on tarpaulins, for direct

carriage from the wharf to the stockfeed users' own storage.

When asked to comment on the use of existing wharf

storage as an alternative to the construction of additional

vertical storage, the AWB responded:

The central handling system in Australia has on occasions utilised warehouse stores on a temporary basis to

accommodate storage capacity. This option, however, is not one that is encouraged by the Australian Wheat Board on account of the unsuitability of most warehouses to provide safe, pest-free storage for grain over an

extended period.

Such stores are generally not equipped with grain

handling equipment and thus require mobile inloading and outloading equipment such as sweeps and/or augers or grain throwers such as the Lobstar unit to transfer

grain. Their open-type structure either prevents or severely limits the ability to segregate more than one grade of wheat; and the nature of their construction is such that the existence of internal supporting structures makes the maintenance of good grain store hygiene and pest control next to impossible to achieve.

The inability to readily turn, transfer and treat grain held in warehouses is a further reason for the

unsuitability of such stores to receive grain.

It is generally agreed, however, that in cases where warehouses need to be used to store grain, the storage period should not exceed three months.

While the Commission can understand the AWB1s concern

over the use of possibly unsuitable long-term storage, it is

not unusual in the bulk-handling system to store wheat in

25

horizontal storage. In fact, Western Australian Co-operative

Bulk Handling Limited, in a booklet entitled A Profile, says:

Various experimental designs including vertical concrete cell blocks and several large horizontal storages of varying construction, materials and styles, incorporating fixed machinery and pit discharge, were also introduced.

The vertical cells were found to be too expensive for a once-a-year operation - this led to horizontal storage becoming the foundation of the modernization programme.

In more recent times, however, for the purpose of

segregation and efficient rapid loading of grain to transport during the receival period, vertical cell type storages have been integrated with the horizontal storage system at many country receival points.3

The Commission therefore believes the use of wharf shed

storage should be pursued even if only on a short-term basis,

say, three months at a time, a period considered acceptable

by the AWB. The TGEB silos could then be used for longer

term storage of wheat, thereby ensuring that sufficient

buffer stocks are available in Tasmania.

On the basis of this evidence, the Commission has

concluded that the TGEB may not need to build additional

storage to handle the fully loaded Flinders Range: existing

wharf storage could provide adequate additional capacity for

this purpose.

3.5 THE WHEAT STORAGE SYSTEMS OF TASMANIAN USERS

The arrangements between Tasmanian wheat users and the TGEB

are significantly different from arrangements on the mainland

between users and grain storage authorities and

co-operatives. On the mainland, storage facilities are

organised for the receival of the grower's product with a

view to exporting a large proportion of the product. These

facilities are therefore not necessarily close to sites of

mainland use. Some mainland users benefit from being close

to places of storage or production by being able to purchase

wheat at a price below the port of export price.

26

In Tasmania, storage facilities are close to - literally

next door to - some places of major use. There are three

flour mills in Tasmania, one each in Hobart, Launceston and

Devonport. The flour mills in Hobart and Devonport are so

close to TGEB silos that they have been connected with the

silos by means of a pipe. Wheat is piped directly from the

silos to the mills. However, the flour mill in Launceston

does not have a similar arrangement, and wheat is trucked to

it from the Launceston silo. In Devonport, the one starch

producer in Tasmania, Tasman Starches Pty Limited, is

adjacent to the flour mill and receives flour piped directly

from the flour mill.

No detailed evidence was given to the Commission on the

question of grain storage in Tasmania outside the TGEB

system. The Commission did, however, have access to copies

of the report of a seminar entitled On-farm Storage of Grain,

held on 4 October 1984 under the auspices of the Tasmanian 4 Department of Agriculture. This document indicates that

those farmers who use stockfeed wheat have limited storage.

It is the Commission's understanding that stockfeed producers

also have limited storage capacity and rely on the TGEB

facilities, from which small amounts of wheat are taken

regularly.

The Commission suggests that Tasmanian users of wheat

might consider their own obligations to provide some on-site

storage of wheat, as do their counterparts on the mainland.

According to the AWB, mainland millers, for example, have a

combined wheat storage capacity of 264 000 tonnes. It is the

Commission's understanding that most mainland users have

their own large storage facilities. It might be, of course,

that Tasmanian users of wheat could co-operate with the TGEB

to provide additional storage, with costs shared between the

TGEB and users.

27

If Tasmanian stockfeed users do not increase their own

storage capacity they may find it difficult to participate

in, and share any of the benefits of, the recently introduced

permit system which allows stockfeed users to deal directly

with growers. Golden Poultry Farming Industries Ltd, a major

stockfeed user in Tasmania, has recently expanded its storage

capacity and has indicated to the Commission that it is

considering the implications of the permit system.

3.6 NON-BULK SHIPPING OF WHEAT TO TASMANIA

The AWB currently ships some wheat to Tasmania in

containers. Each year Burnie and Smithton receive a total of

1800 tonnes of wheat, shipped loose in containers by the

Western Australian Coastal Shipping Commission (Stateships).

King Island receives 350 tonnes each year, currently bagged

and shipped in containers from Melbourne by Brambles

Industries Ltd.

A number of witnesses raised the possibility of the AWB

shipping more wheat in containers. In his evidence to the

Commission, Mr Bridge of the TGEB agreed that containers

could be used and that the TGEB was able to handle such

consignments. He said that the cost to the TGEB might in

fact be less than that for bulk shiploads because the

containers could be unloaded using ordinary day labour rather

than labour on an overtime basis. At present overtime must

be paid because, when a bulk ship docks, unloading continues

twenty-four hours a day until the ship is unloaded.

One shipping line indicated to the Commission its

interest in shipping containerised wheat, but the rate quoted

was such that it did not appear to warrant changing the

present arrangements whereby most Tasmanian requirements are

met from wheat shipped to Tasmania in bulk. The shipping

line's quotation appeared to envisage the shipment of wheat

direct into the users' storage, but, as has already been

28

stated, bulk wheat is drawn, by most users, direct from the

TGEB silos.

One witness, the General Manager of Golden Poultry

Farming Industries Ltd, did say that the company was

interested in participating in the new permit system and in

buying wheat directly from growers on the mainland. It might

well be that that company could benefit from shipments of

wheat in containers. Such shipments would be undertaken by

the company rather than the AWB and would not, therefore, be

eligible for TWFS (see paragraph 6.11).

Mr Bridge of the TGEB told the Commission that small

quantities of specialised wheat shipped in containers may

assist the TGEB to handle the lesser number of voyages that

would result from the use of larger ships. By maintaining

larger quantities of preferred wheat grades in its silos the

Board could use containers to back up its requirements for

smaller quantities of specialised wheat grades.

3.7 COSTS OF CONSTRUCTING NEW WHEAT STORAGE

The Commission received from the AWB evidence that the cost

of constructing additional vertical silo storage would be

approximately $150 per tonne, plus an additional $200 000 to

upgrade the discharge facilities. Mr Bridge advised that if

the TGEB was not constrained by the planning strategy of the

Sullivans Cove Development Authority, it would either build a

new concrete silo cell adjacent to the existing silos or hang

small steel silos in the creases of the present silos, which

would give the Board, in Mr Bridge's words, 1 a tremendous

amount of additional flexibility'. This latter is the option

preferred by the TGEB.

Although the Commission is satisfied that additional

storage may not have to be constructed to handle the shipment

of existing wheat types used in Tasmania, it is necessary to

29

examine the question of who pays for additional storage if it

is built.

It is not appropriate, as was suggested in one

submission, to throw the cost back onto the AWB and thus

reduce returns to mainland growers. Mainland growers and

communities will have already paid for the storage of the

wheat on the mainland before it is shipped to Tasmania.

The clear view of the Tasmanian Government, expressed

through Transport Tasmania, and of the TGEB was that, since

additional storage would enable the AWB to discharge its

obligation to provide wheat to Tasmania, the decision to use

larger ships means the obligation to fund extra storage must

fall on the Commonwealth.

The Commission cannot agree with this view for three

reasons. First, the TGEB provides storage for almost all of

its customers, a situation which does not occur elsewhere in

Australia. Second, mainland wheat users now pay for their

wheat before storing, whereas payment does not take place in

Tasmania until wheat is drawn from TGEB storage. The

Commission can see no compelling reason why the Commonwealth

should fund any continuation of these special positions for

Tasmanian users. Third, the TGEB brought to the notice of

the Commission a letter dated 17 July 1978 from the Prime

Minister to the Tasmanian Premier, concerning changes in

shipping arrangements and the possible need for additional

storage. The Prime Minister said that additional storage was

entirely the responsibility of Tasmania, in the same way as

for the other States. The Commission agrees with the policy

enunciated in the Prime Minister's letter and attaches it as

Appendix IX.

3.8 A STORAGE CONFERENCE

In summary, while accepting that the use of a vessel of the

30

size of the Flinders Range will create problems for Tasmanian

handlers and users of wheat, the Commission is confident that

these can and should be solved by the Tasmanian interests

concerned. It was admitted by a number of witnesses that

there had not always been the necessary degree of

consultation between the parties involved.

The Commission recommends to the Federal Minister that he

suggest to the Tasmanian Government that, at the earliest

possible time, a conference of relevant interests be held to

resolve the problems of storing and handling wheat in

Tasmania without Commonwealth financial assistance. Such a

conference should give particular consideration to the

implications of the use of larger ships on the Tasmanian run,

the introduction of permit wheat trading, the use of

containers for specialised shipments, the use of existing

storage, the type and location of additional storage

required, and the sharing between the Tasmanian Government

and Tasmanian users of the costs of constructing any

additional storage. In the matter of existing wharf storage,

it is suggested that consideration be given to the techniques

applied by mainland handling authorities when using

horizontal storage.

NOTES

1. Joint Study Group, Report on Future Wheat Shipments to

Tasmania, unpub. paper, April 1976.

2. South Australian Co-operative Bulk Handling Limited, A

Silver Milestone: The 25 Year History of South

Australian Co-Operative Bulk Handling Limited, Hyde Park

Press, Adelaide, 1980.

3. Western Australian Co-operative Bulk Handling Limited, A

Profile, Western Australian Co-operative Bulk Handling

Limited, Perth, 1983.

31

4. Tasmanian Department of Agriculture, On-farm Storage of

Grain, unpub. seminar paper, 4 October 1984.

32

CHAPTER 4 HISTORY OF GOVERNMENT INVOLVEMENT IN WHEAT MARKETING

4.1 INTRODUCTION

The social and economic condition of the Australian community

has been, and continues to be, significantly affected by the

condition of the wheat industry.

The history of government involvement in marketing wheat

is long and complex, and it is interwoven with the history of

government policies relating to land release, soldier

settlement, decentralisation, railway development and

international trade. This chapter highlights aspects of the

history of wheat marketing which are of particular relevance

to this report.

4.2 WORLD WAR 1 UNTIL THE GREAT DEPRESSION

The first government intervention in wheat marketing this

century occurred in 1914. In that year the Commonwealth

imposed export restrictions to prevent wheat going to enemy 2 hands and, in the face of a drought-induced shortage of

wheat, the New South Wales Parliament passed legislation

which voided contracts for the sale of wheat and which

established a framework for its compulsory acquisition. (It

was in a case involving a challenge to the constitutional

validity of the New South Wales legislation, The State of New

South Wales v the Commonwealth (1915) 20 CLR 54 (the Wheat

Case), that a majority of the High Court held that the then

Inter-State Commission could not be made a court and could

not be given injunctive powers.)

Soon the problem became an overabundance of wheat because

record harvests for the 1914-15 and 1915-16 seasons coincided

with a war-caused shortage of shipping. From the end of 1915

until the harvest of 1920-21 there was a co-ordinated

33

marketing plan involving the Commonwealth Government and the

four main wheat-producing States, New South Wales, Victoria,

South Australia and Western Australia. The main purpose of

the plan was to 1 prevent ruinous competition between States

for the limited freight space available1 by rationing freight

space for each State in proportion to its respective

3

exportable surplus.

In the 1920s voluntary pooling schemes were set up

independently by those States that had been involved in the

wartime marketing plan. These schemes varied in importance

from State to State and from season to season. In the early

years of these pools the Commonwealth guaranteed a minimum

price to participating wheatgrowers. Even after this

Commonwealth involvement ceased, the voluntary pools

continued to operate; some were still operating at the end of

the 1930s although they seldom attracted a very large share

of the harvest. (Against the trend to voluntarism,

Queensland, which was not a major wheat-producing State and

had not been involved in the wartime plan, introduced

4

compulsory pooling in 1920.)

The wheat industry and Australia's international balance

of payments were severely affected by the onset of the Great

Depression. Through the 1930s attempts to reintroduce

compulsory marketing (which was supported by a Premiers'

Conference in 1930, and in 1935 by the recommendations of the

second report of the Royal Commission on the Wheat, Flour and

Bread Industries [the Gepp Commission]) foundered in the face

of, at first, Senate refusal to pass the necessary

legislation and, later, changes in judicial interpretation of

s. 92 of the Constitution.

Although attempts to reintroduce compulsory marketing

failed, a variety of arrangements through the 1930s did

provide financial assistance to wheatgrowers. One

34

arrangement which was repeated regularly throughout the 1930s

was as follows:

. in exercise of its power in s. 51 (i i) of the

Constitution, the Commonwealth imposed a tax on flour;

. in exercise of its power in s. 96 of the

Constitution, the Commonwealth made grants to States

on condition that the grants be used to make relief

payments to wheat growers;

. States passed legislation to fulfil the condition

attached to the granted fund.

Each time this general arrangement was set up, a special

arrangement was made for Tasmania, to take account of the

fact that although flour consumers in the State would bear

the burden of a flour tax there were very few wheatgrowers in

Tasmania to benefit from the funds raised from the tax. The

Commonwealth could not simply exempt from the tax flour for

Tasmanian consumption because the Commonwealth's power, in

s. 51(ii) of the Constitution, to impose taxation is limited

' so as not to discriminate between States or parts of

States 1.

Instead, a pattern of separate enactments was established

whereby the Commonwealth granted to the State of Tasmania a

fund equivalent to the amount raised by the general tax on

flour consumed in Tasmania. The grant was conditional on

Tasmania using the fund to pay to persons who had paid tax in

its application to flour consumed in Tasmania an amount

equivalent to any such tax they had paid. Tasmania enacted

legislation to fulfil this condition.

The constitutional validity of the 1938 version of the

scheme for reimbursing those who had paid tax for flour

35

consumed in Tasmania was challenged in The Deputy Federal

Commissioner of Taxation (NSW) v W R Moran Pty Ltd (1939 ) 61

CLR 735; W R Moran Pty Ltd v Deputy Federal Commissioner of

Taxation (NSW) (1940 ) 63 CLR 338 (referred to as Moran' s

Case). Both the High Court (by majority) and the Privy

Council upheld the scheme.^

4.3 WORLD WAR 2

During World War 2 the Commonwealth, in reliance on its

expanded defence power (s. 51(vi) of the Constitution),

exercised close control over both the growing and marketing

of wheat through the Wheat Industry (War-Time Control) Act

1939 (Cth), and by exercising powers in the National Security

Act 1939 (Cth) to make the Wheat Acquisition Regulations and

the National Security (Wheat Industry Stabilization)

Regulations. Wartime arrangements, which went through many

changes, included:

. compulsory acquisition of the wheat crop;

. marketing of the compulsorily acquired crop by the

Australian Wheat Board (AWB);

. State committees assisting the AWB;

. a guaranteed price to growers for wheat produced;

. a stabilisation fund made up of half the difference

between the guaranteed price and the market

realisation (with the fund so obtained to be used in

years of low prices to support returns to growers);

. registration and licensing of growers, and

restrictions on acreage grown;

36

. a Commonwealth subsidy for wheat used as stockfeed

(apparently to encourage use of surplus wheat).7

4.4 AFTER WORLD WAR 2

In 1946 the Commonwealth attempted to establish a peacetime

marketing scheme by enacting the Wheat Industry Stabilization

Act. The legislation dealt with many matters. In so far as

the legislation controlled dealings with wheat it was,

however, expressly limited to dealings in the Territories.

Wheat production within the Territories has never represented

a large proportion of the Australian total. The purpose of

setting up this legislation with such a limited operation was

to avoid constitutional problems and establish a set of

provisions which the States could reflect in complementary

State legislation. The Commonwealth Act was also framed so

that the States could vest powers and functions in the AWB.

This legislative structure for achieving a nationwide

marketing scheme has been the legislative framework of all

wheat marketing plans up to and including the current plan.

As it turned out, no State legislation was enacted to

complement the 1946 legislation and the wartime arrangements

(relying on the defence power in s. 51(vi) of the

Constitution) were extended until 1948.

In 1948 the first peacetime scheme of the sort

contemplated by the 1946 Commonwealth Act came into operation

with complementary Commonwealth and State provisions.

Discussion of the legislation within the Commonwealth

Parliament was dominated by recollections of the desperate

and not very distant days of the Great Depression and by the

current experience of the price at which wheat was sold for

home consumption being kept well below very high export

prices.

The 1948 legislation was expressly limited to operate for

37

five seasons. New five-year plans have been introduced in

each of the years 1953, 1958 , 1963, 1968, 1974, 1979 and

1984. (The 1968 plan was extended in 1973 pending the

formulation of the 1974 plan.)

There has been significant variation from plan to plan,

and some of the plans have also undergone mid-term

amendments. In Commonwealth Parliamentary debate there has,

however, been a recurrent and dominant theme of a concern to

provide certainty and financial security for wheatgrowers.

To the extent that there has been variation from plan to

plan, or criticism in Commonwealth Parliament of a particular

plan, it has generally been at the level of how, rather than

whether, to provide certainty and financial security for

wheatgrowers.

The operations of the plans have been the subject of

three extensive reports in the last thirteen years. In 1972

Sir Allan Callaghan presented a report, commissioned by the

Minister for Primary Industry, on the wheat industry and

stabilisation. The Industries Assistance Commission (IAC)

reported in 1978 on wheat stabilisation and in 1983 on the

wheat industry.

Wheat marketing legislation has survived two recent

attempts to have it declared unconstitutional by the High

Court. In Clark King & Co Pty Ltd v Australian Wheat Board

(1978) 140 CLR 120, the legislation was held to be compatible

with s. 92 of the Constitution by a three-to-two majority.

In Uebergang v Australian Wheat Board (1980) 145 CLR 266, the

legislation was brought before a Court of seven Justices.

Two members of the Court were ready to pass an opinion on the

compatibility of the legislation with s. 92 without taking

more evidence; the other five members of the Court were 9 .

not. No evidentiary proceedings have taken place.

38

The common features of the five-year plans have been:

(a) A compulsory pooling of wheat, giving the AWB a

domestic and export monopoly in the sale of wheat so

that growers can share in the combined returns from

domestic sales at prices which are fixed (as outlined

below) and from export sales at prices which are

volatile, despite the attempts of international wheat

agreements and arrangements to stabilise the

international wheat market. (The compulsory pooling

system has been modified under the current Eighth

Plan (1984 ) to the extent that the AWB may permit

some purchasers to deal directly with growers.)

(b) A guaranteed, or stabilised, price to be paid to the

grower for at least a certain amount of wheat

delivered by the grower to marketing authorities.

Approaches to determining the appropriate guaranteed

price have varied. The first four plans followed the

approach of the Gepp Commission and tied guaranteed

prices to growers' costs, this approach being based

on the assumption that growers should be guaranteed a

basic viable return similar to a basic wage

guaranteed to employees. The Fifth Plan (1968)

introduced the principle that the guaranteed return

should bear some relation to market conditions and

prospects, and later plans have strengthened that

principle with a consequent general trend away from

stability.

(c) The fixing of a price at which wheat of a prescribed

quality can be sold by the AWB at 'ports of export'

for use within Australia. For the first four plans

this home consumption price was closely related to

the guaranteed price, but this nexus was broken in

the Fifth Plan.

39

The arrangements for fixing the price for wheat sold for

use within Australia have revolved around the principle that

the port of export price should be the same in each State.

This principle is of particular importance to the Inter-State

Commission's investigation, and the development of the

pricing system is therefore outlined in the following

paragraphs.

4.5 PRICE VARIATION ACCORDING TO QUALITY

The First Plan allowed the AWB to discount prices for wheat

sold which was not of the prescribed quality. All later

plans have similarly allowed the AWB to sell wheat which is

not of the prescribed quality at a price other than the

common price for prescribed quality wheat. For the

first five plans the prescribed quality was 'fair average

quality' (FAQ). From the Sixth Plan (1974) the prescribed

quality has been Australian Standard White.

4.6 PRICE VARIATION ACCORDING TO END USE

The First Plan's pricing structure did not distinguish

between sales according to end use, but in 1951 it was

amended by all states except Western Australia and Queensland

to allow a different (higher) price for wheat sold for

12

stockfeed. The Second Plan (1953) reverted to having a

common pricing system regardless of end use.1^ The Third

(1958) and Fourth (1963) Plans expressly provided only for

wheat for ' manufacture into wheat products for human

consumption in Australia, or wheat for consumption in

Australia by pigs, poultry or dairy stock'.^ The same

pricing system applied to wheat sold for all these uses.

There was no express provision for the price of wheat sold

for other uses.

The Fifth Plan (1968) legislation prescribed a common

pricing system for all sales of 'wheat for use or consumption

40

in Australia'. Problems soon arose because large stocks

of wheat built up as a result of increased Australian and

world production. In addition, there were large amounts of

rain-damaged wheat in store and drought-affected graziers

were demanding access to cheap stockfeeds. The Fifth Plan

was amended in 1969 and 1970 to allow sales of wheat for uses

other than human consumption at (fluctuating) prices below

the fixed price for human consumption wheat.16

15

In 1972 Sir Allan Callaghan's report, The Wheat Industry

and Stabilization (the Callaghan Report), made many findings,

three of which were:

55 The price of wheat used for stock-feed has a

significant bearing on the export competitiveness of livestock products, and an important effect on the pricing of other feed grains.

56 The reduction in the price of wheat for industrial use in the 1970 amendments placed wheat starch in a competitive position with starch from other sources, and had a marked stimulating effect on that

industry. Apart from leading to direct expansion, it has also enabled the industry to take account of new developments - maintenance of the concessional price could lead to a further increase in wheat usage for starch manufacture.

58 Australia is unique in that it is the only country in the world where wheat flour is the major source of starch. Starch from maize is its chief competitor. The viability of the Australian industry depends on

its ability to sell gluten in export markets at

competitive prices. The starch market supplies raw material for additives and surface sizing in paper and carton manufacturing, for glucose and starch

syrups used in confectionery, cordial and beer making and for the flocculent used in mineral processing especially bauxite. -*-7

The Callaghan Report recommended that there be separate

methods for determining prices for sales of wheat for human

consumption, stockfeed and industrial use.

The pricing system of the Sixth Plan (1974) did not

41

distinguish according to the end use of wheat sold.1® The

Seventh Plan (1979) distinguished according to end use, set a

pricing formula for human consumption wheat, and allowed the

AWB to vary prices for stockfeed and industrial use

wheat. The Eighth Plan (1984) is similar to the Seventh

in this respect.^®

4.7 PRICE VARIATION ACCORDING TO PLACE OF DELIVERY TO THE PURCHASER

The plans have always focussed on a price established for

prescribed quality wheat at ports, and in every plan the port

price prescribed has been the same in each State and

Territory. Discussion of the plans in Commonwealth

Parliament has seldom addressed the principle of uniform

pricing. When introducing to Commonwealth Parliament the

legislation for the Second Plan (1953), Mr McEwen, Minister

for Commerce and Agriculture, gave this brief reason for the

principle of uniform pricing: '... the patterns of

interstate trade generally in wheat and flour would have

become distorted owing to the operation of varying wheat 21 prices ... 1

The principle of uniformity in the pricing system is

reflected in the provisions relating to pricing for stockfeed

and wheat for industrial use. When the Seventh Plan ( 1979 )

legislation provided for stockfeed and industrial use pricing

to fluctuate from time to time, it declared that prices

determined by the AWB for such uses:

(a) shall not vary as between wheat at one port of export and wheat at another port of export; and

(b) shall be the same as any corresponding price

determined by the Board under a provision of a State Act that corresponds to [the Commonwealth provisions authorising the AWB to vary stockfeed and industrial use prices].22

The Eighth Plan (1984) makes identical provision.23

42

The principle of pricing uniformity is qualified by two

features of the wheat marketing legislation, one of long

standing and one recent. The long-standing provision is that

which has, since the First Plan, allowed the AWB to deliver

wheat to a purchaser at a place other than a port of export

at a price which varies from the price at the port of export

by an amount taking account of, among other things, place of 24 delivery. The recent provision, introduced in the Eighth

Plan (1984), is one which allows the AWB to authorise

purchasers of wheat for stockfeed to deal directly with 25 growers.

