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Wednesday, 4 November 1992
Page: 2651


Mr TUCKEY (11.40 p.m.) —The Wheat Marketing Amendment Bill, as has been already pointed out, has three functions, namely, the continuation of the Australian Wheat Board's monopoly status, the extension of the Government's guarantee for Wheat Board borrowings at 85 per cent until June of 1999 and, of course, the continued accumulation of the wheat industry fund. It is in that particular area that I wish to pass most of my comments this evening. In his second reading speech, the Minister for Primary Industries and Energy (Mr Crean), said:

  However there was general support for certain elements of these proposals and this support has been embodied in the package of the measures before the House.

The support the Minister refers to, of course, is support of the wheat industry. He goes on to say:

These elements are:

a continued build-up in the industry's capital base through the wheat industry fund levy;

a more active role for the Wheat Board in grains based value adding activities; and

a continuation of the Wheat Board's export monopoly

In fact, I can inform the Minister that he is wrong on two out of those three. There is not industry support for a continued build-up in the industry's capital base through the wheat industry fund. There is in fact at the grassroots level practically no support for that proposal. Of course, I remind the Minister that if we were talking about the role of the Wool Corporation tonight we would be talking about, as people in the industry and taxpayers in the industry have just received, the opportunity to register to cast a vote on that matter.

  The industry that the Minister and his predecessor believe is the true representative is the Grains Council of Australia. It would be an interesting race, but I believe I probably democratically personally represent more wheat growers than the Grains Council.


Mr Crean —Pity help them.


Mr TUCKEY —They have been well represented, and they keep voting me back. It will be interesting to see whether both I and the Minister return next time, but I am more like Subzero. The facts of life are that grassroots farmers are deeply concerned about this levy because they cannot afford it. That is the simple fact. I wonder why we can have a Wool Corporation and all the fuss we had about a democratic vote last year, all the remedies that apply and a proper arrangement where I received as a woolgrower the other day my application to register for a vote, yet my wheat growers do not get the same opportunity to express a view on what is a very significant part of their income.

  I received a letter the other day from consultants in my electorate who carry out work for 271 farm businesses in the central and eastern wheat belt. They have done some sums on the effect of the levy at 2 per cent. It is not that long ago that there was speculation that it should increase to the full 5 per cent provided in the 1989 legislation. I would like the Minister to listen to these figures. I do give him credit that he does come in and listen. These consultants give us all the figures and I would be happy to provide the Minister with a copy of them. The wheat industry fund at 2 per cent, expressed as a percentage of the surplus available to wheat growers in the central wheat belt of Western Australia, after operating and financing costs and tax, is 8.35 per cent of their income at that point. For those in the eastern wheat belt, it is 26.25 per cent.

  If we get down to the effect of the wheat industry fund levy, the surplus of capital and personal expenses—that is, what they have for farm disposable income—after we get rid of additional items such as depreciation is 20.07 per cent for the central wheat belt and 124 per cent for the eastern wheat belt. I am happy to give these figures to honourable members. These people are finding it very difficult and, consequently, the issue has to be considered.

  If I cannot make the grade in numbers in terms of representation, I can certainly make it in tonnes, particularly in the last couple of years. These same wheat growers are complaining bitterly about a more active role for the Wheat Board in grains based value adding activities. They made that very clear in Western Australia throughout the Newco debate. They do not want to see their hard earned money used to finance ventures of this nature, particularly within Australia. I think some of them can see some value in the attempts to develop flour milling facilities, in other words, captive markets, in foreign countries—maybe the storage facilities that are being created in Egypt—but when it comes down to financing ventures in Australia and making them captive, as they are in the meat industry, to the Wally Currans of this world they would rather not do it. They do not want to do it.

  Wheat growers happen to hold a very simple view that if there is a little bit of spare money around they would like to invest it in their own farm. Most of them at the moment would dearly love to pay off some of their debt. When the wheat industry funds started, at least the Wheat Board, as manager, could get 15 or 16 per cent on the surplus in the short term money market. Today it can get 4 or 5 per cent. So the wheat grower is seeing his money forcefully taken out of his cheque and invested at very low returns while he is still being forced to pay his bank manager real interest rates as high as 10 per cent on his own borrowings. It is lousy economics for these people. The present 2 per cent level, when the percentage of the surplus which the eastern wheat belt farmer has available for personal use and capital expenditure reaches 124 per cent—in other words, the levy is putting him into a position where he loses money on his enterprise—is quite ridiculous.

