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Thursday, 4 October 1984
Page: 1699

Mr O'NEIL(10.58) —I listened to the honourable member for Darling Downs ( Mr McVeigh). We on this side of the House have heard some appalling speeches from him, but his speech tonight would have to be the daddy of the lot. Quite frankly, I have been very sympathetic in the past towards the honourable member for Darling Downs because it must be very difficult to oppose the very competent Minister for Primary Industry (Mr Kerin). All members on this side of the House are aware of that. Nevertheless, I say to the shadow Minister, the honourable member for Darling Downs, that he should immediately sack whoever wrote his speech. Quite obviously the person who wrote it knows nothing about the farming community and certainly has had no discussions with the farmers. I have told the honourable member for Darling Downs on numerous occasions that, if he is prepared to listen, he will learn something about primary industry from the very competent Minister for Primary Industry, the Hon. John Kerin. The Minister talks to people in primary industry, finds out about their problems, and is prepared to consult them. Obviously, the shadow Minister does not do that. I say to him, as he is about to leave the chamber, that the honourable member for Maranoa (Mr Ian Cameron) is looking better all the time to take over the position of shadow Minister.

Mr McVeigh —Mr Deputy Speaker, I raise a point of order. The honourable member said that I was about to leave the chamber. That is not true. That was a very unparliamentary remark.

Mr DEPUTY SPEAKER (Mr Keogh) —Order! There is no point of order.

Mr O'NEIL —I foreshadow some amendments to the wheat marketing legislation which will be moved by the Minister during the Committee stage tonight. We believe in consensus in this place and we are prepared to listen to any progressive statements put forward by any member of the House. The Australian Wheat Board will cease to function on 30 September 1985. The reason for including the sunset clause for the Board in the Bill is to provide the industry with the necessary guarantee that the review promised by the Minister will be a genuine one. I think all honourable members, particularly those on this side of the House, would agree with that.

The Wheat Marketing Bill has been introduced to enable the Wheat Board to continue to safeguard the interests of Australian wheatgrowers, as it has done so well since its formation in 1948, nearly four decades ago. It has functioned smoothly and efficiently for a couple of generations of farmers and a variety of governments. The wheat industry has become a major export income earner and a yardstick of the Australian economy. In my electorate of Grey we were reminded of how important a healthy wheat industry is to the general economy when the vast wheat bowl of Eyre Peninsula was stricken by the 1982 drought which reduced national production from 16.4 million tonnes to 8.9 million tonnes.

The changes incorporated into this Bill are being made to keep pace with developments in the industry and to put the lessons of practical experience to best possible use. A very good example of this is in the provision which will allow growers to make their own sales of stockfeed wheat to users outside the normal pooling arrangements of the Wheat Board. The desirability of such an arrangement was one of the lessons that emerged from the 1982 drought, which not only halved crop yields but also devastated stock pastures and sent many pastoralists searching for readily available supplies of grain to keep their stock alive. The exceptional demand for stockfeed grain called for exceptional measures, and the result was that such a cash sales system was introduced into Victoria in January last year and later extended to New South Wales. This innovation has become the basis for clause 22 of the Bill, which will still depend on the bringing in of corresponding State regulations to make it effective. This is one aspect of the Bill which could fairly be said to introduce a new element of deregulation into what is a highly regulated industry , at least in the marketing area.

It is also by world standards a remarkably efficient industry in the technical arena. In recent years it has needed little assistance or none at all. Permits to trade stockfeed wheat outside the pool will be available from the Australian Wheat Board to users, enabling them to buy wheat directly from growers. This is expected to result in considerable savings to both parties. There is a clause prohibiting export of any such wheat or its by-products, and there is separate legislation to provide for the payment of wheat tax and wheat research tax on grower to buyer sales. This stockfeed arrangement is one of the changes that arose from negotiations with the Australian Wheat Growers Federation and wheat industry user groups following release of the Industries Assistance Commission report on the industry last October. One recommendation in the report was that an objective of the Board should be to maximise returns to growers from the sale of wheat without taxing domestic consumers. I think that recommendation is well taken care of by a new method of determining the domestic price of wheat for human consumption, which will tie it more closely to the export price. Each quarter the domestic price will be arrived at by arranging the Wheat Board's export prices for the forward quarter and past quarter. A margin will be included to allow for proven additional costs to growers in servicing the domestic market.