A table showing average prices at which the AWB has

offered wheat for sale for all seasons from 1951-52 to

1983-84 is set out in Appendix X. Appendix VII lists prices

quoted by the AWB on 8 January 1985.

NOTES

1. An extremely thorough history until 1948 is provided by

E Dunsdorfs, The Australian Wheat-Growing Industry

1788-1948, Melbourne University Press, Melbourne, 1956.

Other sources dealing with the early history are F R

Beasley, Open Market v Pooling in Australia, Cornstalk

Publishing Company, Sydney, 1928; and Royal Commission on

the Wheat, Flour and Bread Industries (Sir Herbert R

Gepp, Chairman) , First to Fifth Reports, AGPS, Canberra,

1934-36. More recent history is discussed in Sir Allan R

Callaghan, The Wheat Industry and Stabilization, unpub.

report to the Minister for Primary Industry, Canberra,

1972. See also Industries Assistance Commission, Wheat

Stabilization, Report No. 175, AGPS, Canberra, 1978,

Appendix 4. A source often referred to, but not

available to the Commission, was T Connors, Australian

Wheat Industry: Its Economics and Politics, Gill

Publications, Canberra, 1972.

43

2. Beasley, p . 35.

3. Beasley, pp 36-7. See also Dunsdorfs, pp 227-8; Farey v

Burvett (1916) 21 CLR 433 at pp 443-4.

4. Dunsdorfs, pp 230-3; Beasley pp 40-8.

5. Dunsdorfs, pp 269-70. In James v Cowan (1932 ) 47 CLR

38 6; [ 1932] AC 542, the Privy Council held, contrary to

the view which had prevailed since the Wheat Case, that

compulsory acquisitions of goods could offend s. 92 of

the Constitution. In James v The Commonwealth (1936) 55

CLR 1; [1936] AC 578, the Privy Council held, contrary

to the view which had prevailed since W & A McArthur Ltd

v Queensland (1920) 28 CLR 530, that s. 92 bound the

Commonwealth.

6. The dissenting judgment of Evatt J in the High Court

contains a very thorough discussion of the history and

operation of the arrangement.

7. Dunsdorfs, pp 291-4.

8. Dunsdorfs, p. 294.

9. Berwick CJ was prepared to hold the legislation invalid

without further evidence. Murphy J was prepared to hold

the legislation valid without further evidence. The

other members of the Court were Gibbs, Stephen, Mason,

Aickin and Wilson JJ.

10. Section 33(2) of the Commonwealth Wheat Industry

Stabilization Act 1948 required the AWB to comply with

State law fixing the price of wheat. The States enacted

provisions fixing a common price (the guaranteed price)

for sales of 1 bulk wheat of fair average quality, f.o.r.

44

ports' - see, for example, the New South Wales Wheat

Industry Stabilisation Act 1948, s. 18(a) - with the

price for any other sale 1 to be ascertained by adding to

or deducting from that guaranteed price an amount which

makes a proper allowance for the quality of the wheat,

the condition of sale or the place of delivery' (see, for

example, s. 18(b) of the New South Wales Act).

11. The following references are to Commonwealth Acts.

Second Plan - Wheat Marketing Act 1953, s. 16 inserting

s. 25A( 6) into the 1948 Act; Third Plan - Wheat Industry

Stabilization Act 1958, s. 23(5); Fourth Plan - Wheat

Industry Stabilization Act 1963, s. 27(5); Fifth Plan -

Wheat Industry Stabilization Act 1968, s. 27(6);

extension of Fifth Plan - Wheat Industry Stabilization

Act 1973, s. 9 inserting s. 27AA( 7) into the 1968 Act;

Sixth Plan - Wheat Industry Stabilization Act 1974,

s. 32(4); Seventh Plan - Wheat Marketing Act 1979,

s. 26(6); Eighth (current) Plan - Wheat Marketing Act

1984, s. 32(6).

12. The Commonwealth made related provision in a Bounty Act.

13. See, for example, New South Wales' Wheat Marketing

(Amendment) Act 1953, s. 3 substituting a new s. 18(2)

for s. 18 of the 1948 Act.

14. See, for example, the Commonwealth's (Third Plan) Wheat

Industry Stabilization Act 1958, s. 23, and (Fourth Plan)

Wheat Industry Stabilization Act 1963, s. 27.

15. See, for example, the Commonwealth's Wheat Industry

Stabilization Act 1968, s. 27.

16. See, for example, New South Wales' Wheat Industry

Stabilization and Wheat Quotas (Amendment) Act 1969, s. 2

45

inserting s. 20A into the 1968 Act, and the

Commonwealth's Wheat Industry Stabilization Act, 1970 s. 8

inserting s. 27A into the 1968 Act.

17. Sir Allan R Callaghan, The Wheat Industry and

Stabilization, unpub. report to Minister for Primary

Industry, Canberra, 1972, pp 65-7.

18. See, for example, the Commonwealth's Wheat Industry

Stabilization Act 1974, s. 32.

19. See, for example, the Commonwealth's Wheat Marketing Act

1979, s. 26(1),(2),(4) and (7).

20. See, for example, the Commonwealth's Wheat Marketing Act

1984, s. 32(1), (2), (3) and (7) .

21. Australia, House of Representatives, Debates 1953, no. 1,

p. 1304.

22. See, for example, the Commonwealth's Wheat Marketing Act

1979, s. 26(5), set out in Appendix II.

23. See, for example, the Commonwealth's Wheat Marketing Act

1984, s. 32(4), set out in Appendix III.

24. See Notes 10 and 11.

25. See, for example, the Commonwealth's Wheat Marketing Act

1984, s. 22.

46

CHAPTER 5 THE DEVELOPMENT OF ARRANGEMENTS FOR FUNDING THE

COST OF TRANSPORTING WHEAT TO TASMANIA

5.1 INTRODUCTION

In the legislation for the First Wheat Marketing Plan (1948 )

there was no express provision relating to the freight costs

of shipping wheat to Tasmania. The Commonwealth Act,

however, assumed that States would enact legislation fixing

the price at which wheat would be sold by the Australian

Wheat Board (AWB) in Australia.1 Each State did enact

provisions fixing the price at which wheat could be sold

within that State, and the same price was prescribed by each 2 State. The legislation did not, however, oblige the AWB

to supply wheat to Tasmania.

Controversy arose as to who should pay the costs of

shipping wheat to Tasmania. This was part of a larger

controversy as to what the domestic selling price for wheat

should be, a dispute which was taking place against a

background of high export prices and Commonwealth attempts to

participate in an international wheat agreement. From the

point of view of growers, each domestic sale represented a

subsidy to domestic consumers and the loss of the better

price which could have been obtained on export. The problem

was further complicated by the fact that the price of bread

affected the determination of the basic wage.

5.2 THE INCEPTION OF THE TASMANIAN WHEAT FREIGHT SUBSIDY

The Second Plan in 1953 attempted to deal with, among other

things, issues of domestic selling price. As indicated in

Chapter 4, it was assumed, almost without discussion, that

there should be the same base selling price in each State.

The Second Plan also contained a special arrangement to

deal with costs of shipping wheat to Tasmania. The Minister,

47

Mr McEwen, explained the arrangement, which is described in

this report as the Tasmanian Wheat Freight Subsidy (TWFS),

and its purpose in the following terms:

In the course of these general negotiations, a special arrangement was approved to meet the difficulty of

enabling wheat produced on the mainland to be sold in Tasmania at the common Australian price. For years this has presented a most difficult and unresolved problem. On occasions, the Wheat Board has met the freight at the cost of wheat-growers, who have bitterly, and with

justification, resented that being done. On occasions, the Tasmanian Government has met the freight, and, as an emergency decision, on a number of occasions, the

Commonwealth has done so. This freight is

extraordinarily high. I understand it has been about 3s 6d a bushel. If the price of bread in Tasmania were

loaded by the freight, the price of bread there would be considerably higher than anywhere else in Australia. The arrangement which has now received general approval is that the agreed price at which wheat will be sold on

behalf of growers shall be loaded by a further 1 l/2d a bushel, which sum shall be kept in a separate fund in which wheat-growers will have no equity whatever, the fund being used to meet the cost of Tasmanian freight.

This loading will attach to all wheat sold on the

Australian mainland and in Tasmania.

MR POLLARD (interjecting) : The price of wheat used by all consumers in Australia will be loaded by another 1 l/2d a bushel?

MR McEWEN: That is so. The selling price of sugar in

Australia is loaded by an amount which enables sugar to be delivered and sold at the same price in all States. That arrangement has enjoyed the support of all political parties and it is, I think, an equitable arrangement.

MR POLLARD: This has never been done before in connexion with wheat.

MR McEWEN: It has never been done before in connexion with wheat. There has always been the unsolved problem of Tasmanian freight. 3

The main speaker for the Opposition, Mr Pollard

(representing Lalor), who had as a Minister been involved in

earlier marketing schemes, made the following remarks about

TWFS:

48

MR POLLARD: The Minister does not deny that he was the Minister who was responsible for the imposition of this extra charge of 1 l/2d a bushel. As usual, he coerced and cajoled and threatened, and eventually the States agreed to impose 1 l/2d a bushel to pay freight on wheat to Tasmania. I admit quite frankly that, during the war and for quite a long period, freight to Tasmania was paid and all the wheat-growers carried the charge. I admit also that at one stage the Australian Government itself paid the freight to Tasmania in order to give Tasmania wheat at the same price as that charged to other

consumers in Australia. If the Tasmanian people had to bear the cost of freight, it would mean that the price of bread in Tasmania could easily rise by 25 per cent. The way to meet the problem is not to impose the extra charge

of 1 l/2d a bushel on the wheat consumers and in

particular upon the bread eaters - the section of the community which has the heaviest family

responsibilities. I suggest that the Minister recommend to the States that they abandon this proposal and that his Government offer to meet that cost out of

Consolidated Revenue. I make that suggestion in all sincerity. No doubt the Minister will say the State Labour governments have done this. But imagine the

position of the respective State governments 1 The

Minister says, in effect, 1 If you do not pay this 1 l/2d to meet the Tasmanian freight position, the whole plan will break down and I shall have no machinery to honour the International Wheat Agreement. The blame will be on your shoulders'. Under those circumstances the States

fell into line and agreed to the extra charge of 1 l/2d a bushel.4

Referring to Mr Pollard's comments, another Government

speaker, Mr Leslie (representing Moore), said,

The honorable gentleman criticized the levying of a surcharge of 1 l/2d a bushel to cover freight charges between the mainland and Tasmania. What is wrong with that arrangement? As the Minister has pointed out,

similar arrangements apply to other primary products, such as sugar, which is shipped from Queensland to

Tasmania. I remind the House also that the same

principle applies to the marketing of hundreds of

proprietary lines of goods, which are sold at a uniform price throughout Australia. Obviously, all purchasers of such articles, wherever they live, contribute equally to the cost of freight to all parts of the Commonwealth.

Tobacco and cigarettes, for example, sell at the same prices in Perth, Melbourne, Sydney and Canberra. The principle is sound and it should apply to wheat. The Western Australian growers, exercising their power through

49

their representatives in the State Parliament, rejected the previous proposal that wheat-growers should bear the cost of transporting wheat to Tasmania. That would be wrong in principle, as also would be any plan under which the Treasury provided the cost of freight by way of

subsidy. The correct procedure is to follow the normal business practice of loading the price of the commodity with the necessary costs of distribution. I hope there will be no attempt to alter this arrangement.5

The comments of another speaker, Mr Duthie (representing

Wilmot), are also noteworthy.

Tasmania has been given special consideration in this bill, as it has in other legislation, for two main

reasons. The first is because, by reason of its

geographical position, it has to pay freight on all

requirements that cannot be met from local sources. The second is that, although wheat is grown in Tasmania, it is not of sufficiently good quality for use in the

manufacture of bread. All wheat produced in Tasmania is used for the manufacture of biscuits. Tasmania has to import approximately 2,000,000 bushels of wheat annually for use in the manufacture of bread. The Government

proposes to give to Tasmanian consumers an opportunity to buy bread at approximately the same price as it is sold for in the capital cities on the mainland. But for the assistance provided in the bill, Tasmania would have to pay an additional 3s 6d a bushel for wheat used for the manufacture of bread, which would place the people of

that State in a very disadvantageous position by

comparison with the residents of the mainland States.®

Even though Opposition speakers indicated dissatisfaction

with the consequences of the domestic price fixing

arrangements as a whole for the price of bread and other

basic foods, the Opposition did not oppose either the

arrangements as a whole or TWFS. Each plan since 1953 has

contained TWFS provisions.

5.3 THE THIRD, FOURTH AND FIFTH PLANS

When the Third Plan (1958) came before Commonwealth

Parliament there was no direct discussion of the merits of

TWFS. Mr E G Whitlam, then a member of the Opposition, did

raise the matter indirectly. Declaring a concern 1 for all

consumers and all processors of wheat1, Mr Whitlam reported

50

that recent drought conditions in Queensland and New South

Wales had necessitated the importing into those States of

wheat from other States and that the cost of transport had to

be met by consumers in the drought-affected States. Mr

Whitlam suggested that an arrangement similar to that

applicable for freight costs to Tasmania should apply to

interstate movements of wheat necessitated by drought so that

all users in Australia could obtain wheat at the same cost.^

When the Fourth (1963) and Fifth (1968) Plans came before

Commonwealth Parliament there was no discussion of the merits

or purpose of the Tasmanian freight loading.

The 1969 and 197 0 amendments authorising sales of wheat

for uses other than human consumption at prices below the

price for human consumption wheat also provided that the AWB

was to deduct from the proceeds of any such sales an amount

equivalent to the TWFS loading in the price of human

consumption wheat, and that the amount deducted was to be

credited to the TWFS account. When these amendments came

before Commonwealth Parliament, again there was no discussion

of TWFS.

5.4 THE CALLAGHAN REPORT

The 1972 Callaghan Report, The Wheat Industry and

Stabilization, commented on TWFS in the following manner:

The freight subsidy to Tasmania ... has become a subject of controversy among the various starch producers, because one company has begun wheat starch operations in Tasmania. This operation will reduce the ability of mainland producers to compete for the starch trade

associated with paper manufacturing in Tasmania. It is contended that the intention of the subsidy on freight to Tasmania was meant to apply to wheat for human

consumption purposes only, and place Tasmanian consumers of wheat products on an equal basis with those of the

mainland.8

The Callaghan Report did not make any specific

recommendations on TWFS. It did, however, make a general

51

recommendation that the 1 existing format1 of the wheat

stabilisation legislation relating to pricing should be

maintained subject to changes in, and having separate methods

for determining, the prices for human consumption, stockfeed 9 and industrial use sales.

5.5 THE SIXTH PLAN

In 1973, without any comment on TWFS in Commonwealth

Parliament, the Fifth Plan was extended pending the

formulation of the Sixth Plan.

The Sixth Plan was brought before Commonwealth Parliament

in 1974. It returned to a system of having one pricing

system for sale for use within Australia, regardless of how

the wheat was to be used. The Sixth Plan legislation also

introduced a provision corresponding to s. 27(6) of the Wheat

Marketing Act 1979 (Cth) and to s. 33(7) of the Wheat

Marketing Act 1984 (Cth), obliging the AWB, in relation to

sales of wheat for shipment to Tasmania, to

take such measures as are practicable to obtain

recoupment of the cost of the shipment in respect of such of that wheat as is used in the production in Tasmania of wheat products that are sent to other States for

consumption in Australia and may include in contracts made by the Board provisions for that purpose.10

The Tasmanian legislation for the Sixth Plan did not contain

a corresponding provision11, but that applying to the

Seventh Plan did.12

When legislation for the Sixth Plan came before

Commonwealth Parliament, there was no discussion of either

the continuation of, or changes to, the TWFS arrangement.

5.6 THE 1978 REPORT OF THE INDUSTRIES ASSISTANCE COMMISSION

In 1978 the Industries Assistance Commission (IAC) reported

52

on wheat stabilisation. In the course of its report it

addressed the question of the Tasmanian freight loading.

Several witnesses discussed the question of who should bear the cost of shipping wheat to Tasmania (estimated by the AWB at $3.3 million in 1976-77 ). AFCO [the

Australian Federation of Consumer Organizations Inc.] argued that if it were Commonwealth Government policy to subsidise freight costs of goods transported between the mainland and Tasmania, whether to reduce costs to

consumers or to support local starch and paper

industries, then the Commonwealth Government should bear the cost of shipping wheat to Tasmania. The AWF

[Australian Wheatgrowers Federation ] similarly believes the Commonwealth Government should bear this cost. The Commission recommends that if it is Government policy to continue to offset the freight cost of wheat delivered to Tasmania (as it currently does under Section 33, Wheat

Industry Stabilization Act 1974), then the cost of

shipping wheat to Tasmania should be a charge against the Commonwealth Government and not wheatgrowers or

Australian wheat consumers.

5.7 THE SEVENTH PLAN

The Seventh Plan (1979) restored a pricing system which

distinguished between sales for human consumption, stockfeed

or industrial use. The price of wheat to be used for human

consumption was fixed for twelve-month periods. Prices for

stockfeed and industrial wheat were to fluctuate according to

market conditions. The legislation only imposed TWFS on the

first category of sales, that is, on sales of wheat for human

consumption. When introducing to Commonwealth Parliament

legislation for the Plan, Mr Nixon, Minister for Transport

and Minister for Primary Industry, said,

The principle of the domestic consumer meeting the cost of shipping wheat from the mainland to Tasmania is to be continued. As previously, moneys to cover this cost will

be raised by a loading on the domestic wheat price.

However, this loading will apply to wheat only for human consumption because this will be the only

administratively determined price under the new

arrangements that may not be adjusted within each 12 month period to meet the market. Moneys so raised will be used to meet shipping costs on all wheat shipped from the mainland to Tasmania, regardless of the port from which it is drawn. As has always applied, the freight to

53

Tasmania fund established by the legislation will cover shipping costs only and not, for example, transport costs within Tasmania.

TWFS did not attract the attention of others speaking on

the legislation.

5.8 THE 1983 REPORT OF THE INDUSTRIES ASSISTANCE COMMISSION

In 1983, in its report on the wheat industry, the IAC

addressed the question of TWFS at greater length than it had

in 1978.

A number of witnesses representing Tasmanian interests sought continuation of the arrangement under Section 27 of the Wheat Marketing Act 1979 whereby the cost of

freighting wheat to Tasmania is subsidised. The subsidy funds the cost of sea freight of wheat to Tasmania and applies to all wheat, regardless of port of origin or intended end-use. In the year ended 30 June 1982

Tasmania received 90 54 6 tonnes of wheat. The cost of sea freight averaged nearly $33 a tonne and was met from a levy on all wheat sold for human consumption within Australia (including Tasmania).

Witnesses requesting continuation of the subsidy argued that one of the objectives of the original Wheat

Stabilization plan was to enable millers throughout Australia to have access to wheat at a standard price at all terminal ports. For Tasmania, where little wheat of suitable quality is grown, this was achieved through the freight subsidy. The absence of similar special

treatment to the Northern Territory was said to have arisen from the absence of flour mills in the territory at that time. Some witnesses said that many of the

Tasmanian industries which make use of wheat had been established on the basis that their input would continue to be subsidised, and that removal of the subsidy would be detrimental to those industries.

Other witnesses objected on several grounds. First, they considered that if it were government policy to provide a subsidy this should be financed out of general revenue rather than by a hidden tax on bread consumers. Second, because the freight subsidy is not limited to specific

mainland ports, Tasmanian flour mills (and thus

industrial users) are able to obtain prime wheat more cheaply than their counterparts in Victoria. Finally, it was considered that the subsidy has led to inadequacies in the Tasmanian grain storage system which have resulted

in higher freight costs.

54

In relation to the first point, Tasmanian witnesses argued that if the subsidy were financed from a general appropriation it would be more likely to be reduced. The Commission considers that measures such as this should be apparent to the public and open to challenge or

competition from other claimants for budgetary assistance.

On the second point, the AWB provided data to show the price advantage (of about $8 a tonne) enjoyed by

Tasmanian millers over Victorian millers in the purchase of prime hard (14.5 per cent protein) wheat from various points in New South Wales. The AWB observed:

It is clear ... that users of wheat shipped from

mainland Australia to Tasmania have opportunity to obtain advantage, in terms of price and quality, over users in Victoria (and elsewhere in mainland

Australia other than Northern New South Wales and Queensland). If the freight support arrangement is to continue, it would seem to be appropriate to limit its extent to cover the shortest/least costly wheat supply route, but to permit that support to be

notionally applied to reduce the freight cost to Tasmanian users should they wish to obtain supplies of wheat from other than Geelong or Portland, Victoria.

On the final point, the AWB maintained that the subsidy has created inadequacies in the Tasmanian grain storage system which have raised freight costs, and so the level of the subsidy. In particular, the AWB stated that the storage system is inadequate to handle any reasonably sized shipment of grain, resulting in higher unit freight costs. As the Tasmanian Grain Elevators Board does not have to meet these higher costs it has no incentive to

invest in adequate grain storage capacity. Whilst

rational from that Board's viewpoint it imposes

additional costs upon the Australian community, and is illustrative of the type of inefficiency caused by the subsidy.

The Tasmanian millers objected to the idea of limiting the subsidy to the least costly supply route. They said that the grade of wheat available from Geelong was

inadequate for baking flour purposes and had been the subject of a Tasmanian Government bread inquiry. The Commission does not see this as a justification for

making better quality wheats cheaper in Tasmania than in some other States.

According to data submitted by the AWB the cost of

freighting grain to Tasmania is about twice that incurred in exporting grain to Japan ($33 per tonne versus $16 per tonne).

55

The Commission considers that there is no justification for Australian consumers and wheat growers to continue this freight subsidy. The Commission will recommend that, should it be government policy to continue the subsidy, the costs be met from general revenue and be limited to no more than the cost of freight from Geelong irrespective of the Australian port of shipment.

5.9 THE MINISTER'S DIRECTION TO THE INTER-STATE COMMISSION

Chapter 1 discusses the basis for the investigation and

report of the Inter-State Commission. In August 1984, the

Minister directed this Commission to investigate and report

on aspects of the TWFS arrangements contained in the

legislation of the Seventh Plan (1979). The provisions which

were the subject of the Minister's direction are set out in

Appendix II. In October 1984, Commonwealth legislation for

the Eighth Plan received royal assent, and shortly afterwards

the Minister amended his direction to substitute for the

references to provisions in the 1979 legislation references

to the provisions relating to TWFS in the 1984 legislation.

5.10 THE CURRENT (EIGHTH) PLAN'S TASMANIAN WHEAT FREIGHT SUBSIDY ARRANGEMENTS

The provisions of the 1984 legislation relating to the

Tasmanian Wheat Freight Subsidy, ss 32(5) and 33 of the Wheat

Marketing Act 1984 (Cth), and examples of complementary State

legislation are set out in Appendix III.

Section 32(5) and complementary State provisions require

that there be added to the price of all wheat sold by the AWB

for use in Australia

such amount as the [Commonwealth] Minister, after

consultation with the Board, considers from time to time to be necessary to be included in the price of all wheat sold by the Board for use in Australia for the purpose of enabling the Board to meet the costs of shipment of

wheat (including overseas wheat) that it is required by s. 33 to meet.

This differs from the corresponding provision of the Seventh

56

Plan (1979) legislation, which imposed the loading only on

sales for human consumption.

Section 33(3) and complementary State provisions oblige

the AWB to use the moneys raised by the loading under

s. 32(5) 'in meeting the costs of shipment of wheat

(including overseas wheat) to a port in Tasmania'. The

phrase 1 costs of shipment' is defined to include 'costs of

unloading1 ; the phrase, 1 a port in Tasmania' is to be read

as 'the port, or the first port at which the wheat ...

concerned is landed'.

Section 33(4) and complementary State provisions provide

that:

The Board shall not meet any costs of shipment of wheat under sub-section (3) to the extent that those costs exceed the costs of shipment of that wheat from whichever of the following ports in Victoria the costs of that

shipment are lower:

(a) Geelong,

(b ) Portland.

This provision, reflecting the 1983 IAC recommendation, has

no precedent in earlier plans.

Permits to purchase wheat directly from growers are

subject to a tax which includes an amount equal to the

Tasmanian Wheat Freight Subsidy loading which would have been

payable by the purchaser if the wheat had been sold by the

AWB. An amount equal to that raised by this part of the tax

is to be paid to the AWB and is made subject to s . 33 by

s. 33(1)(b).