  To be fair, the Minister is right: he has huge support amongst grassroots wheat growers for a continuation of the Wheat Board's export monopoly. They want that and they do not want it fiddled with. They like it the way it is. They do not particularly want it corporatised, and they certainly do not want it privatised. That is a fact. I guess one out of three is a pretty good score for the Minister. Sometimes it is worse than that with some of his judgments.

  The simple facts are that it is hurting people; it is not necessary; and, of course, it was implemented originally with the Newco agenda—although the so-called industry representatives, to which the Minister defers, knew very well when they sold out on the old guaranteed minimum price formula for the wheat industry fund where they were headed. Newco was already being spelt out in capital letters back at the Grains Council. I think the Minister has to ask himself the question whether the Grains Council is an appropriate representative body once we start levying people or whether, as it is in the Wool Corporation, each taxpayer should have a say.

  I make this point very strongly because I feel that these people are entitled to a say about their own money, just as they are in the Wool Corporation. It is most important to these people because the only way at the moment that a wheat grower in my electorate can get an opportunity to have even minimal influence over the decisions of the Grains Council is by buying a union ticket. He has to join a rural association. That does not do much for him either unless he then becomes sufficiently active at branch level, at zone level and at a State conference level. Then, of course, if he is in one association, he actually gets the right to vote for somebody on the Grains Council; if he is in the other one in Western Australia, he does not even get that right, having paid hundreds of dollars to be a member.

  Of course, a large number of people would be quite willing to do that, if only their bank manager would let them. But the bank manager goes through their budget and says, `You are over what I think is reasonable. You cannot borrow this amount of money. A few things have to go'. One of the first things to go is their membership to a farmer organisation. People are openly disenfranchised. Therefore, the situation is wrong and should not be left that way.

  By far the majority of the wheat growers of Western Australia do not want the wheat industry fund. They do not see the need for it. In the Minister's second reading speech we read the argument that there has to be a time when the Wheat Board needs this capital base so that it can establish its own borrowings. At first it has an asset provided to it by wheat growers, namely its wheat stocks.

  I personally cannot see under the current arrangements why the Government wants to discontinue the Government guarantee. As I explained to the Minister for Trade and Overseas Development (Mr Kerin) during the 1989 debate, the chances of paying out on the new guarantee are nil. The Minister for Primary Industries and Energy has set the price. He waits until the harvesters are in the paddock before he sets the price. He has all the information about world production at that point and knows very well that the majority of the stocks will clear within months. The Government is only guaranteeing 85 per cent of it and, furthermore, as I said at the time when the Minister was setting his price, `What is 100 per cent of nothing?'. The Government is only giving a percentage guarantee on a limited amount of money. The simple facts are that the industry should have the guarantee maintained.

  I turn to the other reason why my members and farmers generally oppose the establishment of this capital base. The simple fact is that again they say that, if it is necessary to get 85 per cent of the value of their wheat in a harvest price and they have to put up some of that money themselves, why do they not just keep the money and take a smaller harvest price? In some years they do not have a wheat crop because it does not rain. They do not have any wheat to sell, so they do not get a harvest payment. If they had retained the money and not put it into this wheat industry fund, they would at least have that to help out their enterprise. But, no, the Wheat Board has that money. The logic does not even add up.

  They would be better off with what we propose, which is a retention of the Wheat Board in its present form and a 95 per cent guarantee. That is the ultimate. If the Government is going to withdraw that guarantee, then the second best option is to have a smaller harvest payment and have the wheat industry fund levy in the bank. The Minister should please remember that that is the next problem. Western Australian wheat growers are by far the greatest contributors to this and will continue to be so.

  I come to the next stage of the Minister's advice to us in his second reading speech, when he gave us the formula for the future. He said that the wheat industry fund would be used as follows—this worries me because I doubt that 2 per cent will provide $400m-plus: 80 per cent of future contributions for building up the capital base, and around 20 per cent of future contributions together with around $30m of current equity for value adding activities by the Wheat Board's subsidiary company. As I said, that is totally anathema to my people. They do not want to be involved. If they want to be involved, they are quite prepared to buy shares themselves.

