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Thursday, 16 August 2012
Page: 5532

Senator URQUHART (Tasmania) (12:20): I rise to speak on the report of the Senate Select Committee on Australia's Food Processing Sector and I begin by also recognising the work of the secretariat—Richard, Ruth, Erin, Robert, John, Sandra and Tim. Thank you, and to others who assisted the committee members. I also recognise the work of Matt from my office and Frances from Senator Stephens' office: thank you both. I recognise the work of the Chair, a fellow senator for Tasmania, Richard Colbeck, for proposing the committee and the broad terms of reference.

However, I have to express government senators' disappointment that all of the terms of reference are not covered as comprehensively as they should have been. It is no secret to this place that my background is the food processing industry, both working in and later representing workers in the industry. For the opposition senators to place such importance on stripping away the wages and conditions of Australians working in the food processing industry flies in the face of the purpose of Senate select committees, which, to my knowledge, are meant to leave politics at the door and investigate issues. The sections of the report on wages and conditions show the true colours of those opposite. They are not interested in working Australians. It is clear from Senator Colbeck's, Senator Edwards's and former Senator Fisher's efforts that, as much as the Leader of the Opposition tries to pretend, if the opposition is elected Work Choices is definitely not dead, buried or cremated. Those opposite think that the only way to increase productivity in business is to drive down wages and conditions of working Australians. To that I say: think harder and think smarter.

The committee report references the comments of McCain Foods. They said:

The current penalty rates regime in Australian award structures do not encourage continuous 24 hour 7 day processing. Overtime and shift penalties are much higher in Australia than in New Zealand, which again contributes to lower productivity and lack of competitiveness in Australian made products

By including this quote, coalition senators are supporting a notion that people who work shift work should receive no extra support, no extra assistance to cope with the irregular sleeping patterns and no extra assistance to cope with not being able to access services during normal hours—just get the worker in and flog them until they drop.

The government senators' dissenting report catches out the coalition senators on their selective quotes in relation to workplace relations. Three instances are provided where a coalition senator asked a business representative about the impact of the Fair Work Act and modern awards on the business, and on each of these occasions the business representative did not express the kind of approach outlined by McCain. When questioned by former Senator Fisher on whether the Fair Work Act had hindered business, Mr Vincent Pinneri of SPC Ardmona, a major food processor, said:

No, it has been irrelevant.

Further, at the same hearing that McCain appeared at, Mr Mark Kable of the Tasmanian Agricultural Productivity Group said:

Everything seems to be more efficient over there—

in New Zealand—

than what it is here in Australia. The whole costing structure of production, packing, road transport, sea transport—every sector is cheaper than what it is here in Australia when you break every component down.

It is not just about wages and conditions, is it? It is definitely not. Further evidence of that came from the Sydney hearing of the committee, where not one question was directed by coalition senators to the AMWU about wages, conditions or flexibility—not one question to the union representing workers in the food processing sector about wages, conditions or flexibility let alone the impact of the Fair Work Act and modern awards on their members and their members' workplaces. It is as though opposition senators had already made up their minds.

As the senators are aware, the government have recently released a comprehensive independent review of the Fair Work Act. The review found that the legislation provides a number of avenues for flexibility. Under the Fair Work Act, an employer and employees can negotiate an enterprise agreement on any matters that pertain to their relationship. There are no unnecessary restrictions on what can be included in an agreement. The Fair Work Act requires that such an agreement leave employees better off overall compared with the applicable modern award. This provides flexibility to change award conditions, so long as employees are better off overall.

The independent review found that labour costs have not increased, with overall wage growth since 2009 around its decade-long average. It rejected claims that flexibility is created by cutting wages and conditions. It did not recommend the reintroduction of AWAs, or any form of individual contract that coalition senators in their recommendation No. 26 are so desperately asking for. In fact, the review identified that AWAs were bad for many employees, especially for low-skilled and vulnerable workers. The review found many of these workers have suffered the unilateral removal of conditions, a reduction in their take-home pay and were worse off overall compared with the relevant award. AWAs undermined the safety net, often for those who needed protection most. The review had no appetite to reintroduce this arrangement. Further, the review found no convincing evidence that the act impedes productivity growth. In fact, it cautiously noted some recent figures indicating improvements in productivity.

The review found that, since the act came into force, important outcomes like wages growth, industrial disputes, the responsiveness of wages to supply and demand, the rate of employment growth and the flexibility of work patterns have been favourable to Australia's continuing prosperity. Government senators noted in our report that Fair Work Australia is currently undertaking a review of modern awards, including in relation to penalty rates and flexibility. I once again express my disappointment that so much emphasis in the committee report reflects highly selective evidence on industrial relations matters.

I now turn to the other highly politicised section of the committee report: energy costs. Government senators fundamentally disagree with much of the evidence presented to the committee on the carbon pricing policy. There are many examples in the food processing sector that highlight the potential for innovation and opportunities being harnessed through the clean energy technology package. Government senators note that a significant portion of the revenue from carbon pricing is spent on industry assistance. Of particular relevance to the food processing sector is the Clean Technology Investment Program for manufacturing businesses, which provides government co-investment into new capital which lowers energy costs and improves competitiveness.

In evidence to the committee, Mrs Mac's, a large-scale bakehouse, expressed appreciation for the range of government grants to assist businesses. Mr Beros said that through investing with government Mrs Mac's had a 28 per cent decrease in water heating costs, a 25 per cent increase in one of their line speeds using the same level of energy input and a 30 per cent efficiency gain in some of their condensers. I also refer to Crafty Chef from Emu Plains in New South Wales who had received nearly $500,000 from carbon pricing revenue to install a new commercial blast freezer. This will reduce the carbon intensity of its operations by 54.1 per cent, reduce energy intensity by over 56 per cent and boost turnover by 150 per cent to $50 million.

In our dissenting report, government senators refuted claims made by Campbell Arnott's using modelling from the Australian Food and Grocery Council that pricing carbon will have about a 4.5 per cent impact on industry operating profits. This modelling did not include the assistance measures to industry and is an overestimate of the actual impacts on the sector. We also highlighted that, although Lion Pty Ltd is blaming the carbon price for increased admin costs as it is not a directly liable business, there should be not be any additional administrative burdens.

The evidence throughout the report on carbon pricing indicated the extent of community misunderstanding about the actual impacts on Australian businesses. Treasury modelling of the food manufacturing industry forecasts growth of 108 per cent by 2050 and also forecasts that carbon pricing will result in food processing outputs two per cent higher in 2050 than without it. Treasury's broad conclusion is that carbon pricing will drive a shift of economic activity towards low emission intensive sectors of manufacturing like food processing. The government senators consider that the food processing sector needs further assistance to understand the real implications of the carbon price on the food supply chain and the mechanism for determining those costs and how to pass them on to consumers.

The report highlights some areas of reform that will be critical for the food processing sector. We were provided with inspiring examples of new and emerging products that are capable of transforming parts of the sector. We need to remember, however, that the industry is best served by an innovative and adaptive business culture and a trained and supported workforce.