Section 33 and complementary State provisions also

contain sub-sections relating to: the keeping by the AWB of

a separate account of TWFS moneys; the disposal of any

surplus moneys; the carry-over of TWFS accounts from the

57

Seventh Plan (1979 ); and the recovery of the subsidy from

wheat users in Tasmania who send to other States wheat

products for use in Australia.

Following the model of earlier wheat marketing

legislation, the 1984 Act contains provisions which will,

unless repealed or amended, result in most of the legislation

ceasing to operate in due course. Section 32(5) will, by

virtue of the definition of 1 season1 in s. 3(1), have no

operation after 30 June 1991. Most provisions of s. 33 will,

by virtue of the definition of 'wheat1 in s. 3(1), not apply

to any wheat harvested after 30 June 1991.

NOTES

1. Wheat Industry Stabilization Act 1948, s. 33(2) (Cth).

2. See, for example, New South Wales' Wheat Industry

Stabilization Act 1948, s. 18, and Tasmania's Wheat

Industry Stabilization Act 1948, s. 14.

3. Australia, House of Representatives, Debates 1953, no. 1,

p. 1305.

4. Australia, House of Representatives, Debates 1953, no. 1,

p. 1439.

5. Australia, House of Representatives, Debates 1953, no. 1,

p. 1469.

6. Australia, House of Representatives, Debates 1953, no. 1,

p. 1497.

7. Australia, House of Representatives, Debates 1958,

no. 21, pp 1589-92.

58

8. Sir Allan R Callaghan, The Wheat Industry and

Stabilization, unpub. report to the Minister for Primary

Industry, Canberra, 1972, p. 67.

9. Callaghan Report, p. 133.

10. Wheat Industry Stabilization Act 1974, s. 33(6) (Cth).

For an example of complementary State legislation, see

Wheat Industry Stabilization Act, 1974, s. 20(6) (NSW).

11. Wheat Industry Stabilization Act 1974 (Tas.) Section 20

dealt with the application of funds raised by the TWFS

loading on the price of wheat sold for use in Australia.

If the legislation had followed the model of the

Commonwealth Act this section would have contained a

provision relating to recoupment of TWFS.

12. Wheat Marketing Act 1979, s. 20(6) (Tas.)

13. Industries Assistance Commission, Wheat Stabilization,

Report No. 175, AGPS, Canberra, 1978, p. 59.

14. Australia, House of Representatives, Debates 1979,

no. 116, p. 2835.

15. Industries Assistance Commission, The Wheat Industry,

Report No. 329, AGPS, Canberra, 1983, pp 66-8.

59

CHAPTER 6 CONCLUSIONS AND RECOMMENDATIONS

6.1 INTRODUCTION

In making its recommendations, the Commission is cognisant

that its terms of reference related specifically to the

Tasmanian Wheat Freight Subsidy, which is but one element of

the Australian wheat marketing arrangements. The Commission

is also aware that a number of issues which have arisen

during the current investigation, and on previous occasions

when wheat marketing arrangements have been considered, have

much wider implications than the current terms of reference.

6.2 THE TASMANIAN FREIGHT EQUALISATION SCHEME AND THE TASMANIAN WHEAT FREIGHT SUBSIDY

Before dealing with the evidence received on the current

wheat freight subsidy arrangements, the Commission considers

that there is one matter to which reference should be made.

This matter relates to the fundamental differences

between, on the one hand, the Tasmanian Freight Equalisation

Scheme (TFES) and its proposed replacement the Tasmanian

Freight Compensation Scheme (TFCS), and, on the other hand,

the Tasmanian Wheat Freight Subsidy (TWFS). while TFES and

TFCS are discrete schemes specifically aimed at compensating

for the interstate freight cost disadvantages suffered by

Tasmanian consignors and consignees, TWFS is only one

element, albeit an important element, in the long-

established Australian wheat marketing arrangements which

have generally been considered fundamental to a viable and

stable Australian wheat industry.

The Commission considers it significant that only one

witness suggested there should be any integration of the

schemes, and then only on administrative grounds. All other

witnesses made their submissions and gave their evidence on

61

the basis that the two schemes had very different objectives

and should be considered quite separately.

Term of reference 2(d) required the Commission to consider

whether the subsidy or other arrangement should in any way be integrated with the Scheme [TFES] having regard for any modifications which the Commission may consider appropriate arising from its investigation pursuant to my direction of 15 March 1984.

The Commission has found no reasons for integrating in any

way the proposed Tasmanian Freight Compensation Scheme and

the Tasmanian Wheat Freight Subsidy arrangements. The

Commission recommends that the two sets of arrangements

should continue to be considered as two quite distinct and

separate Schemes.

6.3 THE WHEAT MARKETING ACT 1984

The history of wheat marketing arrangements is set out in

Chapter 4, and the current arrangements as provided for under

ss 32(5) and 33 of the Wheat Marketing Act 1984 (Cth) are

discussed in Chapter 5. When giving his second reading

speech for the Wheat Marketing Bill 1984, the Minister for

Primary Industry said, in relation to Tasmania,

The home consumption price of wheat will fall in the new plan but the Tasmanian Freight Subsidy will continue with certain changes, pending its examination by the

Inter-State Commission.

The 1984 Tasmanian subsidy provisions apply until repealed or

amended, or the inbuilt date for termination is reached.

The Wheat Marketing Bill 1984 was under consideration by

Parliament at the time written submissions were being

received by the Commission, but the Bill had received royal

assent on 25 October 1984, prior to the Commission commencing

formal public hearings on 5 November 1984. Although the

arrangements were undergoing significant changes at the time

62

submissions were being prepared, the Commission is satisfied,

from the evidence received, that these changes were generally

known and understood by the witnesses before they gave formal

evidence. The fact that the new arrangements were so recent

meant that the previous arrangements were still quite clear

in witnesses' minds, and as a result the Commission was able

to gain a very distinct idea of the witnesses' perceptions of

the advantages and disadvantages of the two sets of

arrangements .

The 1984 arrangements differ from the 1979 arrangements

in three main respects. First, under the 1979 arrangements

the Australian Wheat Board (AWB) was required to meet the

cost of shipping wheat from any port in mainland Australia to

any port in Tasmania. Under the 1984 arrangements the Board

is empowered to meet costs equivalent to the costs of

shipping wheat to the first port at which wheat is landed in

Tasmania from either Geelong or Portland, whichever provides

the lower shipping cost. Second, under the 1984 arrangements

all domestic wheat prices include the Tasmanian wheat freight

loading, whereas under the 1979 arrangements only the

domestic price for human consumption wheat included the

loading. Third, the 1984 arrangements have introduced the

permit trading system, with the associated tax which provides

some of the TWFS funds. In this regard, the Commission

discusses in paragraph 6.13 the relevance of s. 99 of the

Constitution.

6.4 UNIFORM PRICING OF WHEAT

Uniform pricing applies not only to wheat (see Chapter 4),

but also in varying forms to a number of other commodities,

for example, sugar, petrol, and postal services. (Sugar

pricing, which has often been referred to in Commonwealth

Parliament when TWFS has been under consideration, is

discussed in Appendix XI.)

63

Chapter 5 summarises the development of the Tasmanian

Wheat Freight Subsidy from its inception in 1953, and one

unifying thread throughout is the policy that since bread is

such a basic food it should be available to all Australians

at approximately the same price. It is not surprising

therefore that a dominant feature of the wheat marketing

arrangements has been the principle that the price, or set of

prices, at which wheat is sold to users should be the same in

particular ports, in all States.

It might be within the scope of the Commission's

constitutional and legislative role to investigate the

principle of uniform pricing, because of the interstate

implications of the principle. However, the Commission has

not interpreted the Minister's direction as a direction to

evaluate uniform pricing arrangements as such, and it has not

attempted to do so in this investigation.

The very limited investigation by the Commission of the

extent of the commercial practice of uniform pricing

indicates that businesses seldom achieve uniformity of retail

prices at branches operating in different localities.

(Transport costs are not the only costs which vary from

locality to locality.) But some absorption and thus

spreading, of transport costs does occur, so that, in the

case of a chain of stores, retail prices do not vary as much

from branch to branch as they would if the prices of goods

sold at branches operating in remote localities reflected all

the costs of transport.

In the case of the Tasmanian Wheat Freight Subsidy, the

Commission has not given any detailed consideration to

matters of economic efficiency. To have done so without

thoroughly investigating the overall Australian wheat

marketing arrangements and the full implications of other

uniform pricing arrangements would, in the view of the

Commission, have been unsatisfactory and possibly

64

disruptive. (In the case of the Tasmanian Freight

Equalisation Scheme, the Commission was directed in its terms

of reference to consider economic efficiency, and it has done

s o .)

The policy of uniform pricing of certain commodities is

complex; it has been applied to wheat for many years and has

gained general acceptance by all concerned. So long as there

is an agreed policy that the price, or set of prices, at

which wheat is sold to users should be the same in all

States, it follows that the costs of transporting wheat to

Tasmania should not be met by Tasmanian users alone.

The Commission considered it particularly significant

that none of the witnesses opposed the principle of a uniform

pricing policy for wheat.

The Commission's first term of reference required it to

examine 1 whether the subsidy provided by the arrangements

should continue1. The Commission's recommendation is that

the subsidy should continue.

6.5 THE TASMANIAN WHEAT FREIGHT SUBSIDY: POSSIBLE ALTERNATIVES

The requirement of the Commission's second term of reference

was

(2) if the Commission considers that the subsidy should continue, whether any other form of subsidy or

arrangement would be more appropriate and in

particular

(a) the appropriate form and level of any subsidy that it considers should be paid and its expected cost

(b) the method of calculating any subsidy

(c ) the appropriate mechanism of administration including arrangements for adjusting the rate of any subsidy in the future

65

(d ) whether the subsidy or other arrangement should in any way be integrated with the Scheme having regard for any modifications which the Commission may consider appropriate arising from its

investigation

The particular items referred to - (a), (b), (c) and (d) -

are dealt with in paragraphs 6.2 and 6.10.

For the reasons already given in this chapter, the

Commission has not considered alternative arrangements which

are radically different from the previous arrangements. The

submissions and evidence also proposed variants of, or

modifications to, the present arrangements rather than

completely different arrangements.

The matters examined by the Commission, when considering

whether any other form of subsidy or arrangement would be

more appropriate, can be summarised as follows:

. mainland and Tasmanian perceptions of TWFS

. from where and to what extent should wheat freight

costs be subsidised?

. should eligibility for TWFS depend on end use?

. how should the cost of TWFS be met?

Each of these matters is addressed separately in paragraphs

6 .6-6.9.

6.6 MAINLAND AND TASMANIAN PERCEPTIONS OF THE TASMANIAN WHEAT FREIGHT SUBSIDY

The evidence given to the Commission concerning the

appropriate bases for assessing the Tasmanian Wheat Freight

Subsidy indicated very clearly the different viewpoints of

mainland and Tasmanian wheat users. The mainland view of the

66

freight subsidy is well summarised in the submission from the

Flour Millers Council of Australia:

Wheat legislation since 1953 has provided for a loading on the human consumption price to enable the Australian Wheat Board to defray the cost of shipping wheat from the mainland to Tasmania.

The Wheat Marketing Act of 1979 imposed a levy on human consumption wheat only to cover the cost of transporting all wheat to Tasmania. The wheat transported has been used for industrial and stockfeed purposes as well as human consumption, which made the levy obviously unjust.

The arrangement in the 1984 Act is a distinct

improvement, in that the shipping cost is to be recovered by a levy on all wheat sold in Australia, equally imposed on human consumption, industrial and stockfeed wheat sales.

We do not object to the concept that the price of wheat in Tasmania should be the same as at the mainland

shipping ports. We do believe that if such a subsidy is government policy, it should be funded out of general revenue rather than by a tax on all wheaten products, which are among those foods recognised by health

authorities as nutritionally desirable.

However, our main concern is the advantage that has in the past been given to Tasmanian industry by supplying superior quality wheats to them from Newcastle at no extra freight charge, while millers in Victoria have to pay a very high freight charge to obtain this wheat.

Even mills in Sydney have to pay an out-of-zone freight cost for it.

The 1984 legislation does provide that the Wheat Board shall not meet any shipping costs which exceed the rates applying from Geelong or Portland. We presume that

Tasmanian millers can obtain wheat from Newcastle by paying the additional freight. We believe this still leaves Tasmanian millers at a great advantage over

Victorian millers, as the extra sea freight to Tasmania is very small compared to the total costs of transporting such wheat to Victoria. However it is more equitable than before.

By contrast, the following extract, taken from the

submission made by Golden Poultry Farming Industries Ltd, is

indicative of the views of those using wheat in Tasmania.

67

The underlying principle embodied in legislation since 1949 is that wheat should be available at the same price in all Australian states. This, together with similar arrangements on some other basic commodities, ensures that all Australians can enjoy basically similar

standards of living. This principle should not be

discarded.

Wheat should be available at the same price in Tasmania as in any other State. To achieve this the Australian Wheat Board should provide the full cost of shipping wheat to Tasmania from wherever supply is drawn and

should also provide for the cost of operation of the

Tasmanian Grain Elevators. Wheat purchasers in other States do not pay grain elevator charges. Funds to

operate grain elevators are received from the AWB and are financed from monies collected from growers. The

operation of these storage and distribution systems is a legitimate marketing cost. Growers could not sell their crops without grain elevators to receive and distribute their produce.

These moves would assist in offsetting the impact of 'permit wheat'. Unless stock feed millers in Tasmania can purchase Australian Wheat Board wheat at exactly the same price as their mainland competitors 'permit wheat' could lead to the end of the stock feed and intensive

animal industries in Tasmania.

An impact even greater than this would emanate from the total loss of the current wheat freight arrangement.

These two divergent arguments turn largely on the type of

wheat considered appropriate by the various users of wheat

and the places from which, in their judgment, the right grade

of wheat should be purchased and shipped.

The various factors which determine the type of wheat

appropriate for different uses are discussed in Chapter 2,

and it is of note that to a certain extent some grades of

wheat are interchangeable. The arguments concerning the most

appropriate type of wheat for different uses were most

clearly delineated by the starch and gluten manufacturers.

The Victorian starch and gluten manufacturers submitted

that the sole Tasmanian starch and gluten manufacturer was

able, as a result of the wheat subsidy, to purchase

68

Australian Prime Hard wheat from New South Wales at a lower

cost than they could in Victoria. The Tasmanian

manufacturer, for his part, argued that, because the

Victorian manufacturers were 'on the spot1, they were able to

reserve the pick of the local crop. A number of other

witnesses were also of the view that for this reason they

were unable to obtain wheat of the right quality from

Victoria.

In assessing these two points of view the Commission has

considered the tonnages of hard wheat involved. In 1983-84,

Victorian millers purchased 261 000 tonnes of wheat

(including 53 700 tonnes of hard wheat) for human

consumption, industry and export. Of this amount, 31 017 tonnes were purchased specifically for industrial purposes.

A total of 12 244 tonnes of this wheat came from interstate

(New South Wales), and 7800 tonnes of it was hard wheat. The

details of movement of wheat into Victoria for specified end

use are not available. It should be noted, however, that the

Victorian starch and gluten industry receives a large

quantity of flour from two New South Wales millers. The use

of New South Wales grain is not therefore fully reflected in

the interstate wheat movements quoted above.

In the case of Tasmania, the total quantity of wheat

received in 1983-84 was 77 656 tonnes, of which 13 708 tonnes

was hard or prime hard wheat. In addition, in 1983-84 the

total tonnage of 77 656 included 15 102 tonnes of down-graded

high protein hard wheat which was classified as general

purpose wheat and of which approximately 8000 tonnes was used

for starch and gluten manufacture.

In summary, while the Victorian wheat users are generally

not opposed to a wheat subsidy arrangement based on and

limited to freight rates between Geelong or Portland and

Tasmania, the Tasmanian wheat users consider Sydney or

69

Newcastle the appropriate departure port for Tasmanian wheat

and argue that the subsidies should be on that basis.

The Commission is of the view that an anomaly may exist,

as between starch and gluten manufacturers in Tasmania and on

the mainland, which may not disappear if the Commission's

recommendations are implemented. For the reasons given in

paragraph 6.4 the Commission has not considered it

appropriate to investigate this matter in detail, for to have

done so would have involved a detailed investigation of

uniform pricing arrangements, and possibly many other aspects

of wheat marketing.

6.7 FROM WHERE AND TO WHAT EXTENT SHOULD WHEAT FREIGHT COSTS

BE SUBSIDISED?

Under the current arrangements, the Australian Wheat Board is

empowered to meet freight costs equivalent to the costs of

shipping wheat to the first port at which wheat is landed in

Tasmania, from either Geelong or Portland, whichever provides

the lower shipping cost.

The Commission would consider this basis equitable, and

so would all those who gave evidence, provided the AWB could

guarantee that wheat of a standard acceptable to Tasmanian

consumers could be supplied from Victoria. (The various

factors which determine the type of wheat appropriate for

different uses are discussed in Chapter 2.) In recent years

the normal port of departure for wheat to Tasmania has been

Newcastle.

The main objection to TWFS being payable for shipments

from Newcastle has come from Victorian starch and gluten

manufacturers, who have argued that paying TWFS for such

shipments is inappropriate for two reasons. First, it is

argued that paying TWFS for shipments from Newcastle enables

Tasman Starches Pty Limited, the sole starch and gluten

70

producer in Tasmania, to obtain from New South Wales high

protein wheat at a price lower than that at which it can be

obtained in Victoria. Second, it is argued that the price

differential gives Tasman Starches an advantage when

competing with the Victorian manufacturers, particularly when

competing, in Tasmania, for the custom of Associated Pulp and

Paper Mills Limited (APPM). This company uses starch in the

production of its paper products; it is the sole customer of

Tasman Starches and currently purchases all its starch

requirements from Tasman Starches.

The Commission considers that this second line of

argument relating to competition, fails to recognise the

separation of the Victorian and Tasmanian markets for

starch. The Commission considers that, whatever wheat source

is used as the base for paying TWFS, the business

relationship which now exists between Tasman Starches and

APPM would continue because the production processes of the

two companies are co-ordinated with one another. The APPM

plant is geared to the use of fresh liquid starch, which is

preferred by that company for reasons of quality and

production. This liquid starch is conveyed in tankers from

the nearby Tasman Starches plant. Victorian starch

manufacturers could not, realistically, offer liquid starch:

not only would it be expensive to transport from Victoria to

Tasmania, but also the quality and production advantages of

using fresh liquid starch would be lost.

Tasman Starches is not a competitor in the Victorian

starch market. Should Tasman Starches attempt to compete in

the Victorian market then s. 33(7) of the Wheat Marketing Act

1984 (Cth) would apply and the AWB would be able to recoup

TWFS in respect of any wheat used in the production of starch

or gluten sold for domestic use in Victoria.

The storage costs, which were increased from $5 to $7 per

tonne on 1 December 1984, charged by the Tasmanian Grain

71

Elevators Board have been taken into account by the

Commission in arriving at its recommendation. This matter is

considered below.

Under previous legislation, the AWB could apply the TWFS

fund to meet the cost of shipping to Tasmania wheat from any

port in Australia (see Wheat Marketing Act 1979 s. 27(3)

(Cth) in Appendix II). The Commission considers that that

position was not satisfactory because it did not impose on

the AWB any obligation to find the least costly source from

which to ship wheat to Tasmania.

Under the 1984 legislation, application of the TWFS fund

is tied to the costs of shipment from Geelong or Portland

(see Wheat Marketing Act 1984 s. 33(4) (Cth) in Appendix

III). This provision makes no allowance for the fact that

wheat of the type or types suitable to meet the reasonable

requirements of users in Tasmania is often not available at

Geelong or Portland for shipment to Tasmania.

The Commission believes that, within the framework of

uniform pricing of wheat, the basis for determining the costs

to which TWFS should be applied requires a balancing of two

considerations:

. keeping as low as possible the TWFS loading borne by

wheat purchasers throughout Australia;

. ensuring that users of wheat in Tasmania have access

to wheat of types reasonably appropriate for their

uses at uniform port of export prices.

After taking account of these and other considerations

discussed in this paragraph, the Commission recommends that

the legislation be amended so that the AWB would be required

to apply (and would be limited to applying) the TWFS fund to

72

meet costs equal to the costs of shipping from the least

costly source. 'By 1 least costly source1 the Commission means

the port or combination of ports at which is available wheat

of the type or types suitable for the reasonable requirements

of wheat users in Tasmania and from which such wheat can be

shipped to Tasmania at a freight cost equal to or lower than

that at which the same quantity of similarly suitable wheat

can be shipped from any other port or combination of ports.

The Commission expects that, for the immediate future,

wheat of the type or types suitable for most of the uses in

Tasmania will usually be available only from a port in New

South Wales. In such circumstances it would be necessary to

ship wheat to Tasmania from such port and the cost incurred

would, under the Commission's recommended principle, be

payable out of the TWFS fund.

Officers of the Australian Wheat Board are of the opinion

that a recent decision by the Board (to abandon a previous

practice of allowing buyers to reserve wheat prior to

payment) will result in increasing amounts of wheat suitable

for uses in Tasmania being available for shipment to Tasmania

from Victorian ports. If suitable wheat were available from

a Victorian, or any other, port at a lower freight cost than

that applicable to shipments from New South Wales ports, then

the AWB would be limited by the Commission's recommended

principle to drawing from the TWFS fund an amount equivalent

to the cost of shipping from the port offering the lower or

lowest freight cost. (The Commission stresses that the

difference between the per tonne cost for shipping to

Tasmania from New South Wales and the per tonne cost for

shipping to Tasmania from Victorian ports is small compared

with the total freight cost.)

There may be rare cases when it is not possible to obtain

sufficient wheat suitable for Tasmanian requirements from

73

either New South Wales or Victorian ports, as, for example,

could be the case in times of drought or protracted

industrial unrest. In such a case it may well be necessary

to ship wheat from, for example, a South Australian port, and

shipping costs from the South Australian port should, in

those circumstances, be payable from the TWFS fund, provided

that no preference in breach of s . 99 of the Constitution is

thereby given to the State of Tasmania, and provided further

that, in such cases of drought or protracted industrial

unrest, all States are treated similarly.

In view of this recommendation the Commission invites

attention to the anomaly referred to at the end of

paragraph 6.6.

The Commission emphasises that it does not intend that

the payment principles which it is recommending should

foreclose the possibility of the AWB shipping wheat from one

port even if suitable wheat could have been shipped from

another port at lower freight costs. The AWB might consider

such a course desirable if, for example, there were strains

on the storage capacity of the first port's zone. If the AWB

were to elect, for whatever reason, to ship from a source

other than the source of least cost and to incur thereby

extra freight costs, then it is not appropriate that the

extra costs should be met by the TWFS fund. The funding of

any extra cost would be a matter for the AWB to resolve.

As in s. 33(9) of the Wheat Marketing Act 1984 (Cth), the

costs of shipment of wheat to Tasmania should include the

costs of unloading wheat. Unlike the provision in s. 33(9),

however, the new legislative provision should not be limited

to the first port at which wheat is landed in Tasmania, but

should include payment for landing wheat at the three

principal Tasmanian ports currently receiving bulk wheat and

also at Beauty Point.

74

The question of single-port discharge in Tasmania has

been raised by the Australian National Line (ANL), which has

indicated that the freight rate could thereby be reduced by

$2 per tonne. Given the existing port and transport

infrastructure in Tasmania and the considerable potential

land transport distribution costs which would have to be

incurred, as against the limited sea freight rate reduction

involved, the Commission considers that one-port discharge is

not practicable. The wheat storage and receival system in

Tasmania was not developed in association with the rail

system, which can handle wheat in containers but not as bulk

cargo. Furthermore, no single port in Tasmania has

sufficient storage capacity to receive the cargo of a fully

laden Lake class vessel, let alone the cargo of the fully

laden Flinders Range which is soon to be introduced.

6.8 SHOULD ELIGIBILITY FOR THE TASMANIAN WHEAT FREIGHT SUBSIDY DEPEND ON END USE?

From the inception of the TWFS arrangements in 1953 there has

never been any doubt that the principal concern has been to

ensure similar and affordable prices for bread throughout

Australia.

There is no evidence that TWFS was originally intended to

assist industrial users in Tasmania. At the time that the

arrangements were introduced, industrial use was not

significant in Tasmania or even in Australia as a whole.

However, it would have been difficult at that time to attempt

to distinguish between wheat for human consumption and wheat

for other uses. The general marketing and pricing provisions

contained no such distinctions and the systems for

classifying wheat were much less sophisticated than they are

now.

However, the possibility of using wheat for stockfeed was

well known, and it was established practice in 1953. But

75

because the price of stockfeed affects the price of basic

foods such as eggs, milk and meat, the application of TWFS to

wheat used as stockfeed is not difficult to reconcile with

the principle of providing staple foods at similar and

affordable prices.

