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Wednesday, 11 December 2002
Page: 7789

Senator O'BRIEN (6:36 PM) —I was wondering when I was going to get a chance to respond. With the diversity of comment in the debate, I thought David Attenborough might have liked to have passed a commentary on it—particularly on the mutual predators of the Greens and the Democrats bidding their credentials up in the environment stakes and using a tax on the food manufacturing industry as the basis for leveraging some relevance. A former colleague of mine Gareth Evans once made the mistake of saying that he felt he was suffering from `relevance deprivation syndrome'. We have seen that today from the Democrats, with their absolute need to do some sort of deal on a package that involves taxing an industry that employs 165,000 Australians just so they can get a couple of paragraphs in the newspapers tomorrow to bolster their alleged environment credentials. The Democrats asked a question today in question time, bagging the government on withdrawing funding for the CRC for Renewable Energy. They have not managed to restore that. That was very important at lunchtime; this afternoon it is wetlands in Queensland.

Senator Bartlett —We can't do everything at once!

Senator O'BRIEN —You can manage to impose a tax on the jobs of 165,000 Australians in one fell swoop by opposing this disallowance motion. It was interesting to watch the positioning of the Democrats and the Greens in relation to this motion. I will come back to the Democrats later. Senator Brown certainly had two bob each way, if you will forgive the pun. He does not really want to help the sugar industry—you would have to take that from his contribution—but he could not be seen to be opposing even a minuscule environmental outcome that might have been leveraged by the Democrats. So he had to jump on the bandwagon and oppose the motion, because he was frightened that the Greens might be seen to be not supporting some sort of environmental funding.

It is interesting to note the reference that Senator Cherry made to this being the 48th levy. I do not think he really believes this is a levy; in fact he used the word `tax' quite consistently in his contribution. He compared this to the wholesale sales tax. I suppose it is comparable in the sense that it is a tax, but he did try and confuse the argument. There are 11 principles that this government laid down as the criteria for the establishment of a levy. Senator Cherry tried to criticise a number of levies that would meet those criteria, suggesting that they were equally taxes. That has never been an argument that the Democrats have put in relation to the imposition of the majority of the levies that Senator Cherry suggested could be equated to this matter. He talked about the deer slaughter levy. He did not tell us what it paid for. It is no doubt to do with the costs of inspection in relation to the services the government provides, and research and development, and industry promotion. It is levied on its own industry. Here we have what is called a levy but is really a tax being imposed on the food manufacturing industry to help the sugar industry. He talked about the market milk levy. That probably is somewhat comparable, but the justification for that was a major restructure and deregulation of the industry, in the context where the price of market milk went down, absorbing the cost of the levy to the consumer. And it did not apply to the manufactured milk at all; it only applied to the milk that we buy in the supermarket.

Senator Bartlett —It was still a tax on milk.

Senator O'BRIEN —The reality is that it was a tax on milk, but it was offset by a reduction in the price and it did not effectively flow on to the consumer—but this will. If the Democrats are saying that every levy is sustainable on the basis that you should raise funds for any measure, then we are going to have this government bring a myriad of measures before the Senate to receive the support of the Democrats to raise additional funds, which will be great for the government because they will just sock the money away for their little war chest for the next election. We will see plenty of levies being put forward. I see that Senator Troeth is smiling. She agrees with what I am saying there.

Senator Troeth —Not necessarily.

Senator O'BRIEN —I am certain that you believe that. We are faced now with the reality that this tax is going to be imposed on the Australian food manufacturing industry, which, as I said, provides 165,000 jobs. Some people in the industry probably do not even realise what is going to hit them in 20 days, but there is no doubt that it will impact on jobs. You only have to talk to the people who run the food manufacturing industry to know that the margins are quite tight and competition with overseas manufacture is very important, yet the Australian food industry will be competing with products on the same shelves that do not attract the tax. There will be decisions taken, where companies have manufacturing operations in other countries, to move the product from Australia to, say, New Zealand. Those will be the sorts of things that will happen. Of course, that does not worry the Democrats because they are going to get a bit of publicity out of this, and that is the motivation for this.

There are several criticisms I would make of some of the points made by Senator Harris on behalf of One Nation. Firstly, let us consider his suggestion that Brazil is the problem for the sugar industry. Brazil is a major competitor and a reasonably efficient producer, but the problem is not Brazil. The problem is the European Union and the United States, with their heavily subsidised industries—with export subsidies and production subsidies that inflate the production of inefficient industries. If you took away the subsidies, they would not be producing the sugar, and the Australian sugar industry would be competing in a world market where the price would not be artificially lowered by the subsidies paid by those two large economic groupings. That is the problem for the sugar industry in Australia. Brazil is not the problem. Brazil is a major competitor, but it does not provide those sorts of subsidies at all. Yes, there has been a problem with a devaluation of the real, but we have had a devaluation too. The Australian dollar went from 65c down to 49c at one stage. Look at the effect that that had on the value of the product in US dollar terms. At one stage the Australian sugar industry was doing quite well. The recovery of the currency will pose some problems for major agricultural industries, including the sugar industry.

I was interested to hear some of the comments that Senator Harris made about the actual implementation of the package—the so-called food-on-the-table approach from the government, which is not providing food on the table—and some of the anomalies. It will be very interesting to look at those things, and I look forward to seeing how that works.

If I were going to give some credit to the Democrats, it would be for apparently placing some limits on the extension of this tax, because we have seen this government sock away money from the Ansett levy, and we do not know when it is going to stop that. This would be just another opportunity for that to happen. So we will be looking closely to see how those protections that Senator Cherry talked about will work.

Let me come to the government's position. Firstly, I invited Senator Macdonald, in his contribution, to tell us how this levy fitted in with the government's own 11 levy principles. I cannot recall one word that Senator Macdonald uttered addressing that point in his defence of this tax. I am not surprised, because it would be impossible for him to do so. As I said, it will now be a matter for the government to defend themselves. With every request by every group in the community who wants to impose a levy, the government will have to justify why they will not support the levy the industry wants when they are prepared to do it for the sugar industry.

It is very clear that the government were reluctant to give any support to the sugar industry. The minister had no ability to leverage the government into paying money out of consolidated revenue for this particular package, and so the only option that the minister could get up in cabinet was, `Let's raise another tax to support it.' So we have the case again that the Nationals are blowhards in the bush and cowards in Canberra. They will run away from the problem, thinking that it is a simple proposition where you take a measure to cabinet which gets up or fails, or you take a proposition to cabinet, you kowtow to your Liberal colleagues—and I use that word advisedly—and you come back and try to sell to them the compromise measure that you have been forced to wear. It is interesting and there are many comments I could make.

I will be having a good look at the comments that Senator Boswell made in which he suggests that, perhaps, even if this measure were passed, the government would have funded this package. If that is true, why was Senator Macdonald suggesting that the survival of this package was dependent on the survival of the levy? That is one thing that Senator Boswell had better explain to his constituents in North Queensland. The reality is that the opposition has always believed that, if the government were playing the political game that they appear to be playing on this, and if they had to provide something for the sugar industry because of their concern for the seats in the House of Representatives that sit within the sugar industry, they would ultimately have funded some sort of package and indeed could not have walked away from the package they proposed.

I remind the Senate that Queensland put up $30 million and no tax; the Commonwealth put up zero but have funded $120 million out of the tax which is being called a levy. That is a shameful proposition from the government. To allow this matter to be put, I will cease my comments at this stage. There are many more things I could say but I will conclude my remarks.

Question negatived.