In the first year of application the new method is expected to bring down the domestic price of wheat, and consequently that of bread. Basically, it means that instead of the domestic price being subject to a complex annual formula, the home market will be deregulated to the extent that Australian consumers will , like others, pay a price directly influenced by market forces. Another departure from practice that has been hailed by a writer in the Australian Financial Review as 'a great improvement to wheat marketing rules' is the recognition of five grades of wheat, two above and two below the level of the Australian standard white in current use. Although in the past it has been possible for growers to receive higher rates for premium wheat as well as being docked for lower standards, this measure means that each of the five grades will be subject to a guaranteed minimum price. In the past the guaranteed minimum price has applied only to Australian standard white. The guaranteed minimum price for each of the two new grades will be arrived at by calculation of a differential based on the expected market value of the grade relative to Australian standard white.

The new marketing arrangements will continue the practice of underwriting on a net basis calculated at 95 per cent of a moving average of estimated returns, through a guaranteed minimum price. This is an average of estimated returns for the relevant season and the lowest two of the preceding three seasons. However, there are changes that will both benefit growers and protect government liability. Removal of the high year price from the moving average formula will ensure that Government underwriting cannot be triggered by a short term price rise rather than, as intended, by a significant fall. Underwriting of the Wheat Board's costs will in future be based on the current year rather than a three year average. A new split first advance payment system will give growers a payment of 90 per cent of the estimated GMP at the time of delivery, with a further advance to be made early in the season when the final GMP is determined. The Minister is required to determine by 1 March each year the GMP for wheat of each different category. This will ensure that growers receive a high proportion of their final wheat returns early in the season. The only aspect of the Bill which appears to have aroused any controversy is the change in structure of Australian Wheat Board membership. However, in my experience I have found that growers have been quick to acknowledge the rapidly increasing complexity in international marketing for an industry that is now up around the $3 billion level, and the consequent need for a greater membership component equipped with the specialised experience and expertise required to cope with this complexity.

The new structure will comprise a wheatgrower chairman, one chief executive, one grower member from each mainland state, plus from three to nine additional members, including one Government member, to be appointed by the Minister. These extra members will be selected for their qualifications and experience in finance, marketing, and other areas of relevance to the Wheat Board's activities . Up to five of the nine may be chosen from a list submitted by the Australian Wheatgrowers Federation. The present grower membership of two from each mainland State will be retained until their terms end at the end of June next year, thus accounting for five of the extra seats, leaving four to be appointed. This will give the Board a membership of 16 for the time being. The Minister has said that he will review the situation early next year, but even if membership is reduced to the expected 11, growers will still have a majority.

There are five other Bills forming part of the new wheat marketing arrangements . The Wheat Marketing Amendment Bill changes the calculation of the Government's liability in the event of a payout under the guaranteed minimum price arrangements. It will ensure that the payout is restricted to the amount of borrowings made by the Wheat Board to make first advance payments to growers and to ensure that the entitlements of premium wheat growers are not used to reduce any Government underwriting liability. The Wheat Tax Permit Bill and Wheat Tax Permit Collection Bill deal with tax to be paid on issue of permits for grower to buyer sales of stockfeed wheat. The Wheat Tax Amendment Bill and the Wheat Research Amendment Bill concern the wheat research tax as applied to grower to buyer sales both through the normal pool arrangements and outside them. Other measures contained in the Wheat Marketing Bill include continuation of the Tasmanian freight subsidy, with some changes, pending its examination by the Inter-State Commission.

The Wheat Board will be permitted to operate on the United States of America corn futures market in order to finance wheat receivals and marketing. Its expenditure limit without ministerial approval will be increased to $500,000 from the current $100,000. A new provision imposes a formal statutory obligation on the Wheat Board to consult with the Australian Wheatgrowers Federation. This is good because it has to be recognised that in spite of the backing given to the Wheat Board by an overwhelming majority of growers, the very prosperity that has been engendered by the Board's successful operations has led inevitably to stirrings here and there of the urge to get out from under the umbrella and go it alone in the best laissez faire traditions.

As only about a quarter of total Australian wheat production is absorbed on the home market, any radical change to the status quo would have to involve relaxation of the Board's monopoly of export marketing. The impracticability of any such urging is best summed up by this quotation from a paper put out by the Bureau of Agricultural Economics:

For a market dominated by the regulatory activities of the US Commodity Credit Corporation and by the centralised marketing of Canadian wheat, the AWB would have difficulty retaining sufficient market power if other traders were selling Australian wheat in competition.

To wind up, it would be quite remiss of me if I did not thank the Minister for Primary Industry for coming to Port Lincoln recently to speak with zone delegates of the United Farmers and Graziers Association, finding out the problems of the wheat industry, listening to queries and coming up with this positive legislation. I commend the Bill to the House.