It is significant that, when the marketing arrangements

were altered in 1969 and 1970 to allow the sale of wheat for

uses other than human consumption at prices below that

applicable for human consumption wheat, the industrial use of

wheat increased sharply. Of course, whether or not

assistance for industrial use was originally intended, it can

be, and has been, argued that industries have been developed

in Tasmania which might not have been developed there but for

TWFS.

In this respect particular reference has been made to the

production of wheat starch and gluten by Tasman Starches Pty

Limited at Devonport. This company, which is the sole

supplier of starch to Associated Pulp and Paper Mills

Limited, has virtually become an integral part of the paper

making process. Because wet starch flows directly from the

starch plant to the paper finishing plant, the use of dry

starch, as suggested by mainland interests, would require new

capital investment. The Commission is of the view that,

whether or not wheat used for industrial purposes received

TWFS, it would not affect the business relationship which now

exists between Tasman Starches and APPM.

At the inception of the Tasmanian freight loading

arrangements in 1953, and in their later renewals and

modifications, speakers in Commonwealth Parliament have

declared a concern for keeping down the price of bread.

To the extent that there is this underlying purpose of

keeping down the price of bread, the arrangements seem to

76

have at least one anomalous result, or at least a result

which was not - intended. The freight costs for all wheat

transported to Tasmania are covered by the arrangements, no

matter whether the wheat transported is for human

consumption, stockfeed or industrial use. The loading to

fund TWFS is imposed on all wheat sold for use within

Australia. The arrangements therefore have the effect of

keeping down the price in Tasmania of wheat sold for

stockf eed and industrial use (as well as the price of wheat

sold for human consumption) by increasing the price

throughout Australia of wheat used for, among other things,

making bread.

In order to bring some realism into what can become a

highly theoretical exercise, the Commission obtained from

Bread Manufacturers of Tasmania an indicative breakdown of

the costs of an average loaf for an average bakery. This

breakdown is presented in Table 6.1.

TABLE 6.1 INDICATIVE BREAKDOWN OF COSTS FOR AN AVERAGE LOAF (cents)

Flour 24

Other ingredients 6

Manufacturing costs 20

Distribution costs 13

Administration costs 8

Financial (interest) 2

Shop margin 18

Bakery profit 3

TOTAL ____ 94

Source: Bread Manufacturers

of Tasmania.

77

Using the figures provided in Table 6.1 and assuming a

similar breakdown for bread on the mainland, the Commission

has estimated that without TWFS the price in Tasmania of a

loaf of bread, currently 94 cents, would increase by 2.45

cents and the price of a similar loaf on the mainland would

be reduced by one-tenth of a cent.

Because the current wheat marketing arrangements require

distinctions between wheat sales to be drawn according to end

use, and because the classification of wheat has become more

precise, there are no longer any major administrative or

technical reasons why the payment of TWFS should not be

limited to any selected end use.

There are, however, other factors which need to be taken

into consideration. Where price equalisation schemes are

applied to a product which is available in various grades or

sub-categories, a subsidy on only one of the sub-categories

will normally result in some substitution of that

sub-category for one or more of the unsubsidised

sub-categories. Thus, a subsidy only on wheat used primarily

for breadmaking may result in some use of this wheat for

stockfeed or industrial purposes. Such substitutions are

prevented by a subsidy which does not disturb the price

relativities of the various sub-categories.

In addition, wheat is generally available on the mainland

at a uniform port of export price for each end use, and it is

considered that the same should be the case for Tasmanian

wheat users.

The Commission is, therefore, of the view that at the

present time there is no justification for changing the

current arrangements whereby TWFS is applicable to all wheat,

whether used for human consumption, stockfeed or industrial

purposes. It therefore recommends that there be no change.

78

6.9 THE TASMANIAN WHEAT FREIGHT SUBSIDY: WHO SHOULD PAY?

The views as to who should fund the subsidy in future ranged

from 'It should be a Budget item. That is the only logical

and sensible way to treat it' to the more widely held view

that the current arrangements should continue, with the

subsidy being funded by all those who purchase wheat for

whatever purpose. The concern of those who preferred the

current arrangements was summed up by the witness who said,

'An annual appropriation item is easier to alter than a

five-yearly legislative arrangement.'

One witness expressed the view that the subsidy was

currently being funded by the wheatgrowers because if there

were no subsidy the growers would be paid more. However, so

far as bread and similar wheat products are concerned, the

quantities sold would not be much affected by small price

changes. The demand for such products is relatively

inelastic. The Commission is therefore in agreement with the

witness who said, 'It was the person who ate bread and buns,

they were the ones who paid!' But the same reasoning cannot

be applied to wheat for stockfeed and industrial use.

The Commission discussed the effects of TWFS on wheat

products for human consumption with an officer of the

Australian Federation of Consumer Organisations Inc., who

expressed the attitude that the organisation was not in a

position to make any submission to the inquiry.

The majority of witnesses considered the current

arrangements reasonable, and preferable to the previous

arrangements under which the subsidy was funded only by

purchasers of wheat for human consumption.

A principal consideration for the Commission was the

loading's apparent connection with the broader wheat

marketing framework. In simple terms, the interests of

79

wheatgrowers and wheat users undergo some balancing over

time: growers 'assist1 users by supplying them with wheat at

relatively low prices when export prices are high; users

'assist' growers by paying relatively high domestic prices

when export prices are low. The funding of TWFS through a

loading borne by users (rather than from consolidated

revenue) seems to be part of the relationship between growers

and users.

It is primarily because the Commission wishes, for the

reasons set out in paragraph 6.4, not to disturb the balance

of the broader framework that it recommends that the cost of

TWFS continue to be met by a loading paid by all domestic

purchasers of wheat.

6.10 EXPECTED COST AND ASSOCIATED ISSUES

In the Commission's second term of reference there were four

particular items to which the Commission was required to

address itself.

The first item was 'the appropriate form and level of any

subsidy that it considers should be paid and its expected

cost'. The appropriate form and level of subsidy recommended

by the Commission is dealt with in paragraphs 6.3-6.7.

The AWB based its estimate of the total TWFS for 1984-85

on the shipping of approximately 78 800 tonnes of wheat for

three-port delivery in Tasmania and pickup from either one

Victorian or one New South Wales port. The relevant AWB

contract rates with ANL are $33.80 per tonne from Victoria

and $34.98 from New South Wales. Inclusion of the wharfage

charges, discharging costs and the cost of shipping

containerised wheat to Burnie/Smithton and King Island takes

the average cost per tonne to $40.20 from Victoria and $41.38

from New South Wales.

80

The Commission has also calculated the costs which would

be incurred if the Flinders Range were to be used at full

capacity, thus lowering the freight rate by $5 a tonne, as

indicated by ANL. Table 6.2 provides the estimated TWFS for

1984-85, based on choice of port and vessel used.

TABLE 6.2 ESTIMATED COST OF TASMANIAN WHEAT FREIGHT

SUBSIDY, 1984-85, BY PORT AND VESSEL9

WHEAT SOURCE LAKE CLASS VESSEL FLINDERS RANGE

Average Average

freight cost freight cost

per tonne Total cost per tonne Total cost

NSW $41.38 $3 260 744 $36.38 $2 866 744

Vic $40.20 $3 167 760 $35.20 $2 773 760

DIFFERENCE $ 92 984 $ 92 984

a. Based on shipping 78 800 tonnes of wheat to Tasmania.

The loadings imposed on the purchase of each tonne of

wheat are based on the costs provided in Table 6.2 being

allocated over the estimated total domestic wheat consumption

of 2.263 million tonnes.

Table 6.3 outlines the relevant loading for 1984-85. It

should be noted that the savings which accrue from optimal

use of the Flinders Range are more than four times the

savings accruing from using a Victorian port as opposed to a

New South Wales port.

81

TABLE 6.3 ESTIMATED TASMANIAN WHEAT FREIGHT SUBSIDY LOADING

FOR 1984-85, BY PORT AND VESSEL

($ per tonne)

WHEAT SOURCE LAKE CLASS

VESSEL

FLINDERS

RANGE

DIFFERENCE

NSW $1.44 $1.27 $0.17

Vic $1.40 $1.23 $0.17

DIFFERENCE $0.04 $0.04

The second item in the Commission's second term of

reference was 1 the method of calculating any subsidy1. The

method of calculating the subsidy should be the same as at

present.

The third item in the Commission's second term of

reference was ' the appropriate mechanism of administration

including arrangements for adjusting the rate of any subsidy

in the future'. The mechanism for calculating and adjusting

future subsidy levels and price and tax loadings should be

similar to the current arrangements and should be dependent

upon Tasmanian wheat requirements, total Australian domestic

wheat consumption, and the appropriate freight rates for port

of origin.

The final item referred to in the Commission's second

term of reference was ' whether the subsidy or other

arrangement should in any way be integrated with the Scheme

[TFES] having regard for any modifications which the

Commission may consider appropriate arising from its

investigation . .. ' The matter has been dealt with in

paragraph 6.2 of this report.

82

Wheatgrowers and other witnesses expressed concern about

the administrative effectiveness of the present arrangements.

Attention was drawn to the fact that ANL has been the

successful tenderer since 1957. The competitive nature of

the tendering procedure was highlighted by the AWB in its

submission and stressed in its evidence. However, it would

seem that, because of the contract terms and the need for

tonnage flexibility, ANL has been the only operator

consistently to express an interest and offer a rate for the

bulk movement of wheat to Tasmania. There has, however, been

a greater interest in the shipment, in containers, of wheat

to Burnie/Smithton and to King Island, contracts for which

are currently held by the Western Australian Coastal Shipping

Commission (Stateships) and Brambles Industries Ltd

respectively.

As a result of its investigations and having regard to

its other recommendations, the Commission recommends that the

administration of the subsidy continue to be the

responsibility of the Australian Wheat Board.

6.11 SHIPMENT OF NON-BULK WHEAT UNDER THE TASMANIAN WHEAT

FREIGHT SUBSIDY

The AWB ships containerised wheat to Tasmania, and the

transport cost of this is met under TWFS.

Approximately 1800 tonnes a year is shipped loose in

containers from Western Australia to Burnie/Smithton by

Stateships at a present door-to-door rate of $48.10 per

tonne, of which $37.90 per tonne is for sea freight. It is

only because this is a highly favourable backloading rate

from Stateships that it is viable to import Western

Australian wheat rather than truck wheat from the bulk

storage at Devonport.

It is recommended that this method of supplying wheat to

83

Burnie/Smithton continue to be eligible for TWFS, but only as

long as this method continues to be the cheapest and most

efficient method. It should therefore be reviewed regularly

by the AWB.

Each year, approximately, 350 tonnes of wheat is shipped

bagged and in containers from Victoria to King Island. The

contract is currently held by Brambles, at a door-to-door

rate of $75 per tonne, of which $58 per tonne is for sea

freight. Although this system appears somewhat inefficient

it seems to be the only practical one given the quantity of

grain involved, and it is recommended that such containerised

shipments continue to be eligible for assistance under TWFS.

However, while there is no difference in the sea freight cost

of moving a container of loose versus bagged wheat there

would seem to be substantial savings in packaging costs if

the former could be used. The cost of establishing bulk

grain storage on King Island would be minimal in view of the

350 tonne annual usage and this would seem an appropriate

matter for consideration by the proposed storage conference

(see paragraph 3.8).

Any wheat purchased under the AWB permit system and

transported by the buyer to Tasmania from the mainland should

not be eligible for TWFS assistance. Permit wheat buyers

take themselves outside the AWB-operated compulsory pooling

system which is the focus of the wheat marketing

arrangements. Accordingly, the Commission recommends that

the existing provisions which limit TWFS assistance to AWB

wheat be maintained. However, those who ship containerised

permit wheat to Tasmania would normally be eligible for

assistance under both the present TFES and the proposed TFCS

arrangements.

6.12 REVIEW OF THE TASMANIAN WHEAT FREIGHT SUBSIDY ARRANGEMENTS

Having regard to its recommendations, the Commission

84

considers that the Tasmanian Wheat Freight Subsidy should

continue to be reviewed at the same time as the Australian

wheat marketing arrangements.

6.13 THE RELEVANCE OF S. 99 OF THE CONSTITUTION

The Inter-State Commission had completed the final draft of

this report when it received from the Secretary of the

Attorney-General's Department a formal opinion in respect of

the effect of s. 99 of the Constitution on the legal validity

of some of the provisions of the Wheat Marketing Act 1984

(cth). A copy of the opinion is provided in Appendix XII.

The Commission had previously received other advice which,

in part, is contrary to the opinion expressed by the

Secretary of the Attorney-General1s Department.

The Commission considered a similar question in relation

to the Tasmanian Freight Equalisation Scheme in paragraph 2.9

of the report dealing with that Scheme. For the reasons

expressed in that paragraph the Commission was of the

opinion that s. 99 of the Constitution was not relevant to

TFES, the statutory basis for which is different from that of

the Tasmanian Wheat Freight Subsidy.

The essential parts of the opinion of the Secretary of

the Attorney-General' s Department are contained in paragraphs

3, 7 and 17. According to the estimates of departmental

officers, it is probable that only about 12.5 per cent of the

moneys received by the AWB in order to meet the costs of

shipment of wheat by the Board to a port in Tasmania is

affected by the opinion in respect of constitutional

validity. The remainder of the moneys so received may still

lawfully be used for funding the Tasmanian Wheat Freight

Subsidy because of the existence of the complementary State

legislation, which is not affected by s. 99 of the

Constitution.

85

The Commission considers that it is a matter for the

Commonwealth Government to determine the most appropriate

means of rectifying a situation in which it is advised that

statutory provisions are constitutionally vulnerable. The

Commission deliberately refrains from suggesting a solution.

However, it emphasises that the complementary State

legislation is a legally valid support for about 87.5 per

cent of payments made to fund the Tasmanian Wheat Freight

Subsidy and that it sees no reason to change the

recommendations contained in this report. To the extent to

which the recommendations of the Inter-State Commission are

accepted by the Government, they are proffered subject to the

adoption of a constitutionally sound basis for their

implementation.

86

APPENDIX I THE DIRECTION FROM THE MINISTER FOR TRANSPORT TO

THE INTER-STATE COMMISSION ON THE TASMANIAN

FREIGHT EQUALISATION SCHEME

On 15 March 1984, the Federal Minister for Transport directed

the Inter-State Commission to investigate matters relating to

the Tasmanian Freight Equalisation Scheme. This direction,

which includes the terms of reference for the investigation,

is reproduced below.

In 1976 the Commission of Inquiry into Transport to and from Tasmania ("the Nimmo Commission") found that the charges for the surface movement of almost all non-bulk goods between places in Tasmania and places on the Australian mainland were higher than the charges for moving similar goods over comparable mainland routes by road or rail.

Following the Nimmo Commission's Report the Tasmanian Freight Equalisation Scheme ("the Scheme") was introduced to compensate for the freight cost disadvantages for interstate movement of certain goods by sea to and from

Tasmania.

The Nimmo Commission recommended that the rates of assistance be reviewed either annually or biennially, and that the Inter­ State Commission ("the Commission") would be the appropriate body to undertake necessary reviews. Two major reviews of assistance rates have since been undertaken. New assistance rates for northbound cargoes were introduced

in 1978 and new southbound rates were introduced in 1980.

Pursuant to sub-section 9 (1) of the Inter-State Commission Act 1975 ("the Act"), I direct the Commission to investigate matters relating to the Scheme and in particular to

consider:

(1) (a) The extent to which freight equalisation payments made under the existing Scheme provide appropriate compensation for any interstate freight cost disadvantages,

(b) whether, in the interests of economic efficiency and equity, any changes are desirable to the form of such compensation.

87

(2) In the event that the Commission considers that changes should be made to the Scheme, the Commission shall investigate alternatives and consider:

(a) the appropriate levels of freight cost equalisation payments that should be paid and their expected cost;

(b) the method of calculating the levels of payment; and

(c) the appropriate mechanisms of administration including arrangements for adjusting the rates of equalisation payments in the future.

Pursuant to sub-section 9(6) of the Act I also direct that these investigations be completed by 31 May 1984.

88

APPENDIX II SECTIONS 26 AND 27 OF THE WHEAT MARKETING ACT

1979 (CTH) AND EXAMPLES OF COMPLEMENTARY STATE

LEGISLATION

The initial direction from the Minister for Transport related

to ss 26(3) and 27 of the Wheat Marketing Act 1979 (Cth). So

as to enable the reader to understand the function of s.

26(3), both sections are set out in full in the form in which

they were enacted in 1979.

26. ( I ) T h e p r i c e a t w h ic h , in t h e y e a r c o m m e n c i n g o n 1 D e c e m b e r Home

1 9 7 9 o r a n y o f t h e n e x t 4 s u c c e e d i n g y e a r s , t h e B o a r d s h a l l, b y a c o n t r a c t consumption

m a d e in a T e r r i t o r y ( o t h e r t h a n a c o n t r a c t e n t e r e d i n t o u n d e r s e c ti o n

1 9 ) , se ll w h e a t f o r u s e o r c o n s u m p t i o n in A u s t r a l i a is t h e a p p r o p r i a t e

p r i c e t h a t is a p p l i c a b l e in a c c o r d a n c e w i t h t h is s e c tio n .

( 2 ) S u b j e c t to s u b - s e c t i o n ( 3 ) , t h e p r i c e f o r A u s t r a l i a n s t a n d a r d

w h i t e w h e a t in b u l k s o ld f r e e o n r a il a t a p o r t o f e x p o r t f o r h u m a n c o n ­

s u m p t i o n in A u s t r a l i a i s —

( a ) i n r e s p e c t o f t h e y e a r c o m m e n c i n g o n 1 D e c e m b e r 1 9 7 9 —

$ 1 2 7 .7 8 p e r t o n n e ; o r

( b ) in r e s p e c t o f a n y o f t h e 4 y e a r s s u c c e e d i n g t h a t y e a r —th e p r ic e

p e r t o n n e a s c e r t a i n e d in r e s p e c t o f t h a t y e a r in a c c o r d a n c e w ith

t h e S c h e d u le .

( 3 ) T h e r e s h a l l b e a d d e d to a p r i c e s p e c if ie d in , o r a s c e r t a i n e d

u n d e r , s u b - s e c t io n ( 2 ) in r e s p e c t o f a y e a r s u c h a m o u n t a s t h e M i n is te r ,

a f t e r c o n s u l t a t i o n w i t h t h e B o a r d , c o n s i d e r s t o b e n e c e s s a r y to b e i n ­

c l u d e d in t h e p r i c e o f a ll w h e a t s o l d b y t h e B o a r d in t h a t y e a r f o r h u m a n

c o n s u m p t i o n in A u s t r a l i a f o r t h e p u r p o s e o f e n a b l i n g t h e B o a r d to m e e t

t h e c o s ts o f s h i p m e n t o f w h e a t b y t h e B o a r d to a p o r t in T a s m a n i a .

( 4 ) S u b j e c t to s u b - s e c t io n ( 5 ) —

( a ) t h e p r i c e f o r A u s t r a l i a n s t a n d a r d w h i t e w h e a t in b u lk s o ld f r e e

o n r a il a t a p o r t o f e x p o r t f o r a u s e ( i n t h is p a r a g r a p h r e f e r r e d to

a s “ t h e r e l e v a n t u s e ” ) in A u s t r a l i a t h a t is a s to c k - f e e d u s e is

s u c h p r i c e a s is d e t e r m i n e d f r o m t im e to tim e b y th e B o a r d in r e ­

s p e c t o f t h e r e l e v a n t u s e ; a n d

( b ) t h e p r i c e f o r A u s t r a l i a n s t a n d a r d w h i t e w h e a t in b u lk s o ld fre e

o n r a il a t a p o r t o f e x p o r t f o r a u s e ( i n t h is p a r a g r a p h r e f e r r e d to

a s “ t h e r e l e v a n t u s e ” ) in A u s t r a l i a t h a t is a n i n d u s t r ia l u s e is

s u c h p r i c e a s is d e t e r m i n e d f r o m t im e to t im e b y th e B o a r d in r e ­

s p e c t o f t h e r e l e v a n t u s e .

( 5 ) A p r ic e d e t e r m i n e d f o r a r e l e v a n t u s e u n d e r s u b - s e c t io n ( 4 ) —

( a ) s h a l l n o t v a r y a s b e t w e e n w h e a t a t o n e p o r t o f e x p o r t a n d w h e a t

a t a n o t h e r p o r t o f e x p o r t; a n d

( b ) s h a l l b e t h e s a m e a s a n y c o r r e s p o n d i n g p r ic e d e t e r m i n e d b y t h e

89

B o a r d u n d e r a p r o v i s i o n o f a S t a t e A c t t h a t c o r r e s p o n d s to s u b ­

s e c tio n ( 4 ) .

( 6 ) T h e p r ic e i n r e s p e c t o f w h e a t t h a t is n o t A u s t r a l i a n s t a n d a r d

w h i t e w h e a t in b u l k s o ld f r e e o n r a il a t a p o r t o f e x p o r t is s u c h p r ic e a s

t h e B o a r d d e t e r m i n e s b y a d d i n g to , o r d e d u c t i n g f r o m , th e p r ic e t h a t

w o u l d b e a p p l i c a b l e to t h e w h e a t i f i t w e r e A u s t r a l i a n s t a n d a r d w h ite

w h e a t in b u lk s o ld f r e e o n r a il a t a p o r t o f e x p o r t a n a m o u n t b y w a y o f a l ­

l o w a n c e s in r e s p e c t o f t h e q u a l i t y o f t h e w h e a t , t h e c o n d it i o n s o f s a le a n d

t h e p l a c e o f d e li v e r y , o r in r e s p e c t o f o n e o r m o r e o f t h o s e m a t t e r s , a s th e

c a s e r e q u ir e s .

( 7 ) T h e B o a r d m a y d i s c o u n t a p r i c e f o r w h e a t s o ld b y th e B o a r d

o t h e r t h a n f o r h u m a n c o n s u m p t i o n o n t h e b a s is o f th e q u a n t i t y o f w h e a t

s o s o ld .

Special 2 7 . ( 1 ) S u b j e c t t o t h i s s e c ti o n , t h e B o a r d s h a l l k e e p a s e p a r a t e

acrount for a c c o u n t o f t h e m o n e y s r e c e i v e d b y t h e B o a r d b y r e a s o n o f th e in c lu s io n

Tasmania in t h e p r i c e f o r a s a l e o f w h e a t to w h ic h s e c tio n 2 6 a p p li e s o f a n a m o u n t

r e f e r r e d to in s u b - s e c t i o n 2 6 ( 3 ) a n d o f p a y m e n t s m a d e o u t o f th o s e

m o n e y s , a n d s h a l l n o t a p p l y t h o s e m o n e y s e x c e p t in a c c o r d a n c e w ith th is

s e c ti o n .

( 2 ) T h e B o a r d m a y c o m b i n e t h e a c c o u n t r e q u i r e d to b e k e p t u n d e r

s u b - s e c t i o n ( 1 ) w ith a n y s i m i l a r a c c o u n t o r a c c o u n ts to b e k e p t b y it

u n d e r a S t a t e A c t.

( 3 ) T h e B o a r d s h a l l u s e t h e m o n e y s r e f e r r e d to in s u b - s e c t io n ( 1 ) in

m e e t i n g th e c o s ts o f s h i p m e n t o f w h e a t b y th e B o a r d to a p o r t in T a s ­

m a n i a . a n d s h a l l n o t u s e f o r t h a t p u r p o s e a n y o t h e r m o n e y s d e r iv e d b y it

f r o m t h e s a le o f w h e a t a c q u i r e d b y it u n d e r t h is A c t.

( 4 ) A n y m o n e y s r e f e r r e d to in s u b - s e c t io n ( 1 ) t h a t r e m a i n u n e x ­

p e n d e d a f t e r t h e B o a r d h a s m a d e t h e fin a l p a y m e n t r e q u i r e d to b e m a d e

u n d e r s u b - s e c t io n ( 3 ) s h a l l b e a p p l i e d b y th e B o a r d f o r t h e b e n e f it o f th e

w h e a t i n d u s t r y in s u c h m a n n e r a s t h e M in is te r , a f t e r c o n s u l ta t io n w ith

t h e a p p r o p r i a t e M i n i s t e r o f e a c h S t a te , d ir e c ts .

( 5 ) A n y m o n e y s r e f e r r e d to in s u b - s e c t io n 3 3 ( 1 ) o f th e Wheal In ­

dustry Stabilization Act 1 9 7 4 , a s c o n ti n u e d in f o r c e b y s u b - s e c t io n 3 ( 2 ) o f t h i s A c t, t h a t r e m a i n u n e x p e n d e d a f t e r t h e B o a r d h a s m a d e t h e fin a l

p a y m e n t r e q u i r e d to b e m a d e u n d e r s u b - s e c tio n ( 3 ) o f t h a t s e c tio n s h a ll

b e d e e m e d to b e m o n e y s r e f e r r e d to in s u b - s e c t io n ( 1 ) o f t h is s e c tio n .

