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Wednesday, 4 June 2008
Page: 4398

Mr SECKER (10:06 AM) —I have some things in common with the previous speaker. I too went on a Rotary group study exchange to America, in 1986. Thankfully, the member for New England was not on the panel, otherwise I might not have been able to get that trip, but certainly I have similarities to the member for Parkes. I am a wheat grower myself, my father was a wheat grower, my grandfather was a wheat grower and my son is a wheat grower, so I think I speak with some experience.

Whilst I grow wheat, I also grow barley. Up until recently, we had a go-it-alone stake with a monopoly on the sale of barley within South Australia. But many of us who live near the Victorian border use section 92 of the Constitution to export our wheat via Victoria—often at better prices. Even in South Australia we no longer have that arrangement with the Australian Barley Board because they no longer have those monopoly powers.

It is interesting that, if you talk to other farmers—as I obviously have, because I represent a very large rural seat—you will find that there has been quite a change in view on this idea of a monopoly single desk with the Australian Wheat Board in recent years. If you had asked wheat farmers in my area 10 years ago, probably 90 per cent would have said that they wanted a single desk. I think that now you would be lucky to find nine per cent of farmers that want a single desk. As previous members of this chamber have said, there is almost a generational difference between farmers. The older farmers tend to want to hold on to what they have had all their lives—the single desk and the AWB whereas younger farmers tend to want—and this is not black and white; it never is in these sorts of things—to use the experiences they have had with other grains. As I said, I am a barley grower. I have not used the pool set-up in South Australia for probably 10 years, and now it no longer exists in the form that it did. I also grow canola. I have never had a single desk for that. I grow lucerne. I have never had a single desk for that. I grow many things—lucerne seed, beans, oats—without a single desk, and I do it quite successfully. Personally, I have never had a real tie to a monopoly status for the Australian Wheat Board.

Certainly, over the past few years this debate has been raging within the wheat industry, and I will admit that I think there are differences between states. Western Australia is probably even more in favour of this legislation than Queensland or New South Wales. I am willing to accept that. The previous two speakers were from New South Wales, and I thought there would have been a bit more support for the Australian Wheat Board monopoly status that has been in existence for quite a while. But the debate has been sometimes bitter and divisive and it certainly has had widespread coverage in the rural press in my electorate. Deregulation of the wheat market challenges the very foundations of monopoly controlled marketing within Australia but, at the same time, has focused attention on many of the inefficiencies in the distribution system that has grown up around that monopoly.

Government involvement in the wheat industry began in the first years of white settlement in the eastern states when grain production, storage and marketing was socialised under a system of public farming. This subsequently failed, and the Governor of New South Wales then allowed private settlement agriculture to produce grain, with the Governor being the sole buyer. Of course, a black market in grain soon developed, and the government marketing scheme was abandoned. Thereafter, during the 1800s, government involvement was directed mainly at granting land and providing railways. The effect was to develop a wheat-farming community which was undercapitalised and dependent on government for its land and transport services. The Commonwealth government first became involved in wheat marketing when it compulsorily acquired the crop during World War I as a temporary wartime measure. During the 1920s, the wartime pools were replaced with some voluntary and some compulsory state pools, depending on the state, but growers consistently received higher returns from private traders, so the pools faded away.

With the advent of the Second World War, compulsory wheat pooling and acquisition by the government was introduced under emergency wartime powers. Since World War II, there have been at least eight wheat marketing plans. All plans have shared some common features, such as granting the Australian Wheat Board sole receiving and marketing powers for virtually all wheat grown in Australia, discriminatory pricing of wheat sold domestically, pooling of sales revenue and marketing costs, and assistance provisions which transfer some of the risk of adverse price movements to the government. Marketing arrangements for Australian wheat have changed substantially over the past decade or so. Domestic wheat marketing has been opened to competition and the AWB was re-established as a private corporation, with explicit allocation of shares to wheat producers-cum-owners. I do not dispute that these and other changes improved the efficiency of marketing and related activities with consequential benefits to wheat growers. Then we had the release of the Cole report, which had clear implications for the operation of the single desk system for Australian wheat exports. This in turn caused significant concerns for growers, both at the time and through to today.

However, the relevant question today is whether the remaining monopoly over wheat exports is helping or hindering Australia’s major export industry. In my own electorate of Barker, a large wheat-growing area, a number of producers continue to support the single export desk for wheat. At the same time, a large and growing number are keen to explore alternative marketing arrangements. I listen to their reasons and, for some, their opposition to change partly reflects an attachment to accustomed ways of doing things. Some growers tell me that they are concerned that they will be compelled to perform unfamiliar marketing functions themselves or forced to deal with international commodity traders and processors. Some producers tell me of their fear of being worse off due to reduced wheat prices or removal of the implicit cross-subsidisation that typically occurs under a single desk averaging arrangement. But, as I say to many of these farmers, they still have the option of using a pool. The Australian Wheat Board has announced quite clearly that they will still run a pool so that option is still available to those growers.

Other growers might fear a reduction in asset value and profits if competition is allowed, as well as loss of their control over marketing functions. But if you then ask them whether they fear the same thing with barley, canola, lupins, peas or any of the other many agricultural products that they grow, they have no similar fear. Given the number of significant exporters and producers of wheat internationally and the erosion of buying monopolies, it seems unlikely that Australia possesses sufficient market power in world markets to justify continuation of the export monopoly. The Australian wine industry, which is a very significant industry in the electorate of Barker, is an example of an industry that very successfully undertakes significant amounts of market development and value-adding without recourse to monopoly marketing.

Australia is a modern, open-market, competitive economy. As a matter of public policy, monopolies are not desirable and need to carry strong public interest arguments for their imposition or retention. It now makes sense to make that argument for export wheat, particularly when all other grains and rural products are happily exported, with a choice of exporters, in normal open-market arrangements. If a single desk is not needed for all other agricultural and trade products, the question must be asked: why is it in the public interest for it to be retained for wheat? I share the view of the South Australian Farmers Federation that it just cannot be business as usual, as if the Iraqi wheat scandal never happened. The pathway forward, as provided by the Wheat Export Marketing Bill 2008, will allow the wheat marketing industry to recover and prosper in the future, with viable and competitive participants.