  In the wool industry in Western Australia quite a big company operation was put together by farmers each putting in a couple of bales of wool and giving these people the opportunity to value add. They put it in on that basis knowing full well that they were taking a big risk with it. They went in with their eyes open and they are happy about that.

  They are not happy about someone sitting here in Canberra with a university degree and making judgments about their money. They are better businessmen than that. They still have ringing in their ears the disastrous business decisions of not that long ago which were made by some of their representatives in the Wool Corporation, and they do not see this money going the same way.

  Finally, from the point of Western Australian wheat growers, there is $100m of current equity for the Wheat Board's trading division operations. We are paying 30-plus per cent on it and practically do not get a penny back; we do not get any benefit. The simple reason is that just 3 per cent of Western Australia's wheat production goes to the domestic market. If the wheat industry fund were given back to us, we could give the Western Australian consumers two-thirds of the wheat and be no worse off. But only 3 per cent goes to the domestic market.

  That $100m is spent principally in New South Wales. There is no benefit to the people who are providing the money. Why should this continue? Why should we have to forcibly fund the Wheat Board again? If people in other States where the trading in the domestic market is much larger and much more diverse want to have the Wheat Board acting in that area—and a few who were very committed to that approach find it has not worked all that well for them, but that is another story—why can those people not fund the Wheat Board to trade on their behalf? The simple fact is that they do not and that Western Australian wheat growers get a very raw deal.

  In that case, the wheat growers do not like 80 per cent of their money going to the Wheat Board for its capital base. They like even less 20 per cent plus $30m going to fund activities which seem to be much more involved with the Minister's past activities and associations and trade union mates; they seem to be the ones who will be the beneficiaries. I mention Mr Curran in that connection.

  It is not that long ago when, as a sheep producer, I was in the position where, if I took good quality ewes to the local abattoir under the distant control of Mr Curran and said, `Here they are for nothing, delivered to the door', that abattoir was so inefficient that it could not turn them into meat and meet the demand of the international market. It could get the animals for nothing, because the only alternative we had—and we were obliged to do it—was to shoot them on the property and bury them, and we did that.

  Our meat industry system was so inefficient—to give one example, it had 50 per cent the efficiency of the American system—that it could not competitively turn out meat.


Mr Anderson —That is very optimistic. Fifty per cent is way over the top.


Mr TUCKEY —Yes. This was the situation. It is a fact that the Minister is now telling members of the wheat industry, `Put up your money and we will value add your product, but in the process it is very likely that we will have to pay you less for your wheat'. Maybe we will get to the situation where we will have to deliver the wheat for nothing. I do not see any sense in that.

  It is not much good the Minister joking with his colleague about it, because he is getting some good advice that unfortunately he never got in his previous career. As I said, the Minister is getting advice from the only electorate in Australia that is currently considered a rural electorate by the National Farmers Federation and by someone who grows wheat and who talks to wheat growers.

  I brought some evidence of that to this Parliament recently when the honourable member for Swan (Mr Beazley), whose electorate I also wander around a little, claimed that I spend more time in his electorate than my own. We disproved that, but I am in his electorate often enough to hear all the complaints about him and his Party. I suggest to the Minister that he not get too friendly with the honourable member because he will not be back—and I say that on the presumption that the Minister might be.

  The simple fact is that the electorate where I live is a very strong Labor area and the people there do not want to vote for Paul Keating and his mates. That is another bit of advice for the Minister. If members of the Labor Party are thinking of restructuring their Party, they should not include the honourable member for Swan in the hierarchy because he will not be around.

  Mr Speaker, I am very pleased to see you back in the chamber at this time. This legislation, which has the support of the Opposition simply because it is a bit of an improvement on the 1989 Act in this regard, is not fair to wheat growers, particularly in Western Australia. As individual wheat growers, they do not support the wheat industry fund. They certainly do not, as individual wheat growers, want to have their hard earned money spent on value adding. So this is a real problem.

  I hope that the Minister will also take on board my remarks regarding representation. Wheat growers are not represented at the moment. They are paying good money and, as a parallel to those in the wool industry, they are entitled to a vote if they pay the tax.

  Debate (on motion by Mr Campbell) adjourned.

House adjourned at 12 midnight.