( 6 ) I n r e l a t i o n to s a l e s o f w h e a t b y th e B o a r d f o r s h i p m e n t t o a p o r t

in T a s m a n i a in r e s p e c t o f w h i c h th e B o a r d b e a r s t h e c o s t o f s h i p m e n t ,

t h e B o a r d s h a l l t a k e s u c h m e a s u r e s a s a r e p r a c t i c a b l e t o o b t a i n r e c o u p ­

m e n t o f t h e c o s t o f t h e s h i p m e n t in r e s p e c t o f s u c h o f t h a t w h e a t a s is

u s e d in t h e p r o d u c t i o n in T a s m a n i a o f w h e a t p r o d u c t s t h a t a r e s e n t to

o t h e r S t a t e s f o r c o n s u m p t i o n i n A u s t r a l i a , a n d m a y i n c l u d e in a n y c o n ­

t r a c t s m a d e b y t h e B o a r d p r o v i s i o n s f o r t h a t p u r p o s e .

(7) A n y m o n e y s r e c e iv e d b y th e B o a r d in a c c o r d a n c e w ith s u b ­

s e c ti o n ( 6 ) b y w a y o f r e c o u p m e n t o f c o s ts o f s h i p m e n t s h a l l b e d e e m e d

t o b e m o n e y s r e f e r r e d to in s u b - s e c t io n ( 1 ) .

( 8 ) A r e f e r e n c e in t h is s e c ti o n to a p o r t in T a s m a n i a s h a ll b e r e a d a s

a r e f e r e n c e to t h e p o r t , o r t h e first p o r t , in T a s m a n i a a t w h ic h t h e w h e a t

c o n c e r n e d is l a n d e d .

90

All States enacted complementary provisions in Acts

entitled Wheat Marketing Acts. Each State except South

Australia enacted this legislation in 1979. South Australia,

after making interim arrangements pursuant to the Wheat

Industry Stabilization Amendment Act (No. 2) 1979, enacted its

Wheat Marketing Act in 1980. Two examples of the State

provisions corresponding to ss 26 and 27 of the Commonwealth

Act are provided.

NEW SOUTH WALES: WHEAT MARKETING ACT 1979

Home 2 1 . ( 1 ) T h e p r ic e at w h ic h , in th e y e a r c o m m e n c in g o n 1st

consumption D e c e m b e r , 1 9 7 9 , o r a n y o f th e n e x t 4 s u c c e e d in g y e a r s , th e B o a r d

w heat s h a ll, b y a c o n tr a c t m a d e in th e S ta te ( o t h e r th a n a c o n tr a c t

e n te r e d in t o u n d e r s e c tio n 1 4 ) , se ll w h e a t fo r u s e o r c o n s u m p tio n

in A u s t r a lia is th e a p p r o p r ia te p r ic e th a t is a p p lic a b le in a c c o r d a n c e w ith t h is s e c tio n .

( 2 ) S u b je c t t o s u b s e c tio n ( 3 ) , th e p r ic e fo r A u str a lia n

sta n d a r d w h ite w h e a t in b u lk s o ld fr e e o n r a il a t a p o r t o f e x p o r t

fo r h u m a n c o n s u m p tio n in A u s tr a lia is—

( a ) i n r e s p e c t o f th e y e a r c o m m e n c in g o n 1 st D e c e m b e r ,

1 9 7 9 — $ 1 2 7 . 7 8 p e r to n n e ; o r

( b ) i n r e s p e c t o f a n y o f th e 4 y e a rs s u c c e e d in g th a t y e a r —

t h e p r ice p e r to n n e a sc e r ta in e d in r e s p e c t o f th a t y e a r in

a c c o r d a n c e w ith S c h e d u le 1.

( 3 ) T h e r e s h a l l b e a d d e d t o a p r i c e s p e c if ie d in , o r

a s c e r t a i n e d u n d e r , s u b s e c t io n ( 2 ) i n r e s p e c t o f a y e a r s u c h a m o u n t

a s t h e M i n i s t e r , a f t e r c o n s u l t a t i o n w ith th e B o a r d , c o n s i d e r s to b e

n e c e s s a r y t o b e i n c l u d e d in t h e p r i c e o f a ll w h e a t s o ld b y th e

B o a r d i n t h a t y e a r f o r h u m a n c o n s u m p t i o n i n A u s t r a l i a f o r th e

p u r p o s e o f e n a b l i n g t h e B o a r d t o m e e t t h e c o s ts o f s h i p m e n t o f

w h e a t b y t h e B o a r d t o a p o r t i n T a s m a n i a .

( 4 ) S u b j e c t to s u b s e c t io n ( 5 ) —

( a ) t h e p r i c e f o r A u s t r a l i a n s t a n d a r d w h i t e w h e a t in b u lk

s o l d f r e e o n r a il a t a p o r t o f e x p o r t f o r a u s e ( i n th is

p a r a g r a p h r e f e r r e d t o a s “ th e r e l e v a n t u s e ” ) in A u s t r a l i a

t h a t is a s to c k - f e e d u s e is s u c h p r i c e a s is d e te r m i n e d f r o m

t im e to t im e b y th e B o a r d in r e s p e c t o f t h e r e l e v a n t u s e ;

a n d

91

Special account for freight

to Taimania.

( b ) th e p r ic e fo r A u s t r a lia n sta n d a r d w h it e w h e a t in b u lk s o ld

fr e e o n ra il at a p o r t o f e x p o r t fo r a u s e ( i n th is p a r a ­

g r a p h r e fe r r e d t o a s “ th e r e le v a n t u s e " ) in A u s tr a lia th a t

is a n in d u s tr ia l u s e is s u c h p r ic e a s is d e te r m in e d fr o m

tim e to t im e b y th e B o a r d in r e s p e c t o f th e r e le v a n t u s e .

( 5 ) A p r ic e d e t e r m in e d fo r a r e le v a n t u s e u n d e r s u b s e c tio n

( 4 ) —

( a ) s h a ll n o t v a r y a s b e t w e e n w h e a t at o n e p o r t o f e x p o r t a n d

w h e a t a t a n o t h e r p o r t o f e x p o r t; a n d

( b ) sh a ll b e th e s a m e a s a n y c o r r e s p o n d in g p r ic e d e te r m in e d

b y t h e B o a r d u n d e r a p r o v is io n o f th e C o m m o n w e a lt h

A c t , o r o f a S ta te A c t , th a t c o r r e s p o n d s to s u b s e c t io n

( 4 ) .

( 6 ) T h e p r ic e in r e s p e c t o f w h e a t th a t is n o t A u s tr a lia n

s ta n d a r d w h ite w h e a t in b u lk s o ld f r e e o n ra il a t a p o r t o f e x p o r t

is s u c h p r ic e a s th e B o a r d d e te r m in e s b y a d d in g t o , o r d e d u c tin g

f r o m , th e p r ic e th a t w o u ld b e a p p lic a b le t o th e w h e a t if it w e r e

A u s t r a lia n sta n d a r d w h it e w h e a t in b u lk s o ld fr e e o n ra il a t a p o r t

o f e x p o r t a n a m o u n t b y w a y o f a llo w a n c e s in r e s p e c t o f th e q u a lity

o f t h e w h e a t, t h e c o n d it io n s o f s a le a n d th e p la c e o f d e liv e r y , o r in

r e s p e c t o f o n e o r m o r e o f t h o s e m a tte r s, as th e c a s e r e q u ir e s.

( 7 ) T h e B o a r d m a y d is c o u n t a p r ice fo r w h e a t s o ld b y th e

B o a r d o th e r th a n fo r h u m a n c o n s u m p tio n o n th e b a s is o f th e

q u a n tity o f w h e a t s o s o ld .

22. (1 ) Subject to this section, the Board shall keep a separate account of the moneys received by the Board by reason of the inclusion in the price for a sale of wheat to which section 21 applies of an amount referred to in section 21 (3 ) and of payments made out of those moneys, and shall not apply those moneys except

in accordance with this section.

(2 ) The Board may combine the account required to be

kept under subsection (1 ) with any similar account or accounts to be kept by it under the Commonwealth Act or under a State Act.

(3 ) The Board shall use the moneys referred to in sub­

section (1 ) in meeting the costs of shipment of wheat by the Board

92

t o a p o r t in T a s m a n i a , a n d s h a ll n o t u s e f o r t h a t p u r p o s e a n y o t h e r

m o n e y s d e r iv e d b y it f r o m t h e s a le o f w h e a t a c q u i r e d b y it in

p u r s u a n c e o f t h is A c t.

( 4 ) A n y m o n e y s r e f e r r e d to in s u b s e c t io n ( 1 ) t h a t r e m a in

u n e x p e n d e d a f t e r th e B o a r d h a s m a d e th e fin a l p a y m e n t r e q u ir e d

t o b e m a d e u n d e r s u b s e c t io n ( 3 ) s h a ll b e a p p li e d b y th e B o a r d

f o r t h e b e n e f it o f th e w h e a t i n d u s t r y i n s u c h m a n n e r a s th e

C o m m o n w e a l t h M i n i s t e r , a f t e r c o n s u l ta t io n w ith t h e a p p r o p r i a t e

M i n i s t e r o f e a c h S t a te , d ir e c ts .

( 5 ) A n y m o n e y s r e f e r r e d to i n s e c tio n 2 0 ( 1 ) o f th e

W h e a t I n d u s t r y S t a b il i z a t io n A c t , 1 9 7 4 , a s c o n ti n u e d in f o r c e b y

s e c ti o n 4 ( 2 ) , t h a t r e m a i n u n e x p e n d e d a f t e r th e B o a r d h a s m a d e

th e fin a l p a y m e n t r e q u i r e d to b e m a d e u n d e r s e c ti o n 2 0 ( 3 ) o f t h a t

A c t s h a l l b e d e e m e d to b e m o n e y s r e f e r r e d to i n s u b s e c t io n ( 1 ) .

( 6 ) I n r e l a t i o n t o s a le s o f w h e a t b y t h e B o a r d f o r s h ip ­

m e n t t o a p o r t i n T a s m a n i a i n r e s p e c t o f w h ic h t h e B o a r d b e a r s

th e c o s t o f s h i p m e n t , th e B o a r d s h a ll t a k e s u c h m e a s u r e s a s a r e

p r a c t i c a b l e to o b t a i n r e c o u p m e n t o f th e c o s t o f t h e s h i p m e n t in

r e s p e c t o f s u c h o f t h a t w h e a t a s is u s e d i n t h e p r o d u c t i o n in

T a s m a n i a o f w h e a t p r o d u c t s t h a t a r e s e n t to o t h e r S t a te s f o r c o n ­

s u m p t i o n in A u s t r a l i a , a n d m a y in c lu d e i n a n y c o n t r a c t s m a d e b y

t h e B o a r d p r o v i s i o n s f o r t h a t p u r p o s e .

( 7 ) A n y m o n e y s r e c e iv e d b y th e B o a r d in a c c o r d a n c e w ith

s u b s e c t io n ( 6 ) b y w a y o f r e c o u p m e n t o f c o s ts o f s h i p m e n t s h a ll b e

d e e m e d t o b e m o n e y s r e f e r r e d to in s u b s e c t io n ( 1 ) .

( 8 ) A r e f e r e n c e in th is s e c tio n to a p o r t in T a s m a n i a s h a ll

b e r e a d a s a r e f e r e n c e to th e p o r t , o r th e firs t p o r t , in T a s m a n i a a t

w h ic h t h e w h e a t c o n c e r n e d is la n d e d .

TASMANIA: WHEAT MARKETING ACT 1979

Homm tion 19— ( 1 ) T h e p r i c e a t w h i c h , i n t h e y e a r c o m m e n c i n g o n 1 s t

° D e c e m b e r 1 9 7 9 o r a n y o f t h e n e x t 4 s u c c e e d i n g y e a r s , t h e B o a r d

s h a l l , b y a c o n t r a c t m a d e i n t h i s S t a t e ( o t h e r t h a n a c o n t r a c t e n t e r e d

i n t o u n d e r s e c t i o n 1 2 ) , s e l l w h e a t f o r u s e o r c o n s u m p t i o n in

A u s t r a l i a is t h e a p p r o p r i a t e p r i c e t h a t is a p p l i c a b l e i n a c c o r d a n c e

w i t h t h i s s e c t i o n .

93

( 2 ) S u b j e c t t o s u b s e c t i o n ( 3 ) , t h e p r i c e f o r A u s t r a l i a n s t a n d a r d

w h i t e w h e a t i n b u l k s o l d f r e e o n r a i l a t a p o r t o f e x p o r t f o r h u m a n

c o n s u m p t i o n i n A u s t r a l i a is —

( a ) i n r e s p e c t o f t h e y e a r c o m m e n c i n g o n 1 s t D e c e m b e r

1 9 7 9 — $ 1 2 7 · 7 8 p e r t o n n e ; o r

( b ) i n r e s p e c t o f a n y o f t h e 4 y e a r s s u c c e e d i n g t h a t y e a r — t h e

p r i c e p e r t o n n e a s c e r t a i n e d i n r e s p e c t o f t h a t y e a r in

a c c o r d a n c e w i t h t h e f o r m u l a s e t o u t i n S c h e d u l e 1 .

( 3 ) T h e r e s h a l l b e a d d e d t o a p r i c e s p e c i f ie d i n , o r a s c e r t a i n e d

u n d e r , s u b s e c t i o n ( 2 ) i n r e s p e c t o f a y e a r s u c h a m o u n t a s t h e

M i n i s t e r , a f t e r c o n s u l t a t i o n w i t h t h e B o a r d , c o n s i d e r s t o b e n e c e s s a r y

t o b e i n c l u d e d i n t h e p r i c e o f a l l w h e a t s o l d b y t h e B o a r d i n t h a t

y e a r f o r h u m a n c o n s u m p t i o n i n A u s t r a l i a f o r t h e p u r p o s e o f e n a b l i n g

t h e B o a r d t o m e e t t h e c o s t s o f s h i p m e n t o f w h e a t b y t h e B o a r d t o a

p o r t i n t h i s S t a t e .

( 4 ) S u b j e c t t o s u b s e c t i o n ( 5 ) — -

( a ) t h e p r i c e f o r A u s t r a l i a n s t a n d a r d w h i t e w h e a t i n b u l k

s o l d f r e e o n r a i l a t a p o r t o f e x p o r t f o r u s e i n A u s t r a l i a

a s s t o c k - f e e d i s s u c h p r i c e a s is d e t e r m i n e d f r o m t i m e

t o t i m e b y t h e B o a r d i n r e s p e c t o f t h a t u s e ; a n d

( b ) t h e p r i c e f o r A u s t r a l i a n s t a n d a r d w h i t e w h e a t i n b u l k

s o l d f r e e o n r a i l a t a p o r t o f e x p o r t f o r u s e i n A u s t r a l i a

f o r a n i n d u s t r i a l p u r p o s e i s s u c h p r i c e a s is d e t e r m i n e d

f r o m t i m e t o t i m e b y t h e B o a r d i n r e s p e c t o f t h a t u s e .

( 5 ) A p r i c e d e t e r m i n e d f o r a u s e u n d e r s u b s e c t i o n ( 4 ) { a ) o r

( b ) -

( a) s h a l l n o t v a r y a s b e t w e e n w h e a t a t o n e p o r t o f e x p o r t a n d

w h e a t a t a n o t h e r p o r t o f e x p o r t ; a n d

( b ) s h a l l b e t h e s a m e a s a n y c o r r e s p o n d i n g p r i c e d e t e r m i n e d

b y t h e B o a r d u n d e r a p r o v i s i o n o f t h e C o m m o n w e a l t h

A c t , o r o f a S t a t e A c t , t h a t c o r r e s p o n d s t o s u b ­

s e c t i o n ( 4 ) .

( 6 ) T h e p r i c e i n r e s p e c t o f w h e a t t h a t is n o t A u s t r a l i a n s t a n d a r d

w h i t e w h e a t i n b u l k s o l d f r e e o n r a i l a t a p o r t o f e x p o r t is s u c h

p r i c e a s t h e B o a r d d e t e r m i n e s b y a d d i n g t o , o r d e d u c t i n g f r o m , t h e

p r i c e t h a t w o u l d b e a p p l i c a b l e t o t h e w h e a t i f i t w e r e A u s t r a l i a n

s t a n d a r d w h i t e w h e a t i n b u l k s o l d f r e e o n r a i l a t a p o r t o f e x p o r t

a n a m o u n t b y w a y o f a l l o w a n c e s i n r e s p e c t o f t h e q u a l i t y o f t h e

w h e a t , t h e c o n d i t i o n s o f s a l e , a n d t h e p l a c e o f d e l i v e r y , o r i n r e s p e c t

o f o n e o r m o r e o f t h o s e m a t t e r s , a s t h e c a s e r e q u i r e s .

94

( 7 ) T h e B o a r d m a y d i s c o u n t a p r i c e f o r w h e a t s o l d b y t h e B o a r d

o t h e r ' t h a n f o r h u m a n c o n s u m p t i o n o n t h e b a s i s o f t h e q u a n t i t y o f

w h e a t s o s o l d .

ίοΓίκφΓιΤ' 2 0 — ( 1 ) S u b j e c t t o t h i s s e c t i o n , t h e B o a r d s h a l l k e e p a s e p a r a t e

c ” No's6 of a c c o u n t ° f t h e m o n e y r e c e i v e d b y t h e B o a r d b y r e a s o n o f t h e i n c l u s i o n

1974, s. 2 o. i n t h e p r i c e f o r a s a l e o f w h e a t t o w h i c h s e c t i o n 1 9 a p p l i e s o f a n

a m o u n t r e f e r r e d t o i n s u b s e c t i o n ( 3 ) o f t h a t s e c t i o n a n d o f p a y ­

m e n t s m a d e o u t o f t h a t m o n e y , a n d s h a l l n o t a p p l y t h a t m o n e y

e x c e p t i n a c c o r d a n c e w i t h t h i s s e c t i o n .

( 2 ) T h e B o a r d m a y c o m b i n e t h e a c c o u n t r e q u i r e d t o b e k e p t

u n d e r s u b s e c t i o n ( 1 ) w i t h a n y s i m i l a r a c c o u n t o r a c c o u n t s r e q u i r e d

t o b e k e p t b y i t u n d e r t h e C o m m o n w e a l t h A c t o r a S t a t e A c t.

( 3 ) T h e B o a r d s h a l l u s e t h e m o n e y r e f e r r e d t o i n s u b s e c t i o n ( 1 )

i n m e e t i n g t h e c o s t s o f s h i p p i n g w h e a t b y t h e B o a r d t o a p o r t i n

t h i s S t a t e , a n d s h a l l n o t u s e f o r t h a t p u r p o s e a n y o t h e r m o n e y

d e r i v e d b y i t f r o m t h e s a l e o f w h e a t a c q u i r e d b y i t p u r s u a n t t o

t h i s A c t .

( 4 ) A n y m o n e y r e f e r r e d t o i n s u b s e c t i o n ( 1 ) t h a t r e m a i n s

u n s p e n t a f t e r t h e B o a r d h a s m a d e t h e f i n a l p a y m e n t r e q u i r e d t o

b e m a d e u n d e r s u b s e c t i o n ( 3 ) s h a l l b e a p p l i e d b y t h e B o a r d f o r

t h e b e n e f i t o f t h e w h e a t i n d u s t r y i n s u c h m a n n e r a s t h e C o m m o n ­

w e a l t h M i n i s t e r , a f t e r c o n s u l t a t i o n w i t h t h e a p p r o p r i a t e M i n i s t e r

o f e a c h S t a t e , d i r e c t s .

( 5 ) W h e r e a n y m o n e y r e f e r r e d t o i n s e c t i o n 2 0 ( 1 ) o f t h e

r e p e a l e d A c t ( a s c o n t i n u e d i n f o r c e b y s e c t i o n 3 2 o f th i s A c t )

r e m a i n s u n s p e n t a f t e r t h e B o a r d h a s m a d e t h e f in a l p a y m e n t

r e q u i r e d t o b e m a d e u n d e r s e c t i o n 2 0 ( 3 ) o f t h e r e p e a l e d A c t ,

t h a t m o n e y s h a l l b e d e e m e d t o b e m o n e y r e f e r r e d t o i n s u b s e c t i o n

( 1 ) o f t h i s s e c t i o n .

( 6 ) I n r e l a t i o n t o s a l e s o f w h e a t b y t h e B o a r d f o r s h i p m e n t t o a

p o r t i n t h i s S t a t e i n r e s p e c t o f w h i c h t h e B o a r d b e a r s t h e c o s t o f

s h i p m e n t , t h e B o a r d —

( a ) s h a l l t a k e s u c h m e a s u r e s a s a r e p r a c t i c a b l e t o r e c o u p t h e

c o s t o f t h e s h i p m e n t i n ' r e s p e c t o f s u c h o f t h a t w h e a t

a s i s u s e d i n t h e p r o d u c t i o n i n t h i s S t a t e o f w h e a t

p r o d u c t s t h a t a r e s e n t t o o t h e r S t a t e s f o r c o n s u m p t i o n

i n A u s t r a l i a ; a n d

( b ) m a y i n c l u d e i n a n y c o n t r a c t s m a d e b y t h e B o a r d p r o v i s i o n s

f o r t h a t p u r p o s e .

95

( 7 ) A n y m o n e y r e c e i v e d b y t h e B o a r d a s a r e s u l t o f m e a s u r e s

t a k e n i n a c c o r d a n c e w i t h s u b s e c t i o n ( 6 ) t o r e c o u p c o s t s o f s h i p m e n t

s h a l l b e d e e m e d t o b e m o n e y r e f e r r e d t o i n s u b s e c t i o n ( 1 ) .

( 8 ) A r e f e r e n c e i n t h i s s e c t i o n t o a p o r t i n t h i s S t a t e is a r e f e r e n c e

t o t h e p o r t , o r t h e f i r s t p o r t , i n t h i s S t a t e a t w h i c h t h e w h e a t c o n ­

c e r n e d is l a n d e d .

For other States, the corresponding sections were ss 20

and 21 in Victoria, ss 22 and 23 in Western Australia, ss 21

and 22 in South Australia, and ss 24 and 25 in Queensland.

These provisions were amended in 1982 and 1983 by Acts

bearing various titles. For the Commonwealth, New South

Wales and Victoria, the legislation was entitled Wheat

Marketing (Amendment) Act 1982. For Western Australia the

title was Wheat Marketing Act 1982. For South Australia and

Queensland the legislation was entitled Wheat Marketing Act

Amendment Act 1983.

For the purposes of this report, it is not necessary to

set out the 1982 and 1983 amendments to s. 26. These

amendments added subsections corresponding to subsections

(8)— (14) of s. 32 of the Commonwealth's Wheat Marketing Act

1984, which is set out in Appendix III. The Commonwealth

amending legislation also inserted into s. 27 references to

'overseas wheat' corresponding to the references appearing in

s. 33 of the Commonwealth's Wheat Marketing Act 1984, which

is set out in Appendix III.

96

A P P E N D I X I I I S E C T I O N S 3 2 A N D 3 3 O F T H E W H EA T M A R K E T IN G A C T

1 9 8 4 ( C T H ) A N D E X A M P L E S O F C O M P L E M E N T A R Y S T A T E

L E G I S L A T I O N

The Minister's amending direction related to ss 32(5) and 33

of the Wheat Marketing Act 1984 (Cth). So as to enable the

reader to understand the function of s. 32(5), both sections

are set out in full.

H o m e c o n s u m p tio n p r ic e o f w h e a t

3 2 . ( 1 ) T h e p r i c e a t w h ic h , d u r i n g a s e a s o n , th e B o a r d s h a ll, b y a c o n tr a c t

m a d e in a T e r r i t o r y ( o t h e r t h a n a c o n t r a c t e n te r e d i n to u n d e r s e c tio n 2 3 ) , sell

w h e a t f o r u se in A u s t r a l i a is t h e a p p r o p r i a t e p r ic e t h a t is a p p li c a b l e in

a c c o r d a n c e w i t h t h is s e c tio n .

