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Thursday, 16 August 2012
Page: 5535


Senator EDWARDS (South Australia) (12:30): I rise also to speak on the inquiry report tabled by the Select Committee on Australia's Food Processing Sector. This nearly year-long inquiry took us the length and breadth of this country, where we spoke with myriad businesses, industry organisations, grower groups, academics and government agencies. We visited a diverse number of businesses across Australia, including vegetable growers in Tasmania, chocolatiers in Adelaide and the seafood industry in Western Australia.

The food industry is currently in a 'perfect storm', confronted by a high Australian dollar, making exports harder and increasing competition from cheap imported products; increasing input costs, including labour, energy and ingredients; complex regulation and taxation; high market concentration; and growing private label market share. Prospects for future growth are good, based on Australia's clean, green, safe reputation for food, a burgeoning Asian middle class and a growing global population. The industry employs around 194,300 people across 10,000 businesses. There is much work to be done if the industry is to realise its full potential and harness this prosperity. This report begins that process, but there is much more that can and should be done.

This report is nine chapters long, with 34 recommendations, and is a comprehensive investigation of the industry. I congratulate our chair, Senator Richard Colbeck, and the secretariat for preparing such a massive report that is sound and perceptive. The recommendations reflect what I believe the industry and Australia needs going forward in the food processing sector.

I first turn my attention to the skills development and labour market issues chapter. What industry told us is that there is a large shortage of suitably qualified labour. For example, there is a large shortfall between the 4,000 to 5,000 job vacancies for agricultural and food science positions and the 700 to 800 science graduates each year, so we have some work to do in this area. One reason for this shortfall, we believe, is a lack of promotion in primary and secondary schools of the careers available in the food industry. Yes, that is right—it goes right back to primary schools. Some kids think that milk is grown in a packet, that chops come from a place where they also produce polystyrene trays. Poor advice from careers advisers is also to blame for the shortfall, as is the perceived 'unsexiness' of the industry with these people which is leading them away from career choices. This is profound. This is why I am currently working with the University of Adelaide and the food industry in my home state to build stronger links between tertiary institutions and industry, assist in delivering graduates who are more job ready and foster more research with practical industry outcomes.

We have just heard a dissertation from Labor Senator Anne Urquhart about the Fair Work Act and what it is doing to protect this industry. We also heard from her about energy costs and how they are not really to blame. These people have been marginalised by retail market consolidation and lack of export ability because of the high dollar that is favouring imports into this country. I am not sure what parallel universe Senator Urquhart was in during the hearings because she was sitting there on the committee with me. Further, we have been chastised about the fact that we interrogated witnesses based on their experiences with the Fair Work Act. Well, the evidence flowed and flowed, and it kept coming the length and breadth of this country. However, there were Labor senators involved in this inquiry and they failed to interrogate those witnesses. I am not sure they thought they were going to get any other evidence. We have been chastised here in this chamber about a biased level of questioning but we were on equal time during the inquiry. They had the perfect opportunity to interrogate those witnesses themselves and they failed to do so. I am not sure that they thought they would find out anything different. So I will not accept that criticism at all.

The inflexibility of the Fair Work Act impacts on the food industry disproportionately due to the nature of the industry. Harvest time, production shift work and the seasonal nature of the industry mean that flexibility is needed to ramp production up and down quickly. For example, penalty rates are having a disproportionate impact on the wine industry. I can bear witness to that experience myself, when we shut a winery because rates have become too expensive to keep it open over the Easter period and long weekends. What happens to the fruit out there that is ripe? It just has to wait. That is evidenced in the length and breadth of the wine industry, let alone in the broccoli industry and the carrot industry through Tasmania. Broccoli does not wait, but it has to wait until you can afford to pick it. Coles and Woolworths do not pay you more because you picked it on a Sunday. You cannot recoup those costs. This is a serious problem.

One of the other experiences was backpackers being employed and superannuation being taken from their pay and producers writing cheques—in one case in Shepparton—for $30,000 for the harvest season for superannuation to people who have no hope of ever collecting that money. Where are they going to find them—somewhere in Central Europe? That was an impost on business—excessive red tape. Further reforms are required. A renewed commitment to the national, seamless economy through COAG and the simplification of taxes will help improve the competitiveness of this industry. The government's carbon tax is another impost on business, which is why we have recommended that its impact be closely monitored. And of course, this tax is something which the coalition is committed to repealing, easing some of the burden which is quite obvious out there in the evidence we took on this industry sector.

The Competition and Consumer Act 2010 is designed to address anticompetitive conduct but has largely failed to serve everyone in the food processing sector. Through this inquiry we have heard how the act has seemingly failed with regard to unconscionable conduct, predatory pricing, the use of trading terms in contract negotiations and creeping acquisitions. There is a climate of fear within the industry preventing it from bringing breaches forward, and the Australian Competition and Consumer Commission have thus far failed to address industry's concerns and provide adequate anonymity and protection for people to come forward. I must say that there has been some progress and there is some level of optimism out there in industry, with the new chairman seemingly taking a new approach to this issue. The industry strongly advocated for a supermarket fair trading ombudsman similar to that operating in the United Kingdom. The report's recommendations did not go this far, instead recommending a review of the Produce and Grocery Industry Ombudsman as to its effectiveness or lack thereof.

I and a number of the other committee members considered more interventionist regulatory changes including: structural separation of supermarkets' private-label businesses, mandatory divestiture—highly controversial—of the supply chain assets and businesses, preventing retailers achieving a market share greater than 40 per cent, and other things including price monitoring, prohibiting the sale of food below cost, and trading terms all came into the conversation. These options were strongly supported by some sectors of business and peak industry bodies but were not supported by the majority of the committee.

Food labelling in this country is confusing and misleading for consumers and prevents some businesses from gaining the benefits of being wholly Australian. The Blewett report and its findings several years ago again reinforced that the momentum must be maintained. The cost pressures put on industry have meant that the investment in research and development has been dramatically cut particularly by small to medium enterprises. R&D is critical for the future innovation, productivity and competitiveness of the industry. I seek leave to continue my remarks.

Leave granted.