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Tuesday, 24 September 2002
Page: 4755

Senator O'BRIEN (5:10 PM) —This report entitled The Australian meat industry consultative structure and quota allocation: US beef quota allocation has the support of all members of the Rural and Regional Affairs and Transport Legislation Committee, as I understand it. It is an all-party report, based on evidence, both oral and written, from a wide cross-section of the beef industry. Its unanimous conclusions reflect an open and comprehensive inquiry that received evidence of broad industry support for a global model.

The committee received a significant number of written submissions, took evidence from 34 witnesses and generated about 150 pages of Hansard transcript. It was clear from the evidence presented to the committee that the industry itself is tired of division on the question of quota allocation and wants a model adopted that will enhance Australia's overall export effort. Companies were happy to provide the committee with considerable details about their individual export effort to enable us to gain an understanding of the impact of the various quota allocation proposals.

I have no doubt that I speak on behalf of the chair, Senator Heffernan, and my fellow committee members when I say that we appreciated the time and effort many processors devoted to assisting the inquiry. I must place on record my thanks to Robina Jaffray, Trish Carling, Lyn Fairweather and Shirani Visvanathan from the committee secretariat. As usual, we demanded a lot of them, and they delivered. I also place on record my admiration for the manner in which my fellow senators went to work on this issue.

The report recommends the adoption of a global allocation model based on the performance of companies in the previous 12-month period. The model proposes a quota allocation every four months—on 1 November, 1 March and 1 July of each quota year. As a transitional arrangement, it is proposed that the initial specialist allocation for 2003 be based on quota year 2001, an arrangement that takes into account the difficulties faced by many processors in 2002. Certainly that is only the case for what I might call the US specialists. Beyond these transitional arrangements, the model proposes a quota allocation based on export performance in the preceding 12-month period.

In the view of the committee, this approach picks up the real-time benefits of the model proposed by Australian Meat Holdings but over a longer time frame. In addition to the difficulties faced by many companies this year, the committee also recognises the challenges a global allocation model will pose for US dependent processors. On this matter, the committee noted, in particular, evidence from processors like Mr Peter Greenham. We have therefore recommended that, in the 2003 quota year, companies that were more than 70 per cent reliant on the US market in 2001 be allocated the equivalent of their total 2002 quota allocation—that was the reference I made to 2001 earlier.

The second phase of the transition for US dependent companies will provide those companies that are 70 per cent reliant on the United States in 2003 with 85 per cent of their 2003 performance in 2004. I know that sounds rather complex, Mr Acting Deputy President, but I can assure you that it does make sense. When you have a look at it, it is simpler than it might seem.

The Minister for Agriculture, Fisheries and Forestry, Mr Truss, has no choice but to immediately adopt what I will describe as the Heffernan model—Senator Heffernan being the chair of the committee making this proposal. The appointment of a panel to advise Mr Truss on the quota was little more than an attempt by the minister to deflect some of the political pressure to which he was subjected. That is not a criticism of the members of the panel, because they are clearly competent people serving at the minister's request.

The problems Mr Truss has faced in relation to the management of the US beef quota have been very much of his own making. It is difficult to imagine how Mr Truss's panel could have formed a different view from that of the committee if it had had the opportunity to undertake the same exhaustive and transparent consultative process. I understand that the panel has been asked to report back to the minister with its recommendations regarding quota arrangements on 1 October. That is just 31 days before the commencement of the new quota year on 1 November.

Mr Sutton, AFFA's general manager of the Meat, Wool and Dairy Branch, told the committee that the panel was still working on the allocation of discretionary quota for 2002 as at 19 August. Advice to applicants on that discretionary quota allocation—an allocation for the current year—was posted on 23 August. It is with some alarm that I note that, based on evidence from AFFA, the panel allowed just eight weeks to determine how billions of dollars worth of quota entitlement should be allocated next year.

There have been some strong signals coming from Mr Truss and his department that he wants minimal change to the current arrangements for the 2003 quota year. That has more to do with administrative convenience for Mr Truss than with good public policy and good outcomes for a multibillion dollar industry that sustains thousands of regional jobs. It also reflects the impossible time frame given to the panel to consider this matter.

I asked most of the witnesses that came before the committee whether they would accept the extension of Mr Truss's model into 2003. I can tell the Senate that support for that model was extremely limited and heavily qualified. In fact, the vast majority of witnesses opposed the model. The Australian Meat Council described it as unfair. The AMC said that the situation in 2002 bordered on chaos. Mr Paul Troja from Rockdale Beef told the committee:

If the government decided to maintain the present arrangements, I believe you would see a lot of export establishments, who are holding on desperately, go broke.

He said:

I think the Truss model was a disaster and is a disaster to our industry.

The Northern Cooperative Meat Company was happy for the Truss model to carry through to 2003 but only after a substantial variation to the manner in which it was calculated—that is, a radical change to the basis on which the quota was allocated. Mr Kennedy from Kilcoy Pastoral Company told the committee:

Our company would have to give very serious consideration to closing down and winding up if that program were continued next year without significant discretionary assistance.

And the Stanbroke Pastoral Company—the world's largest cattle producer—said that it did not support the Truss model.

The minister's department was able to provide the committee with a considerable amount of data in a timely fashion. The committee appreciates that support. The department did express some concern about a model that allocated quota on a quarterly basis. The committee noted that concern and has provided for a four-month cycle. During the hearings a director of the Australian Meat Council, Mr Carl, told the committee:

We need a sure scheme in place so that people know what they are working towards.

This was a key issue for the committee and ought to be a key issue for the minister. Unfortunately, Mr Truss has again run himself very short of time in addressing quota arrangements. One would have thought that he might have learnt from last year's fiasco, but it appears not.

The basis of the Heffernan model—as I describe it—outlined in the committee report, has widespread industry support. Obviously, the industry will look at the variations that the committee has put down, and I believe that there will be widespread support for it as varied. It has, as I said earlier, unanimous support from the Labor, Liberal and Democrat senators who formed the committee. It deserves support from everyone concerned about a vibrant, export focused beef industry and a good return to the Australian economy.

I hope this is not the case, but, if Mr Truss chooses to ignore the Heffernan model, he ignores the considered views of an all-party Senate committee that happened to be dominated by members of his own government. More importantly, he will ignore the desire of the beef industry for some long overdue certainty on quota allocation. On these two counts, the minister will ignore the committee's recommendations at his own peril.