( 2 ) S u b je c t t o s u b - s e c tio n ( 5 ) , d u r i n g a q u a r t e r (in t h is s u b - s e c tio n r e f e r r e d

to a s t h e “ r e l e v a n t q u a r t e r ” ) t h e p r ic e p e r to n n e o f A u s tr a l ia n s t a n d a r d w h ite

w h e a t in b u l k s o ld f r e e o n r a il a t a p o r t o f e x p o r t f o r h u m a n c o n s u m p ti o n in

A u s t r a l i a is t h e p r i c e d e t e r m i n e d b y t h e M in is te r , o r b y a p e r s o n a u t h o r i z e d in

w r i t in g b y t h e M i n i s t e r , b y —

( a ) t a k i n g t h e a v e r a g e a m o u n t p e r t o n n e o f th e e x p o r t p r ic e , f.o .b ., q u o t e d

b y th e B o a r d o n e a c h o f t h e 2 0 b u s in e s s d a y s im m e d ia t e l y p r e c e d in g

t h e 1 6 th d a y o f th e m o n t h i m m e d ia te ly p r e c e d in g —

( i ) t h e r e l e v a n t q u a r t e r ; a n d

( ii) t h e q u a r t e r i m m e d ia t e l y p r e c e d in g th e r e le v a n t q u a r t e r ,

f o r A u s t r a l i a n s t a n d a r d w h ite w h e a t t o b e d is p o s e d o f o n e a c h d a y o f

t h e r e l e v a n t q u a r t e r o r t h e q u a r t e r i m m e d ia te ly p r e c e d in g t h e r e le v a n t

q u a r t e r , a s t h e c a s e r e q u ir e s , b y t h e B o a r d by w a y o f e x p o r t s a le o r sa le

f o r e x p o r t ; a n d

( b ) a d d in g t o t h e a m o u n t c a l c u l a te d in a c c o r d a n c e w ith p a r a g r a p h ( a )

s u c h a m o u n t ( i f a n y ) a s is d e te r m i n e d b y th e M i n is te r , a f te r

c o n s u l t a t i o n w ith t h e B o a r d , in r e la ti o n t o th e r e le v a n t q u a r t e r o r in

r e la ti o n t o o n e o r m o r e q u a r t e r s t h a t in c lu d e t h e r e l e v a n t .q u a r t e r , to be

t h e a m o u n t p e r t o n n e b y w h ic h t h e c o s ts i n c u r r e d b y t h e B o a rd in

m a r k e t i n g w h e a t fo r h u m a n c o n s u m p ti o n in A u s t r a l i a e x c e e d th e c o sts

i n c u r r e d b y t h e B o a rd in m a r k e ti n g w h e a t fo r e x p o r t.

( 3 ) S u b je c t t o s u b - s e c tio n s ( 4 ) a n d ( 5 ) —

( a ) t h e p r i c e f o r A u s tr a l ia n s t a n d a r d w h ite w h e a t in b u lk s o ld f r e e o n rail

a t a p o r t o f e x p o r t f o r a u s e (in th is s e c tio n r e f e r r e d t o a s t h e “ r e le v a n t

u s e ” ) in A u s t r a l i a t h a t is a s t o c k f e e d u se is s u c h p r ic e a s is d e te r m i n e d

f r o m t im e t o t im e b y t h e B o a r d in r e s p e c t o f t h e r e le v a n t u se ; a n d

( b ) t h e p r ic e f o r A u s t r a l i a n s t a n d a r d w h ite w h e a t in b u lk s o ld f r e e o n ra il

a t a p o r t o f e x p o r t f o r a u s e (in th is s e c tio n a ls o r e f e r r e d t o a s th e

“ r e le v a n t u s e ” ) in A u s t r a l i a t h a t is a n in d u s t r ia l u se is s u c h p r ic e a s is

d e te r m i n e d f r o m tim e t o tim e b y t h e B o a rd in r e s p e c t o f t h e r e le v a n t

u se.

97

(4 ) A p r ic e d e te r m i n e d f o r a r e l e v a n t u se u n d e r s u b - s e c tio n ( 3 ) —

( a ) s h a ll n o t v a r y a s b e tw e e n w h e a t a t o n e p o r t o f e x p o r t a n d w h e a t a t

a n o t h e r p o r t o f e x p o r t ; a n d

( b ) s h a ll b e t h e s a m e a s a n y c o r r e s p o n d i n g p r ic e d e te r m i n e d b y th e B o a rd

u n d e r a p r o v is io n o f a S t a t e A c t t h a t c o r r e s p o n d s to s u b - s e c tio n ( 3 ) .

( 5 ) T h e r e s h a ll b e a d d e d t o a p r i c e d e te r m i n e d u n d e r s u b - s e c tio n (2) o r (3)

s u c h a m o u n t a s t h e M i n i s t e r , a f t e r c o n s u l t a t i o n w ith th e B o a r d , c o n s id e r s fro m

tim e t o tim e to b e n e c e s s a r y t o b e in c l u d e d in th e p r ic e o f a ll w h e a t so ld by th e

B o a r d f o r u s e in A u s t r a l i a f o r t h e p u r p o s e o f e n a b lin g t h e B o a r d t o m e e t th e

c o s ts o f s h i p m e n t o f w h e a t ( i n c l u d i n g o v e r s e a s w h e a t ) t h a t it is r e q u ir e d by

s e c tio n 33 t o m e e t.

( 6 ) T h e p r i c e in r e s p e c t o f w h e a t t h a t is n o t A u s t r a l i a n s t a n d a r d w h ite

w h e a t in b u lk s o ld f r e e o n r a il a t a p o r t o f e x p o r t is s u c h p r i c e a s th e B o a rd

d e te r m i n e s b y a d d in g to , o r d e d u c t i n g f r o m , th e p r ic e t h a t w o u ld b e a p p lic a b le

t o th e w h e a t i f it w e r e A u s t r a l i a n s t a n d a r d w h ite w h e a t in b u lk s o ld fre e o n ra il

a t a p o r t o f e x p o r t a n a m o u n t b y w a y o f a ll o w a n c e s in r e s p e c t o f t h e 'q u a l it y o f

t h e w h e a t , t h e c o n d it i o n s o f s a le a n d t h e p l a c e o f d e liv e ry o f th e w h e a t.

( 7 ) T h e B o a r d m a y d i s c o u n t a p r i c e f o r w h e a t s o ld b y th e B o a r d o t h e r t h a n

f o r h u m a n c o n s u m p t i o n o n t h e b a s is o f t h e q u a n t i t y o f w h e a t s o so ld .

(8) T h e p r i c e f o r A u s t r a l i a n s t a n d a r d w h ite w h e a t in b u lk , b e in g w h e a t o f a

s e a s o n s o ld fre e o n r a il a t a p o r t o f e x p o r t b e f o re t h e fin a l p u r c h a s i n g d a y fo r

t h a t s e a s o n t o a p e r s o n w h o h a s d e l i v e r e d w h e a t o f t h a t s e a s o n t o t h e B o a rd f o r

a s t o c k f e e d u s e b y t h e p e r s o n in A u s t r a l i a , is th e p r ic e d e te r m i n e d f r o m tim e to

t im e b y t h e B o a r d t o b e a n e q u i t a b l e p r i c e in r e s p e c t o f th e s a le o f w h e a t o f t h a t

s e a s o n t o th e p e r s o n in r e s p e c t o f t h a t s t o c k f e e d u se , b e in g a p r ic e t h a t is n o t less

t h a n t h e p r ic e p e r t o n n e p a id t o t h e p e r s o n by t h e B o a r d u n d e r s u b - s e c tio n

26 ( 4 ) f o r w h e a t o f t h a t s e a s o n i n c r e a s e d o r d e c r e a s e d b y s u c h a llo w a n c e s a s

t h e B o a r d c o n s id e r s p r o p e r f o r —

( a ) th e c o s ts i n c u r r e d b y t h e B o a r d in h a n d li n g a n d s t o r i n g t h a t w h e a t

b e f o re it is s o ld t o t h e p e r s o n ;

( b ) a n y c o s ts i n c u r r e d b y t h e B o a r d in d e liv e rin g t h a t w h e a t to t h e p e rs o n ;

a n d

( c ) o t h e r n e c e s s a r y a d ju s tm e n ts .

( 9 ) T h e B o a r d m a y , in d e t e r m i n i n g a p r i c e in r e s p e c t o f th e s a le o f w h e a t o f

a s e a s o n u n d e r s u b - s e c t io n ( 8 ) t o a p e r s o n w h o h a s d e liv e re d w h e a t o f t h a t

s e a s o n t o th e B o a r d , m a k e a l l o w a n c e s f o r t h e q u a li t y o f t h e w h e a t s o ld t o th e

p e r s o n u n d e r t h a t s u b - s e c t io n c o m p a r e d t o t h e q u a lity o f t h e w h e a t o f t h a t

s e a s o n d e li v e r e d b y t h e p e r s o n t o t h e B o a r d .

(10) F o r t h e p u r p o s e s o f s u b - s e c t io n ( 8 ) , w h e a t s h a ll b e t a k e n t o b e s o ld to

a p e r s o n f o r a s t o c k f e e d u s e b y t h e p e r s o n if it is s o ld t o th e p e r s o n f o r a

s t o c k f e e d u s e — 1

( a ) b y t h e p e r s o n a t t h e f a r m a t w h ic h t h e w h e a t o f t h a t s e a s o n t h a t w a s

d e li v e r e d t o th e B o a r d b y t h e p e r s o n w a s h a r v e s te d ; o r

( b ) b y t h e p e r s o n o r b y a n o t h e r p e r s o n a t a n a s s o c ia te d f a r m a p p r o v e d by

t h e B o a rd .

(11) T h e B o a r d s h a ll n o t se ll t o a p e r s o n u n d e r s u b - s e c tio n ( 8 ) a t o ta l

a m o u n t o f w h e a t o f a s e a s o n t h a t is g r e a t e r t h a n t h e t o t a l a m o u n t o f w h e a t o f

t h a t s e a s o n d e liv e r e d to t h e B o a r d b y t h e p e r s o n . .

98

(12) W h e r e a p e r s o n o t h e r t h a n t h e B o a r d e x p o r ts w h e a t p r o d u c ts

c o n ta i n in g a n y w h e a t s o ld by t h e B o a r d u n d e r t h is s e c tio n , t h e B o a r d s h a ll, o n

a p p l i c a t i o n m a d e t o it b y th e p e r s o n , r e f u n d t o t h e p e r s o n a n a m o u n t e q u a l to

th e a g g r e g a te o f th e a m o u n t s r e f e r r e d t o in p a r a g r a p h ( 2 ) ( b ) a n d s u b - s e c tio n

( 5 ) t h a t w e r e a p p l i c a b l e in r e la ti o n t o t h e w h e a t a t t h e t im e w h e n t h e w h e a t

w a s s o ld b y t h e B o a rd .

(13) A n a p p l i c a t i o n u n d e r s u b - s e c t io n ( 1 2 ) s h a ll b e in a c c o r d a n c e w ith a

fo rm a p p r o v e d b y t h e B o a rd .

(14) In th is s e c t i o n —

“ a s s o c i a t e d f a r m " h a s th e s a m e m e a n i n g a s in s e c tio n 2 1;

“ b u s in e s s d a y " m e a n s a d a y o t h e r t h a n —

( a ) a S a t u r d a y ;

( b ) a S u n d a y ; o r

( c ) a d a y t h a t is a p u b l ic h o lid a y in t h e p la c e w h e r e t h e h e a d o ffice

o f t h e B o a r d is s i t u a t e d ;

“ f in a l p u r c h a s i n g d a y ” , in r e la ti o n t o a s e a s o n , m e a n s —

( a ) t h e d a y i m m e d ia t e l y s u c c e e d in g t h e e x p ir a ti o n o f th e s e a s o n ; o r

( b ) s u c h o t h e r d a y ( w h e t h e r o r n o t d u r i n g t h e s e a s o n ) a s th e

M i n i s t e r , by n o t ic e p u b l is h e d in t h e Gazette b e f o r e th e

e x p i r a t i o n o f t h e s e a s o n , d e te r m i n e s ;

“ q u a r t e r " m e a n s a p e r io d o f 3 m o n t h s c o m m e n c i n g o n a n y 1 J a n u a r y ,

1 A p r i l , 1 J u l y o r 1 O c t o b e r ;

“ s e a s o n ” d o e s n o t in c lu d e t h e s e a s o n c o m m e n c i n g o n 1 J u l y 1989 o r th e

n e x t s u c c e e d in g s e a s o n .

S p e c ia l a c c o u n t fo r f r e ig h t to T a s m a n ia

3 3 . ( 1 ) S u b je c t t o t h is s e c tio n , t h e B o a r d s h a ll k e e p a s e p a r a t e a c c o u n t

o f —

( a ) m o n e y s r e c e iv e d b y t h e B o a r d b y r e a s o n o f t h e in c lu s io n in t h e p ric e

f o r a s a le o f w h e a t to w h ic h s e c tio n 3 2 a p p li e s o r a s a le in A u s t r a l i a o f

o v e r s e a s w h e a t o f a n a m o u n t r e f e r r e d t o in s u b - s e c tio n 32 ( 5 ) ;

( b ) s u c h p r o p o r t i o n o f th e m o n e y s r e c e iv e d b y th e B o a r d u n d e r s e c ti o n 50

a s is e q u a l t o t h e a m o u n t s r e f e r r e d t o in p a r a g r a p h 6 ( c ) o f t h e Wheat

Tax (Permit) Act 1984 t h a t w o u ld h a v e b e e n r e c e iv e d u n d e r t h a t A c t

in r e s p e c t o f a ll p e r m its is s u e d b y t h e B o a r d u n d e r s e c tio n 22 o f th is

A c t o r t h e c o r r e s p o n d i n g p r o v is io n o f a S t a te A c t w ith r e s p e c t t o a

s e a s o n if t h e t o t a l q u a n t i t y o f w h e a t a u t h o r i z e d b y t h o s e p e r m i t s to be

p u r c h a s e d d u r i n g t h a t s e a s o n h a d b e e n t h e s a m e a s th e t o ta l q u a n t i t y o f

w h e a t t h a t w a s p u r c h a s e d u n d e r t h o s e p e r m i t s d u r i n g t h a t s e a s o n : a n d

( c ) p a y m e n t s m a d e o u t o f t h e m o n e y s r e f e r r e d to in p a r a g r a p h s ( a ) a n d

( b ) ,

a n d t h e B o a r d s h a ll n o t a p p ly t h o s e m o n e y s e x c e p t in a c c o r d a n c e w ith th is

s e c tio n .

(2) T h e B o a rd m a y c o m b in e t h e a c c o u n t r e q u ir e d to b e k e p t u n d e r

s u b - s e c tio n ( 1 ) w ith a n y s im ila r a c c o u n t o r a c c o u n t s to b e k e p t b y it u n d e r a

S t a te A c t.

99

( 3 ) T h e B o a r d s h a ll u se t h e m o n e y s r e f e r r e d t o in s u b - s e c tio n ( 1 ) in

m e e tin g t h e c o s ts o f s h i p m e n t o f w h e a t ( i n c lu d in g o v e r s e a s w h e a t ) by th e

B o a r d t o a p o r t in T a s m a n i a , a n d s h a ll n o t u se f o r t h a t p u r p o s e a n y o t h e r

m o n e y s d e r iv e d b y it f r o m t h e s a le o f w h e a t a c q u i r e d by it u n d e r th is A c t o r

f r o m th e s a le in A u s t r a l i a o f o v e r s e a s w h e a t .

(4 ) T h e B o a r d s h a ll n o t m e e t a n y c o s ts o f s h i p m e n t o f w h e a t u n d e r

s u b - s e c tio n ( 3 ) t o th e e x t e n t t h a t t h o s e c o s ts e x c e e d t h e c o s ts o f s h i p m e n t o f

t h a t w h e a t f r o m w h i c h e v e r o f t h e f o llo w in g p o r t s in V ic to r ia th e c o s ts o f t h a t

s h i p m e n t a r e lo w e r:

( a ) G e e lo n g ;

( b ) P o r t l a n d .

( 5 ) A n y m o n e y s r e f e r r e d t o in s u b - s e c t io n ( 1 ) t h a t a r e n o t , a n d in th e

o p in io n o f th e B o a r d a r e n o t lik e ly t o b e , r e q u ir e d f o r th e p u r p o s e o f p a y m e n t s

u n d e r s u b - s e c tio n ( 3 ) s h a ll b e a p p l i e d b y t h e B o a r d f o r t h e b e n e fit o f th e w h e a t

i n d u s t r y in s u c h m a n n e r a s t h e M i n i s t e r , a f t e r c o n s u l ta t io n w ith th e

a p p r o p r i a t e M i n i s t e r o f e a c h S t a t e , d i r e c ts .

( 6 ) A n y m o n e y s r e f e r r e d t o in s u b - s e c t io n 2 7 ( 1 ) o f th e Wheat Marketing

Act 1979, a s c o n t i n u e d in f o r c e b y s e c tio n 65 o f t h is A c t, t h a t r e m a in

u n e x p e n d e d a f t e r t h e B o a r d h a s m a d e t h e fin a l p a y m e n t r e q u ir e d to b e m a d e

u n d e r s u b - s e c tio n 2 7 ( 3 ) o f t h a t A c t s h a l l b e d e e m e d t o b e m o n e y s r e f e r r e d to

in s u b - s e c tio n ( 1 ) o f th is s e c tio n .

( 7 ) In r e la ti o n to s a le s o f w h e a t ( i n c l u d i n g o v e r s e a s w h e a t ) b y th e B o a ru

fo r s h i p m e n t t o a p o r t in T a s m a n i a in r e s p e c t o f w h ic h t h e B o a rd b e a r s t h e c o s t

o f s h i p m e n t , t h e B o a r d s h a ll t a k e s u c h m e a s u r e s a s a r e p r a c t ic a b le to o b ta in

r e c o u p m e n t o f th e c o s t o f t h e s h i p m e n t in r e s p e c t o f s u c h o f t h a t w h e a t a s is

u s e d in t h e p r o d u c ti o n in T a s m a n i a o f w h e a t p r o d u c t s ( i n c lu d in g w h e a t

p r o d u c t s m a d e in w h o le o r in p a r t f r o m o v e r s e a s w h e a t ) t h a t a r e s e n t t o o t h e r

S t a te s f o r u se in A u s tr a l ia , a n d m a y in c lu d e in a n y c o n t r a c t s m a d e b y t h e B o a rd

p r o v is io n s f o r t h a t p u r p o s e .

( 8 ) A n y m o n e y s r e c e iv e d b y t h e B o a r d in a c c o r d a n c e w ith s u b - s e c tio n ( 7 )

b y w a y o f r e c o u p m e n t o f c o s ts o f s h i p m e n t s h a ll b e d e e m e d to b e m o n e y s

r e f e r r e d t o in s u b - s e c tio n ( 1 ) .

( 9 ) In th is s e c ti o n —

( a ) a r e f e r e n c e t o t h e c o s ts o f s h i p m e n t o f w h e a t i n c lu d e s a r e f e r e n c e to

t h e c o s ts o f u n l o a d i n g th e w h e a t ; a n d

( b ) a r e f e r e n c e t o a p o r t in T a s m a n i a is a r e f e r e n c e t o th e p o r t , o r t h e first

p o r t , a t w h ic h t h e w h e a t ( i n c l u d i n g o v e r s e a s w h e a t ) c o n c e r n e d is

la n d e d .

Each State has enacted complementary provisions which

are, or are expected soon to be, contained in Acts entitled

Wheat Marketing Act 1984 or Wheat Marketing Act 1985. Two

examples of complementary State provisions are set out below.

100

NEW SOUTH WALES: WHEAT MARKETING ACT 1984

Home consumption price of wheat.

2 1 . (1 ) T h e p r i c e a t w h ic h , d u r i n g a s e a s o n , t h e B o a r d s h a ll, b y a

c o n t r a c t m a d e i n t h e S ta te ( o t h e r t h a n a c o n t r a c t e n te r e d i n to u n d e r s e c tio n

1 3 ) , se ll w h e a t f o r u s e i n A u s t r a l i a is t h e a p p r o p r i a te p r i c e t h a t is a p p lic a b le

in a c c o r d a n c e w i t h t h is s e c tio n ,

(2) S u b j e c t t o s u b s e c t io n ( 5 ) , d u r i n g a q u a r t e r ( i n th is s u b s e c tio n

r e f e r r e d t o a s t h e “ r e le v a n t q u a r t e r ” ) t h e p r ic e p e r to n n e o f A u s tr a l ia n

s t a n d a r d w h ite w h e a t in b u l k s o ld f r e e o n r a il a t a p o r t o f e x p o r t f o r h u m a n

c o n s u m p t i o n in A u s t r a l i a is s u c h p r i c e a s is d e te r m i n e d b y t h e C o m m o n ­

w e a l t h M i n i s t e r , o r b y a p e r s o n a u t h o r i z e d in w r itin g b y th e C o m m o n w e a l th

M i n i s t e r , a s t h e c a s e m a y b e , b y —

( a ) t a k i n g t h e a v e r a g e a m o u n t p e r t o n n e o f t h e e x p o r t p r i c e , f .o .b .,

q u o t e d b y t h e B o a r d o n e a c h o f th e 2 0 b u s in e s s d a y s im m e d ia te ly

p r e c e d in g t h e 1 6 th d a y o f t h e m o n th i m m e d ia te ly p r e c e d in g —

( i ) th e r e le v a n t q u a r t e r ; a n d

( i i ) t h e q u a r t e r im m e d ia t e l y p r e c e d in g th e r e le v a n t q u a r te r ,

f o r A u s t r a l i a n s t a n d a r d w h ite w h e a t t o b e d is p o s e d o f o n e a c h d a y

o f th e r e l e v a n t q u a r t e r o r th e q u a r t e r i m m e d ia te ly p r e c e d in g th e

r e l e v a n t q u a r t e r , a s t h e c a s e r e q u ir e s , b y th e B o a r d b y w a y o f

e x p o r t s a le o r s a le f o r e x p o r t; a n d "

( b ) a d d i n g t o t h e a m o u n t c a l c u l a te d in a c c o r d a n c e w ith p a r a g r a p h ( a )

s u c h a m o u n t ( i f a n y ) a s is d e te r m i n e d b y th e C o m m o n w e a l th

M i n i s t e r , a f t e r c o n s u l t a t i o n w ith th e M i n is te r a n d t h e B o a r d , in

r e l a t i o n t o t h e r e l e v a n t q u a r t e r o r in r e la tio n t o 2 o r m o r e q u a r te r s

t h a t i n c l u d e th e r e le v a n t q u a r t e r , to b e th e a m o u n t p e r to n n e b y

w h ic h t h e c o s ts i n c u r r e d b y th e B o a r d in m a r k e ti n g w h e a t f o r

h u m a n c o n s u m p t i o n in A u s t r a l i a e x c e e d th e c o s ts i n c u r r e d b y th e

B o a r d in m a r k e ti n g w h e a t f o r e x p o r t.

( 3 ) S u b j e c t t o s u b s e c tio n s ( 4 ) a n d ( 5 ) —

( a ) t h e p r i c e f o r A u s t r a l i a n s t a n d a r d w h ite w h e a t i n b u l k s o ld f r e e

o n r a i l a t a p o r t o f e x p o r t f o r a u s e ( i n th is s e c tio n r e f e r r e d t o as

t h e “ r e l e v a n t u s e " ) in A u s t r a l i a t h a t is a s t o c k f e e d u s e is s u c h

p r i c e a s is d e te r m i n e d f r o m t im e t o tim e b y th e B o a r d in r e s p e c t

o f t h e r e le v a n t u s e ; a n d

( b ) t h e p r i c e f o r A u s t r a l i a n s t a n d a r d w h ite w h e a t i n b u l k s o ld f r e e

o n r a i l a t a p o r t o f e x p o r t f o r a u s e ( i n t h is s e c tio n a ls o r e f e r r e d to

a s t h e “r e l e v a n t u s e ” ) i n A u s t r a l i a t h a t is a n i n d u s t r ia l u s e is s u c h

p r i c e a s is d e te r m i n e d f r o m t im e to tim e b y th e B o a r d in r e s p e c t

o f t h e r e l e v a n t u se .

(4 ) A p r i c e d e te r m i n e d f o r a r e l e v a n t u se u n d e r s u b s e c tio n ( 3 ) —

( a ) s h a ll n o t v a r y a s b e tw e e n w h e a t a t o n e p o r t o f e x p o r t a n d w h e a t

a t a n o t h e r p o r t o f e x p o r t; a n d

101

( b ) s h a ll b e th e s a m e a s a n y c o r r e s p o n d i n g p r i c e d e te r m i n e d b y th e

B o a r d u n d e r a p r o v i s i o n o f t h e C o m m o n w e a l th A c t o r o f a S ta te

A c t t h a t c o r r e s p o n d s t o s u b s e c t io n ( 3 ) .

(5) T h e r e sh a ll b e a d d e d to a p r i c e d e te r m i n e d u n d e r s u b s e c tio n ( 2 )

o r ( 3 ) s u c h a m o u n t a s th e C o m m o n w e a l th M i n is te r , a f te r c o n s u l ta t io n w ith

t h e M i n i s t e r a n d th e B o a r d , c o n s i d e r s f r o m tim e to t im e to b e n e c e s s a r y to

b e in c l u d e d in th e p r ic e o f a ll w h e a t s o ld b y th e B o a r d f o r u s e in A u s tr a l ia

f o r th e p u r p o s e o f e n a b l i n g t h e B o a r d t o m e e t th e c o s ts o f s h ip m e n t o f

w h e a t t h a t it is r e q u ir e d b y s e c tio n 2 2 t o m e e t.

(6 ) T h e p r i c e in r e s p e c t o f w h e a t t h a t is n o t A u s t r a l i a n s t a n d a r d

w h ite w h e a t in b u l k s o ld f r e e o n r a il a t a p o r t o f e x p o r t is s u c h p r ic e as th e

B o a r d d e te r m i n e s b y a d d in g to , o r d e d u c t i n g f r o m , t h e p r ic e t h a t w o u ld b e

a p p li c a b l e t o th e w h e a t if it w e r e A u s t r a l i a n s t a n d a r d w h ite w h e a t in b u lk

s o ld f r e e o n r a il a t a p o r t o f e x p o r t a n a m o u n t b y w 'ay o f a llo w a n c e s in

r e s p e c t o f th e q u a li t y o f t h e w h e a t , t h e c o n d it i o n s o f s a le a n d t h e p la c e o f

d e liv e ry o f t h e w -heat.

( 7 ) T h e B o a r d m a y d i s c o u n t a p r ic e f o r w h e a t so ld b y th e B o a r d

o t h e r t h a n f o r h u m a n c o n s u m p ti o n o n th e b a s is o f th e q u a n ti t y o f w h e a t so

s o ld .

(8) T h e p r i c e f o r A u s t r a l i a n s t a n d a r d w h ite w h e a t i n b u lk , b e in g

w h e a t o f a s e a s o n s o ld f r e e o n r a i l a t a p o r t o f e x p o r t b e f o r e th e fin a l

p u r c h a s i n g d a y f o r t h a t s e a s o n t o a p e r s o n w h d h a s d e l i v e r e d w h e a t o f t h a t

s e a s o n t o t h e B o a r d f o r a s t o c k f e e d u s e b y t h e p e r s o n in A u s tr a l ia , is t h e

p r i c e d e t e r m i n e d f r o m tim e t o t im e b y t h e B o a r d t o b e a n e q u it a b le p r ic e i n

r e s p e c t o f t h e s a le o f w h e a t o f t h a t s e a s o n t o t h e p e r s o n i n r e s p e c t o f t h a t

s t o c k f e e d u s e , b e i n g a p r i c e t h a t is n o t le s s t h a n t h e p r i c e p e r t o n n e p a id to

t h e p e r s o n b y t h e B o a r d u n d e r s e c ti o n 1 5 ( 3 ) f o r w h e a t o f t h a t s e a s o n

i n c r e a s e d o r d e c r e a s e d b y s u c h a ll o w a n c e s a s t h e B o a r d c o n s id e r s p r o p e r

f o r —

( a ) t h e c o s ts i n c u r r e d b y t h e B o a r d i n h a n d li n g a n d s t o r i n g t h a t w h e a t

b e f o r e i t is s o ld t o t h e p e r s o n ;

( b ) a n y c o s ts i n c u r r e d b y t h e B o a r d in d e liv e r in g t h a t w h e a t to th e

p e r s o n ; a n d

( c ) o t h e r n e c e s s a r y a d ju s tm e n ts .

( 9 ) T h e B o a r d m a y , in d e t e r m i n i n g a p r i c e i n r e s p e c t o f th e sa le

o f w h e a t o f a s e a s o n u n d e r s u b s e c t i o n ( 8 ) t o a p e r s o n w h o h a s d e liv e re d

w h e a t o f t h a t s e a s o n to t h e B o a r d , m a k e a llo w a n c e s f o r th e q u a li t y o f th e

w h e a t s o l d t o t h e p e r s o n u n d e r t h a t s u b s e c t io n c o m p a r e d t o th e q u a li t y o f th e

w h e a t o f t h a t s e a s o n d e liv e r e d b y t h e p e r s o n t o t h e B o a r d .

(10) F o r th e p u r p o s e s o f s u b s e c t i o n ( 8 ) , w h e a t s h a ll b e t a k e n to b e

s o ld t o a p e r s o n f o r a s t o c k f e e d u s e b y t h e p e r s o n if it is s o ld t o t h e p e r s o n

f o r a s t o c k f e e d u s e —

102

( a ) b y t h e p e r s o n a t th e f a r m a t w h i c h t h e w h e a t o f t h a t s e a s o n t h a t

w a s d e l i v e r e d to th e B o a r d b y t h e p e r s o n w a s h a r v e s te d ; o r

( b ) b y th e p e r s o n o r b y a n o t h e r p e r s o n a t a n a s s o c ia te d f a r m a p p r o v e d

b y th e B o a r d .

(11) T h e B o a r d sh a ll n o t se ll t o a p e r s o n u n d e r s u b s e c tio n ( 8 ) a

t o ta l a m o u n t o f w h e a t o f a s e a s o n t h a t is g r e a t e r t h a n th e t o ta l a m o u n t o f

w h e a t o f t h a t s e a s o n d e liv e r e d t o th e B o a r d b y th e p e rs o n .

(12) W h e r e a p e r s o n o t h e r t h a n t h e B o a r d e x p o r ts w h e a t p r o d u c ts

c o n t a i n i n g a n y w h e a t s o ld b y th e B o a r d u n d e r th is s e c tio n , th e B o a r d s h a ll,

o n a p p l i c a t i o n m a d e t o it b y t h e p e r s o n ,- r e f u n d to th e p e r s o n a n a m o u n t

e q u a l t o th e a g g r e g a te o f th e a m o u n t s r e f e r r e d to in s u b s e c t io n s ( 2 ) ( b )

a n d ( 5 ) t h a t w e r e a p p li c a b l e in r e la ti o n t o t h e w h e a t a t t h e tim e w h e n th e

w h e a t w a s s o ld b y th e B o a r d . '

(13) A n a p p l i c a t i o n u n d e r s u b s e c tio n ( 1 2 ) s h a ll b e in a c c o r d a n c e

w ith a f o r m a p p r o v e d b y th e B o a r d .

(14) In t h is s e c ti o n —

“ a s s o c ia te d f a r m " h a s th e s a m e m e a n i n g a s in s e c tio n 1 1 ;

“ b u s in e s s d a y " m e a n s a d a y o t h e r t h a n —

( a ) a S a t u r d a y ;

( b ) a S u n d a y ; o r

( c ) a d a y - t h a t is a p u b l ic h o l id a y in th e p la c e w h e r e th e h e a d

o ffic e o f th e B o a r d is s i t u a t e d ;

“ fin a l p u r c h a s i n g d a y ’’, in r e la ti o n t o a s e a s o n , m e a n s t h e d a y t h a t is

t h e fin a l p u r c h a s i n g d a y in r e la ti o n t o t h a t s e a s o n u n d e r s e c tio n

3 2 o f t h e C o m m o n w e a l th A c t;

" q u a r t e r " m e a n s a p e r io d o f 3 m o n th s c o m m e n c in g o n a n y 1 st J a n u a r y ,

1 s t A p r i l , 1 st J u ly o r 1 st O c t o b e r ;

“ s e a s o n " d o e s n o t in c lu d e th e s e a s o n c o m m e n c i n g o n 1st J u l y , 1 9 8 9 ,

o r th e n e x t s u c c e e d in g s e a s o n .

S p e c ia l a c c o u n t fo r fr e ig h t to T a sm a n ia .

22. (1) S u b je c t to th is s e c tio n , th e B o a r d sh a ll k e e p a s e p a r a t e a c c o u n t

o f—

( a ) m o n e y s r e c e iv e d b y t h e B o a r d b y r e a s o n o f t h e i n c l u s i o n in th e

p r i c e f o r a s a le o f w h e a t t o w h ic h s e c tio n 21 a p p lie s o f a n a m o u n t

r e f e r r e d t o in s e c tio n 21 ( 5 ); a n d

( b ) p a y m e n t s m a d e o u t o f t h o s e m o n e y s ,

a n d th e B o a r d s h a ll n o t a p p ly t h o s e m o n e y s e x c e p t in a c c o r d a n c e w ith th is

s e c tio n .

103

(2) T h e B o a r d m a y c o m b i n e th e a c c o u n t r e q u ir e d t o b e k e p t u n d e r

s u b s e c t io n ( 1 ) w ith a n y s i m il a r a c c o u n t o r a c c o u n ts t o b e k e p t b y it u n d e r

th e C o m m o n w e a l th A c t o r a S t a te A c t ,

( 3 ) T h e B o a r d s h a ll u se th e m o n e y s r e f e r r e d to in s u b s e c tio n ( 1 ) in

m e e t in g th e c o s ts o f s h i p m e n t o f w h e a t b y th e B o a r d to a p o r t in T a s m a n i a ,

a n d s h a ll n o t u se fo r t h a t p u r p o s e a n y o t h e r m o n e y s d e r iv e d b y it fro m th e

s a le o f w h e a t a c q u i r e d b y it u n d e r t h is A c t,

(4) T h e B o a r d s h a ll n o t m e e t a n y c o s ts o f s h ip m e n t o f w h e a t u n d e r

s u b s e c tio n ( 3 ) to th e e x t e n t t h a t th o s e c o s ts e x c e e d th e c o s ts o f s h ip m e n t

o f t h a t w h e a t f r o m w h ic h e v e r o f t h e f o llo w in g p o r t s in V ic to r ia th e c o sts o f

t h a t s h i p m e n t a r e lo w e r ; —

( a ) G e e lo n g ;

f b ) P o r t l a n d .

(5) A n y m o n e y s r e f e r r e d t o in s u b s e c t io n ( 1 ) t h a t a r e n o t, a n d in

th e o p i n io n o f th e B o a r d a r e n o t lik e ly to b e , r e q u ir e d f o r th e p u r p o s e o f

p a y m e n t s u n d e r s u b s e c t io n ( 3 ) s h a l l b e a p p li e d b y th e B o a r d f o r th e b e n e fit

o f th e w h e a t i n d u s t r y in s u c h m a n n e r a s t h e C o m m o n w e a l th M in is te r , a f te r

c o n s u l t a t i o n w ith t h e a p p r o p r i a t e M i n i s t e r o f e a c h S ta te , d ir e c ts .

(6 ) A n y m o n e y s r e f e r r e d t o in s e c ti o n 2 2 ( 1 ) o f th e W h e a t M a r k e t ­

in g A c t, 1 9 7 9 , a s c o n t i n u e d in f o r c e b y s e c ti o n 3 0 o f th is A c t, t h a t r e m a in

u n e x p e n d e d a f te r th e B o a r d h a s m a d e t h e fin a l p a y m e n t r e q u ir e d to b e

m a d e u n d e r s e c ti o n 2 2 ( 3 ) o f t h a t A c t s h a ll b e d e e m e d to b e m o n e y s

r e f e r r e d to in s u b s e c t io n ( 1 ) o f th is s e c tio n .

(7) I n r e la ti o n t o s a le s o f w h e a t b y th e B o a r d f o r s h ip m e n t to a

p o r t in T a s m a n i a in r e s p e c t o f w h i c h t h e B o a r d b e a r s t h e c o s t o f s h ip m e n t,

t h e B o a r d s h a ll t a k e s u c h m e a s u r e s a s a r e p r a c t ic a b le to o b t a i n a r e c o u p ­

m e n t o f t h e c o s t o f th e s h i p m e n t in r e s p e c t o f s u c h o f t h a t w h e a t a s is u se d

in t h e p r o d u c t i o n in T a s m a n i a o f w h e a t p r o d u c ts t h a t a re s e n t t o o t h e r

S t a te s f o r u s e in A u s t r a l i a , a n d m a y i n c l u d e in a n y c o n tr a c t s m a d e b y th e

B o a r d p r o v is io n s f o r t h a t p u r p o s e .

(8) A n y m o n e y s r e c e iv e d b y th e B o a r d in a c c o r d a n c e w ith s u b s e c tio n

( 7 ) b y w a y o f r e c o u p m e n t o f c o s t s o f s h i p m e n t sh a ll b e d e e m e d to h e

m o n e y s r e f e r r e d to in s u b s e c tio n (1 )

(9) I n th is s e c tio n —

( a ) a r e f e r e n c e t o th e c o s ts o f s h i p m e n t o f w h e a t i n c l u d e s a r e fe r e n c e

t o th e c o s ts o f u n l o a d i n g t h e w h e a t ; a n d

( b ) a r e f e r e n c e t o a p o r t in T a s m a n i a is a r e f e r e n c e t o t h e p o r t , o r

th e firs t p o r t , a t w h ic h th e w h e a t c o n c e r n e d is la n d e d

104

TASMANIA: WHEAT MARKETING AMENDMENT ACT 1984

As an interim measure, Tasmania's 1979 Wheat Marketing Act

has been amended by the Wheat Marketing Amendment Act 1984,

which substitutes the following section for s. 19 of the

principal Act. (See also s. 20 of the 1979 Act, reproduced

in Appendix II.)

( 1 ) T h e p r i c e a t w h i c h t h e B o a r d s h a l l, b y a c o n t r a c t

m a d e i n t h i s S t a t e ( o t h e r t h a n a c o n t r a c t e n t e r e d i n t o

u n d e r s e c t i o n 1 2 ) , s e l l w h e a t f o r u s e o r c o n s u m p t i o n

in A u s t r a l i a is t h e a p p r o p r i a t e p r i c e t h a t is a p p l i c a b l e

in a c c o r d a n c e w i t h t h i s s e c t i o n .

( 2 ) S u b j e c t t o s u b s e c t i o n ( 3 ) , d u r i n g a q u a r t e r ( in

t h i s s u b s e c t i o n r e f e r r e d t o a s t h e “ r e l e v a n t q u a r t e r ” )

t h e p r i c e p e r t o n n e f o r A u s t r a l i a n s t a n d a r d w h i t e w h e a t

i n b u l k s o l d f r e e o n r a i l a t a p o r t o f e x p o r t f o r h u m a n

c o n s u m p t i o n i n A u s t r a l i a is t h e a m o u n t d e t e r m i n e d b v

t h e C o m m o n w e a l t h M i n i s t e r , o r b y a p e r s o n a u t h o r i z e d

in w r i t i n g b y t h e C o m m o n w e a l t h M i n i s t e r , b y —

( a ) t a k i n g t h e a v e r a g e a m o u n t p e r t o n n e o f th e

a v e r a g e e x p o r t p r i c e , f . o . b . , q u o t e d b y th e

B o a r d o n e a c h o f t h e 2 0 b u s i n e s s d a y s

i m m e d i a t e l y p r e c e d i n g t h e 1 6 t h d a y o f t h e

m o n t h i m m e d i a t e l y p r e c e d i n g —

( i ) t h e r e l e v a n t q u a r t e r ; a n d

( i i ) t h e q u a r t e r i m m e d i a t e l y p r e c e d i n g

t h e r e l e v a n t q u a r t e r ,

f o r A u s t r a l i a n s t a n d a r d w h i t e w h e a t t o b e

d i s p o s e d o f o n e a c h d a y o f t h e r e l e v a n t

q u a r t e r o r t h e q u a r t e r i m m e d i a t e l y p r e ­

c e d i n g t h e r e l e v a n t q u a r t e r , a s t h e c a s e

r e q u i r e s , b y t h e B o a r d b y w a y o f e x p o r t

s a l e o r s a le f o r e x p o r t ; a n d

( b ) a d d i n g to t h e a m o u n t c a l c u l a t e d i n a c c o r d ­

a n c e w i t h p a r a g r a p h ( a ) s u c h a m o u n t

( i f a n y ) a s is d e t e r m i n e d b y t h e C o m m o n ­

w e a l t h M i n i s t e r , a f t e r c o n s u l t a t i o n w i t h

t h e M i n i s t e r a n d t h e B o a r d , i n r e l a t i o n

t o t h e r e l e v a n t q u a r t e r o r i n r e l a t i o n to

o n e o r m o r e q u a r t e r s t h a t i n c l u d e th e

r e l e v a n t q u a r t e r , t o b e t h e a m o u n t p e r

t o n n e b y w h i c h t h e c o s t s i n c u r r e d b y th e

B o a r d in m a r k e t i n g w h e a t f o r h u m a n

c o n s u m p t i o n in A u s t r a l i a e x c e e d t h e c o s t s

105

i n c u r r e d b y t h e B o a r d in m a r k e t i n g w h e a t

f o r e x p o r t .

( 3 ) T h e r e s h a l l b e a d d e d t o a p r i c e d e t e r m i n e d

u n d e r s u b s e c t i o n ( 2 ) o r ( 4 ) s u c h a m o u n t a s t h e

C o m m o n w e a l t h M i n i s t e r , a f t e r c o n s u l t a t i o n w i t h t h e

B o a r d , c o n s i d e r s t o b e n e c e s s a r y t o b e i n c l u d e d in t h e

p r i c e o f a ll w h e a t s o l d b y t h e B o a r d f o r u s e o r

c o n s u m p t i o n in A u s t r a l i a f o r t h e p u r p o s e o f e n a b l i n g

t h e B o a r d t o m e e t t h e c o s t s o f s h i p m e n t o f w h e a t

( i n c l u d i n g o v e r s e a s w h e a t ) b y t h e B o a r d t o a p o r t in

t h i s S t a t e .

106

APPENDIX IV NOTICE OF INVESTIGATION

Under s. 11(1)(b ) of the Inter-State Commission Act 1975

(Cth), the Commission is required to give reasonable notice

of the commencement of its investigation. This appendix

provides examples of two typical advertisements in relation

to the wheat marketing investigation. The first example

appeared in the Canberra Times on 2 November 1984; the

second example appeared in the Hobart Mercury on 14 November

WHEAT MARKETING ARRANGEMENTS IN TASMANIA

The Federal Minister for Transport has directed the Inter-State Commission to extend its investigation of the Tasmanian Freight Equalisation Scheme into wheat marketing arrangements in Tasmania.

Public hearings will be held in Canberra from 2 - 9 November 1984 in Hearings Room 2, third floor, AMP Building, Hobart Place, Canberra City. Hearings will commence at 10.00am on 2,6 and 8 November, and at 10.30am on 5,7 and 9 November. The hearings are open to the public unless otherwise advised.

Further public hearings will be scheduled in Tasmania commencing on 19 November 1984, at places to be advertised.

For further information contact Mr R. Anderson, ph (062) 47 3166.

1984.

INTER-STATE COMMISSION

107

+mg>m

INTER-STATE COMMISSION

WHEAT MARKETING ARRANGEMENTS IN TASMANIA

The Federal Minister for Transport has directed the Inter-State Commission to extend its investigation of the Tasmanian Freight Equalisation Scheme into wheat marketing arrangements in Tasmania.

Public hearings in Hobart and Launceston will be held in the week commencing Monday 19 November 1984 as follows:

Location Date Time

HOBART: Hearing Room 4 19-21 Nov 1984 10.00am

Commonwealth Law Courts Building,

39-41 Davey Street

LAUNCESTON:

Court No 2 22 Nov 1984 9.30am

Supreme Court Building Cameron Street

The hearings are open to the public unless otherwise advised.

For further information contact Mr R Anderson, Ph (062) 47 3166.

108

APPENDIX V WITNESSES APPEARING AT PUBLIC HEARINGS BEFORE THE

COMMISSION

The Inter-State Commission commenced its public hearings on

5 November 1984. The witnesses listed below appeared before

the Commission.

ORGANISATION NAME VENUE DATE

Associated Pulp and Paper Mills Limited A O'Shaunnesy Hobart 21.11.84

Australian National D Williams Canber ra 15.11.84

Australian Wheat Board R Paice Canberra 05.11.84

Australian Wheatgrowers Federation I Wearing Canberra 08.11.84

Australian Wheat Starch Producers R Street Canberra 09.11.84

Department of Primary Industry N Honan Canberra 06.11.84

Egg Marketing Board of Tasmania B Titmus Hobart 19.11.84

Federated Millers & Mill Employees Association P Neilson Hobart 20.11.84

Flour Millers' Council of Australia G McCorquodale Canberra 08.11.84

Gibsons Limited; Monds & Affleck Pty Limited; North Western Flour Mills Ltd J L Meredith Hobart 20.11.84

Golden Poultry Farming Industries Ltd I L Dickinson Launceston 22.11.84

Sanitarium Health Food Company A L Hawkins Hobart 21.11.84

Southern Pig Producers Group D Calvert Hobart 20.11.84

109

ORGANISATION NAME VENUE DATE

Tasman Starches Pty Limited G Grace J Honan Launceston 22.11.84

Tasmanian Chamber of Industries C lies Hobart 19.11.84

Tasmanian Grain Elevators Board N Bridge Hobart 19.11.84

Transport Tasmania R Morris Canberra 07.11.84

110

APPENDIX VI REPRESENTATIVES PARTICIPATING IN INFORMAL

DISCUSSIONS WITH THE COMMISSION

The Inter-State Commission held informal discussions with a

number of individuals representing organisations concerned

with the Tasmanian wheat marketing arrangements.

ORGANISATION NAME DATE

Australian Federation of Consumer Organisations Inc. R Holmes 01.02.85

Australian National Line M Moore-Wilton

A Booth K Walsh D Summer

26.11.84

and 18.11.84

Australian Wheat Board R Paice 23.11.84

Hobart Marine Board S FitzGerald

D Taylor 21.11.84

Tasman Starches Pty Limited

G Grace J T Honan 22.11.84

Tasmanian Department of Agriculture D J Fergusson 07.11.84

Tasmanian Grain Elevators Board N Bridge 20.11.84

Transport Tasmania R Morris 21.11.84

Union Steamship Company of Australia Pty Limited K Farrell D Jury 04.12.84

Waterside Workers' Federation of Australia T Bull 29.01.85

Ill

APPENDIX VII AUSTRALIAN WHEAT PRICES, 8 JANUARY 1985

The Australian Wheat Board publishes wheat prices at regular

intervals. Table VII.1 lists prices current on 8 January

1985.

TABLE VII.1 AUSTRALIAN WHEAT PRICES, 8 JANUARY 1985

Australian standard White for shipment US$

January 152.00

February 152.00

March 152.00

April 152.00

May 152.00

June 152.00

Prime Hard 14 per cent for shipment US$

January 168.00

February 168.00

March 169.00

April 170.00

May 170.00

June 170.00

Stockfeed wheat prices $A

January 193.90

February 194.40

March 195.40

April 195.90

May 196.40

June 196.90

Notes: 1. 2.

3.

Source:

Prices are f.o.b. eastern Australia. For a stockfeed order in excess of 500 tonnes

there is a discount of $5 per tonne. For a

stockfeed order in excess of 100 tonnes, there is a discount of $2 per tonne. On 8 January 1985 the exchange rate was

US$1.00=$A0.8156. Australian Financial Review, 9 January 1985 .

113

APPENDIX VIII EXTRACT FROM A PAPER BY THE TASMANIAN

DEPARTMENT OF AGRICULTURE ON POTENTIAL FOR

INCREASED GRAIN PRODUCTION IN TASMANIA

The term 'grain1 as used in this paper, refers to barley,

wheat, oats and triticale. Of these, barley is the principal component.

Tasmania imports from 85 000 to 95 000 tonnes of wheat annually. These imports could be satisfied by locally grown grain as there is sufficient arable land available for growing grain. Much of this land is currently being

used for far more profitable enterprises. However, land is but one of the constraints in production.

Land

It is estimated that there are approximately 160 000 ha of land in Tasmania that is suitable for crop

production. Of this area some 98 000 ha is planted

annually. Cereal crops are grown currently on around 45 000 ha, but only 22 000 ha is harvested for grain.

The remaining 23 000 ha is used for green feed, silage or hay. Of the remaining 53 000 ha, 32 000 ha is sown to

fodder crops and 21 000 ha sown to high value

horticultural crops.

This cropping pattern reflects the dominance of the livestock industries within the Tasmanian agricultural sector. Much of the cereal harvested for grain is the result of opportunist cropping activities rather than an

integral part of farming operations. This is so even in those regions that are suited to grain growing.

Research carried out by the Department and the University has shown that, with the correct management input,

commercial yields can be increased from the current 2t/ha to around 4t/ha. Therefore, to become completely

independent of imported grains, a further 12 500-17 500 ha of grain needs to be grown. This represents an

increase of some 50-75 per cent of current production. To increase grain production to this extent, land that is currently being used for high value horticultural crops or relatively stable and similar valued grazing

enterprises will need to be used for grain production.

This development would need to occur in a situation where there are no economic pressures discouraging growers from increasing cereal production.

115

There are also technical problems associated with

expanding wheat production within the Tasmanian

environment. Wheat and triticale growing has been

hindered by the lack of suitably adapted high-yielding and disease-resistant varieties. Cultivars selected from mainland breeding programmes are seldom reliable under Tasmanian conditions. And the setting up of a local

breeding programme is unlikely to prove cost effective given the factors which hinder the large scale adoption of cereal growing within Tasmania.

Due to the technical problems associated with growing wheat, it is felt that, if local grain production is to be increased, efforts should be concentrated upon

increasing the production of barley. To this end, the University and the Department have been conducting joint trials into the acceptability of growing Triumph barley and other European varieties within the Tasmanian

environment. European wheat varieties are also being trialled under Tasmanian conditions.

Expertise

A skilled labour force will be needed to grow increased areas of grain economically within Tasmania. The current labour force is not highly skilled in the area of grain production because to a large extent the current growers are opportunists. In many cases they are not committed to grain production and as a result do not adopt cultural practices that will lead to maximized returns. They are more interested in growing the crop using the least

amount of input.

Current research shows that in order to maximize returns, high input cropping is the appropriate option within the Tasmanian environment. This requires skill and

commitment on behalf of growers, and a change in the

attitude of those currently involved.

Present grain growers are essentially skilled graziers who are able to manage the feed requirements of their livestock and squeeze in a grain crop for a little extra cash flow. A large increase in grain production will require these producers to accept that grain production must become an integral part of their farming operations.

Capital considerations

Grain is currently grown with a minimum of equipment. This is necessary given the opportunist nature of the local industry. To increase production to levels

required to achieve a greater degree of self-sufficiency will require a large investment in equipment for

116

production. As the current degree of cropping plant would cost in the order of $50 000-75 000 , it is unlikely that in the prevailing economic climate growers will make this investment in order to grow a crop which shows no

appreciable economic benefits over current enterprises.

Farms within Tasmania are smaller than those on the

mainland. This is especially so in those areas most

suited to high return grain production. Therefore, investment in equipment will be restricted to small scale plant.

A second factor which will restrict the scale of plant is the geography of many of the paddocks that are suited to grain production. The undulations within a paddock and its size will restrict the ability of an operator to use a larger machine in grain growing operations.

The fact that the scale of equipment will be limited is likely to lead to a higher production cost than that

associated with grain production on the mainland.

117

APPENDIX IX PRIME MINISTER'S LETTER CONCERNING STORAGE OF

WHEAT IN TASMANIA

On 17 July 1978 the then Prime Minister, the Right Honourable

J M Fraser, MP, wrote to the then Tasmanian Premier and

Treasurer, the Honourable D A Lowe, MHA, concerning the

shipment of wheat to Tasmania and the possible need for

additional storage. A copy of this letter, as reproduced

below, was provided by the Tasmanian Grain Elevators Board.

COPY

PRIME MINISTER - CANBERRA

DATED 17th July 1978

My dear Premier,

I refer to our recent correspondence concerning arrangements for the future transport of wheat to Tasmania.

In your letter of 18 April, you outlined two further options now before your Government, making a total of four. These are:

. the use for a further five years of the "North Esk";

. the use for a much longer period of a 15,000 tonne bulk

carrier;

. an offer by Bulkships Limited to provide a special wheat carrier; and

. an offer by Tasman Starches Pty. Ltd. , to charter a bulk carrier, bill the Shipping Fund for freight, build the necessary storage and provide free road transport for wheat from Devonport to Launceston.

In the Commonwealth's view, the least economical shipping arrangements would be the one that involved the refitting of the "North Esk". I am informed that a refit, besides being a very costly exercise, would only extend the life of the

vessel by four or five years. On the other hand, I

understand that considerable savings in the cost of

transporting wheat to Tasmania would result from use of the 15,000 dwt carriers and, for that reason, my Government would support that solution.

119

With regard to your suggestion that extra storage facilities for wheat be built from a Commonwealth grant, I would point out, as I did in my letter of 4 February 1977 to the then

Premier, the Hon. W.A. Neilson, that the Commonwealth

considers this matter entirely the responsibility of your State, just as it is for the other States.

Furthermore, it would also follow that should your Government decide to accept the Bulkships offer, any guarantee that may be required must be a matter for your Government. Likewise the internal transport of wheat within your State is also a Tasmanian matter.

I should also mention in the context of the coming

re-negotiation of the Wheat Stabilization Scheme that there is no guarantee that other States will agree to continue the Shipping Fund in its present form. The additional costs that would be imposed on the Australian consumer if a small vessel were used rather than the 15,000 dwt bulk carriers might well influence the other States in their consideration of this matter. If the Fund were not continued, I might add that

there would be no automatic Commonwealth freight subsidy on wheat shipments under, for example, the Tasmanian Freight Equalisation Scheme.

I bring the abovementioned matters to your notice in relation to Mr. Batt's suggestion in his telex message of 26 May 1978 that moneys from the Fund be used for additional equipment at Hobart and Devonport for the discharge of wheat from bulk carriers. You would realise, of course, that the other

States would have to agree to the use of moneys in the Fund for purposes of other than meeting the cost of freight to Tasmania.

Yours sincerely,

(Malcolm Fraser)

The Hon. D.A. Lowe, MHA Premier and Treasurer of Tasmania, Hobart. Tas. 7000.

120

APPENDIX X EXPORT AND DOMESTIC WHEAT PRICES, 1951-52 TO

1983-84

Table X .1 provides details of the average prices at which the

AWB has offered wheat for sale on the export and domestic

markets from 1951-52 to 1983-84.

As outlined in Chapter 4, the relevant legislation set

domestic wheat prices on the basis of separate human

consumption and stockfeed use in the years 1951-52 and

1952-53, and of separate prices for human and non-human

consumption from 1969-70 to 1972-73. From 1979-80 to 1983-84

separate domestic prices were set for human consumption,

stockfeed, and industrial wheat. In all other years only a

single home-consumption price was set.

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TABLE X.l EXPORT AND DOMESTIC WHEAT PRICES ($/Tonne)

Year Export

(f.o.b.) Human Consumption(a )Stockfeed(a ) (f.o.r.) (f.o.r.)

Industrial (f.o.r.)

1951-52 - 36.74 44.09 -

1952-53 - 43.79 51.14 -

1953-54 - 51.90 -

1954-55 - 51.90 -

1955-56 47.64 49.45 -

1956-57 50.77 50.68 -

1957-58 53.44 52.67 -

1958-59 49.55 53.89 -

1959-60 49.14 55.12 -

1960-61 50.40 56.34 -

1961-62 53.95 58.18 -

1962-63 56.62 58.64 -

1963-64 56.62 53.58 -

1964-65 51.07 53.89 -

1965-66 54.88 56.22 -

1966-67 54.96 57.50 -

1967-68 52.19 60.81 -

1968-69 50.82 62.83 -

1969-70 48.32 63.38 52.73 -

1970-71 51.72 63.93 53.28 -

1971-72 53.77 65.40 54.75 -

1972-73 97.38 67.63 56.97 -

1973-74 135.17 71.00 -

1974-75 116.52 83.40 -

1975-76 106.39 99.32 -

1976-77 96.54 105.40 -

1977-78 116.48 111.16 -

1978-79 137.63 116.61 -

1979-80 153.18 130.78 140.50 133.08

1980-81 152.03 156.12 151.37 151.67

1981-82(b ) 152.50 187.20 149.78 151.15

1982-83(c ) 179.92 203.46 184.11 174.16

1983-84(d ) 152.20 219.41 175.24 170.34

Notes: Year commencing 1 December.

Simple averages of daily asking prices for FAQ (to 1973-74) and ASW (1974-75 to 1980-81).

(a) Includes Tasmanian shipping levy.

(b) 1 December 1981 to 30 September 1982.

(c) 1 October 1982 to 30 September 1983.

(d) All export prices quoted in $US from December 1983.

Source: Australian Wheat Board.

122

APPENDIX XI SUGAR PRICING

Since 1915 the marketing of sugar in Australia has been the

subject of sugar agreements between the Commonwealth and

Queensland Governments. The 1923 Agreement established the

features which all later agreements have followed, and since

1932 the agreements have regularly been brought before

Commonwealth Parliament for legislative approval in Sugar

Agreement Acts. The 1984 Agreement, to apply until 1989, is

expected to come before Parliament in autumn 1985.

The pattern, established since 1923, is that the State of

Queensland, acting through the Queensland Sugar Board,

acquires compulsorily the entire Queensland sugar product

(which currently accounts for 95 per cent of the Australian

total) and purchases all of the New South Wales sugar product

(which currently accounts for approximately 5 per cent of the

Australian total). The sugar acquired is refined by CSR

Limited, which has refineries at every mainland State

capital, and Millaquin Sugar Company Pty Limited, which has a

refinery at Bundaberg in Queensland. Queensland retains

ownership of the refined sugar. CSR, acting on behalf of the

Queensland Government, markets the sugar in Australia and

internationally.

All agreements since the 1923 Agreement have contained a

principle of common pricing for the domestic market. (Prior

to 1923, when the Commonwealth marketed sugar, common pricing

may well have been the practice, but none of the provisions

in agreements made before that time required common

pricing.) In the 1923 Agreement, the principle of common

pricing was reflected in provisions whereby the Queensland

Government made the following undertakings: to sell refined

sugar at the same price in each capital city of the

Commonwealth; to provide, at a prescribed price per ton at

refineries, sugar to be used for the manufacture for

123

consumption within Australia of jams, canned fruits,

preserves, and condensed milk; to make refined sugar

available at such a price as to enable it to be retailed to

the public in all capital cities at a price not exceeding

4 l/2d per pound to cash buyers.

The provisions incorporating the principle of common

pricing have undergone a variety of modifications since

1923. In the 1984 Agreement, the principle of common pricing

is reflected in provisions which oblige Queensland to supply

sugar and sugar products at Australian refineries and at

suitable distribution centres in Darwin, Hobart and

Launceston at prices not exceeding prices which are

prescribed (subject to annual variation) for refined bulk

sugar and which are calculated according to a formula

(related to the refined bulk-sugar price) for sugar products

other than refined bulk sugar.

Launceston has been included in the guarantee of common

maximum pricing since the 1928 Agreement. There was a

special provision for Darwin, with a formula taking account

of transport costs in all agreements from 1940 until 1969

(the 1969 Agreement applied until 1979). The 1979 Agreement

was the first to bring Darwin into the common maximum price

guarantee. Fremantle, as well as Perth, was guaranteed a

common maximum price in all agreements from that of 1928

until the 1969 Agreement.

All agreements since 1923 have contained provisions

relating to the use of sugar in the manufacture of goods for

export from Australia. The current agreement requires

Queensland to pay such exporters a rebate sufficient to cover

the amount by which the domestic price exceeds what users

would have to pay if they were free to purchase imported

sugar.

124

The Industries Assistance Commission discussed common

capital city pricing in paragraph 3.3.2 of The Sugar

Industry, Report No. 332, AGPS, Canberra, 1983.

125

APPENDIX XII THE OPINION OF THE SECRETARY OF THE ATTORNEY-

GENERAL'S DEPARTMENT

The Inter-State Commission received from the Secretary of the

Attorney-General's Department a formal opinion in respect of

the constitutional validity of the Tasmanian Wheat Freight

Subsidy in view of s. 99 of the Constitution. This opinion

is reproduced below.

OPINION

I am asked to advise as to the constitutional validity of the existing statutory scheme, contained in sections 32 and 33 of the Wheat Marketing Act 1984, for the payment by the Australian Wheat Board of the Bass Strait freight

costs of shipments of wheat to Tasmania.

2. In particular, I am asked whether the scheme is

consistent with section 99 of the Constitution which provides as follows:

' The Commonwealth shall not, by any law or regulation of trade, commerce or revenue, give preference to one State or any part thereof over another State or any part

thereof.1

3. In my opinion, for the reasons set out below,

sub-section 33(3) is constitutionally vulnerable in at least one respect by reason of section 99 of the

Constitution. On the other hand, the complementary State legislation is not subject to s. 99 and the subsidies paid pursuant to that legislation are valid in so far as they are paid out of moneys received by the Board under the State legislation.

The Statutory Provisions

4. Sub-sections 32(2) and (3) of the Wheat Marketing Act 1984 ('the Act') provide for the determination by the Australian Wheat Board ('the Board') of the prices for Australian standard white wheat (ASW). Sub-sections

32(5) and (6) then provide as follows:

'(5) There shall be added to a price determined under sub-section (2) or (3) such amount as the

Minister, after consultation with the Board, considers from time to time to be necessary to be included in the price of all wheat sold by the

Board for use in Australia for the purpose of

127

enabling the Board to meet the costs of shipment of wheat (including overseas wheat) that it is required by section 33 to meet.

(6) The price in respect of wheat that is not

Australian standard white wheat in bulk sold free on rail at a port of export is such price as the

Board determines by adding to, or deducting from, the price that would be applicable to the wheat if it were Australian standard white wheat in bulk sold free on rail at a port of export an

amount by way of allowances in respect of the

quality of the wheat, the conditions of sale and the place of delivery of the wheat.'

5. The relevant provisions of section 33 are as follows:

'33(1) Subject to this section, the Board shall keep a separate account of -(a) moneys received by the Board by reason of the inclusion in the price for a sale of wheat to

which section 32 applies or a sale in

Australia of overseas wheat of an amount

referred to in sub-section 32(5);

(b) such proportion of the moneys received by the Board under section 50 as is equal to the

amounts referred to in paragraph 6(c) of the Wheat Tax (Permit) Act 1984 that would have been received under that Act in respect of all permits issued by the Board under section

22 of this Act or the corresponding provision of a State Act with respect to a season if

the total quantity of wheat authorized by those permits to be purchased during that season had been the same as the total

quantity of wheat that was purchased under those permits during that season; and

(c) payments made out of the moneys referred to in paragraphs (a) and (b),

and the Board shall not apply those moneys except in accordance with this section.

(3) The Board shall use the moneys referred to in

sub-section (1) in meeting the costs of shipment of wheat (including overseas wheat) by the Board to a port in Tasmania, and shall not use for that purpose any other moneys derived by it from the sale of wheat acquired by it under this Act or

from the sale in Australia of overseas wheat.

128

(4) The Board shall not meet any costs of shipment of

wheat under sub-section (3) to the extent that those costs exceed the costs of shipment of that wheat from whichever of the following ports in Victoria the costs of that shipment are lower:

(a) Geelong,

(b) Portland.'

6. In paragraph 33(1)(a) of the Act the reference to 1 a sale of wheat to which section 32 applies' is a reference to a sale by a contract made in a Territory.

Complementary State legislation in all states makes, or it is assumed will make, corresponding provision in respect of moneys received by the Board (pursuant to the State legislation) for wheat sold by contracts made in the respective States.

7. Paragraph 33(1)(b) of the Act, concerning moneys derived from the proceeds of the Wheat Tax (Permit) Act 1984, is a new provision: it has no counterpart in the Wheat marketing Act 1979 or in previous legislation. It

is a constitutionally significant provision since it means that, by contrast with the 1979 Act and previous legislation, the moneys used to pay the subsidy now

include amounts derived from taxes raised under a

constitutional power other than the Territories power in section 122 of the Constitution, namely, taxation power in section 51(ii). The constitutional basis of the

requirement in sub-section 33(3) to spend those amounts on meeting the cost of shipment to Tasmania cannot, of course, be found in the taxation power or in section 122 of the Constitution. In my opinion, in respect of

shipments to Tasmania from other States or overseas, the constitutional basis for sub-section 33(3) of the Act, certainly in respect of moneys received for the issue of permits issued under the State Acts, and probably in

respect of all the other moneys referred to in

sub-section 33(1), can be found only in section 51 (i) of the Constitution - the power with respect to trade and commerce with other countries and among the States.

The Purpose and Effect of the Subsidy

8. It appears that the subsidy arises from the policy of making ASW available at a common price throughout

Australia at all 'ports of export1 . Tasmania has no 'port of export' : although it grows some wheat, the amount is much less than Tasmania needs, and Tasmania exports none. It was decided in 1953 that the Australian Wheat Board should meet the costs of shipping wheat to

Tasmania from any 'port of export', though it appears to

129

have been understood that Tasmanian importers would not seek supplies from any source north of Newcastle. In 1984 the rate of subsidy was restricted to an amount not exceeding the rate from Geelong or Portland (whichever is the lower) to the relevant Tasmanian port.

9. It appears, however, that the operation of the

subsidy extends beyond the scope of the policy mentioned above. Although the basis of the policy was the

availability of ASW at common prices at ’ports of

export', the subsidy is not in fact confined to ASW

wheat: it includes, for example, prime hard wheat from areas for which Newcastle is the 'port of export1

('Newcastle wheat'). There is a demand in Tasmania (as in some other places in Australia) for Newcastle wheat for certain purposes in preference to ASW. It appears that the freight rate from Newcastle to the Tasmanian ports is only a little greater than the rates from

Geelong/Portland to the Tasmanian ports. Consequently, the Tasmanian importers pay only a small amount, whereas Geelong/Portland importers of Newcastle wheat must pay the full freight costs from Newcastle, or from some other place in northern New South Wales (in which case they

receive a rebate from the Board calculated according to the cost that would have been incurred by the Board in transporting wheat from that other place to Newcastle). In such a case, therefore, the scheme operates to put a Tasmanian importer of Newcastle wheat in a better

position than Geelong/Portland importers of Newcastle wheat, or other importers of that wheat outside the

Newcastle zone.

Section 99 of the Constitution

Laws of 'trade or commerce'

10. In so far as it refers to a ' law or regulation of

trade (or) commerce', section 99 of the Constitution applies only to a law that is made, or that could have

been made, under section 51(i) of the Constitution

(Morgan v. The Commonwealth (1947) 74 CLR 421; The

Commonwealth v. Tasmania - The Franklin Dam Case (1983) 46 ALR 625, at 714-5, 738 and 795 per Mason, Murphy and Brennan JJ respectively). Perhaps section 99 is further limited to laws that could only have been made under

section 51(i) (Morgan's Case, at 455).

11. In my opinion, sub-section 33(3) of the Act, in so far as it applies to shipments to Tasmania from other States or from overseas, is probably a law that could have been made only under section 51 (i) of the

Constitution (see paragraphs 6-7 above). Theoretically at least, sub-section 33(3) also applies to shipments to

130

Tasmania from a Territory. Nevertheless, I think that sub-section 33(3), in its application to shipments to Tasmania from other States or overseas, is subject to section 99 of the Constitution.

'Preference' to Tasmania

12. The next question is whether sub-section 33(3) gives 'preference' to Tasmania, or any part thereof, over any other State or part thereof.

13. Existing judicial authorities on the meaning of the word 'preference' in section 99 indicate that the word refers to a 'tangible advantage of a commercial character or any legal means of securing it' (Crowe v . The

Commonwealth (1935) 54 CLR 69 at 83 per Rich J), or 'some tangible advantage obtainable in the course of trading or commercial operations, or at least, some material or sensible benefit of a commercial or trading character'

(ibid., at 92 per Dixon J). For generally similar

remarks see Elliott v. The Commonwealth (1936) 54 CLR 657 at 699-672, 678, 680, 683--701 and 704 per Latham CJ, Rich, Starke, Dixon, Evatt and McTiernan JJ

respectively. In Elliott Dixon J (at 683 ) said that section 99 'does not call upon the (High) Court to

estimate the total amount of economic or commercial advantage which does or will actually ensue'.

14. While there are some uncertainties arising from the use of varying expressions in the High Court judgments, it seems clear enough that, at least in the respect

mentioned in paragraph 9 above, the present legislation does give 'preference' to Tasmania over other States. Tasmanian importers of Newcastle wheat, unlike other users outside the Newcastle zone, pay very much less than the actual freight costs. It is true that

sub-section 33(7) requires the Board to take such

measures as are practicable in order to obtain recoupment of the cost of shipment of any wheat that is used in the production in Tasmania of wheat products that are sent to other States for use in Australia. However, that still

leaves a Tasmanian importer with a ' tangible commercial advantage', as compared with other importers of Newcastle wheat, where the wheat is to be used in the production of wheat products for use in Tasmania or for export to other

countries (as appears to be the case with a Tasmanian starch/gluten manufacturer).

15. It is possible that, if the full operation of the

present scheme were examined, other kinds of

'preferences' might be discerned. For example, there could be questions arising from the fact that the costs are borne by the Board for shipments to no less than 3

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Tasmanian ports. However, it seems sufficient for

present purposes to have identified the preference outlined above.

16. The constitutional objection would be avoided if the subsidy were paid in the form of a grant to Tasmania, at least if the Commonwealth legislation did not contain any conditions requiring the Tasmanian Government to

distribute the moneys to the importers of the wheat (see W.R. Moran Pty Ltd v . Deputy Federal Commissioner of Taxation (1940) 63 CLR 338).

17. It remains to repeat that the complementary State legislation is not subject to s . 99 and that the subsidies paid pursuant to that legislation are valid in so far as they are paid out of moneys received by the Board under the State legislation.

P BRAZIL

7 February 1985

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GLOSSARY

Auger

Australian Feed (AF)

Australian General

Purpose (AGP)

Australian Hard (AH)

Australian Prime

Hard (APH)

Australian Soft (AS)

Australian Standard

White (ASW)

Backhaul

Backloading rate

a screw conveyor used for the movement

of grain.

poor standard, low protein wheat

marketed as stockfeed.

poor standard, low protein wheat, some

of which may be suitable for milling,

the remainder for stockfeed.

wheat of proven breadmaking quality with

protein levels between 11.5 and 13.5

per cent.

high quality wheat with a minimum protein

level of 13 per cent, ideal for starch

production.

low protein wheat suited to the

production of biscuits, cakes and pastry

goods.

multi-purpose wheat with a protein level

generally between 9.5 and 12.0 per cent.

the return movement of a conveyance

which is providing a traffic service of

known proportion in one direction.

the additional rate charged for

providing a backhaul service. The

charges for shipment on this leg are

generally the lowest.

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Bushel a dry measurement of volume; 1 tonne of

wheat = 36.7 bushels.

Cargo, bulk cargo shipped loose in ships' holds or

tanks. For the purpose of this report,

goods normally exported in large

quantities on specialised ships are also

classified as bulk cargo.

Cargo, cellular cargo shipped in cells or containers.

Cultivar a formally registered breeding strain of

plant.

Dead-weight tonne the total load of cargo, fuel, stores and

(dwt) ballast which a vessel can carry.

Fair average term used to describe a standard of

quality (FAQ) wheat; used in wheat marketing until

1974.

Free on board delivery of the goods with all charges

(f.o.b.) paid on board the ship at the terminal

port. Since the goods have not left the

harbour, all export taxes and costs

involved in documents for overseas

shipments would be assessed to the buyer.

Free on rail delivery of goods with all charges

(f .0.r .) paid on board the wagons at the rail

siding.

Grain thrower a conveyor which operates with a sling

mechanism. Grain is fed to the grain

thrower by an auger or a belt conveyor.

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Horizontal storage a shed in which grain is placed in bins for each of the different grades.

Natural terminal in terms of transport costs and State port boundaries, the port most suitable for

the delivery of wheat from country silos.

Permit wheat wheat obtained through a permit issued

by the AWB. The permit allows direct

purchase of domestic stockfeed wheat

from growers.

Port of export the port from which a ship clears or

sails for another country.

Stowage factor relationship between the volume

measurement and the weight of a cargo.

Tr iticale a hybrid grain of wheat and rye.

Vertical storage a silo in which grain is placed in bins

for each of the different grades.

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ABBREVIATIONS

AC Law Reports, Appeal Cases

AF Australian Feed wheat

AFCO Australian Federation of Consumer Organizations Inc

AGP Australian General Purpose wheat

AGPS Australian Government Publishing Service

AH Australian Hard wheat

ANL Australian National Line

APH Australian Prime Hard wheat

APPM Associated Pulp and Paper Mills Limited

AS Australian Soft wheat

ASW Australian Standard White wheat

AWB Australian Wheat Board

AWF Australian Wheatgrowers Federation

AWSP Australian Wheat Starch Producers

CLR Commonwealth Law Reports

dwt dead-weight tonne

FAQ Fair average quality

f.o.b. free on board

f . o . r . free on rail

I AC Industries Assistance Commission

ISC Inter-State Commission

MV Motor Vessel

TFCS Tasmanian Freight Compensation Scheme

TFES Tasmanian Freight Equalisation Scheme

TGEB Tasmanian Grain Elevators Board

TTC Tasmanian Transport Commission

TWFS Tasmanian Wheat Freight Subsidy

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