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Thursday, 4 October 1984
Page: 1718


Mr KERIN (Minister for Primary Industry)(12.50 a.m.) —in reply-First of all, the Government believes that the Wheat Marketing Bill and those being debated cognately form an excellent package of legislation for another five years for the wheat industry. In many places we carry on the gradual development of the Australian Wheat Board's powers. I instance particularly the permit system and the fact that we have introduced a grading system whereby the Wheat Board each year sets the number of grades. This will give the Board more flexibility. There has been no inordinate delay with the legislation. As occurred in 1979, final agreement had to be negotiated with the States at the last Australian Agricultural Council meeting before the legislation could be introduced.

Opposition members plainly do not understand what has happened, despite being briefed by my Department. As usual the honourable member for Darling Downs (Mr McVeigh) has engaged in a bit of vitriol. I was accused of blackmail by him. I think the honourable member for O'Connor (Mr Tuckey) accused me of being against Father Christmas. I have been accused of prostitution, perversion, treachery and seduction. Given that most of this abuse has come from the National Party, I am pretty grateful that I have not been accused of rape, incest or bestiality. As we all know in respect of bestiality and the jackaroos it is the view of this Parliament that what happens between a man and his beast in the privacy of his back paddock should not be a question for this House. I will not get on to that, however.

I wish to speak now about the accusation of blackmail. Meetings throughout the country were masterminded by the Livestock and Grain Producers Association mainly to get the Wheatgrowers Federation. However, I will not go into that. The honourable member for Darling Downs attended those meetings.


Mr McVeigh —Incorrect; one meeting.


Mr KERIN —He attended one meeting. The honourable member once again displayed his ignorance and capitalised on some of the suspicions of the farmers while indulging in a bit of grandstanding. The Press reports that very day claimed that the legislation would be blocked in the Senate. I very charitably pointed out at the end of my second reading speech that, if this occurred, given the honourable member's abundant ignorance he should understand that the growers would not be paid until the legislation went through. The honourable member made a personal explanation saying that he had been misquoted. There, I guessed the matter had ended. However, apparently this had caused all sorts of brawls in the so-called coalition's party rooms.

The honourable member for Darling Downs raised a few points about the money being put in the Wheat Finance Fund and how it is being invested. The money is held in a trust account in the Department of Primary Industry. It is invested at the best rate possible by professional investment managers.


Mr McVeigh —Tell us the rate.


Mr KERIN —The rate varies depending on what deals can be done. Again, there is some ignorance about the underwriting principle. It is to take care of a sudden collapse in the international market. The problem that we faced and the problem that has developed with the Wheat Board-the Board and the Federation readily acknowledge that-is that we had a drought in 1982-83 when a higher percentage than normal of the wheat crop was sold on the domestic market which gave us a higher price. That was followed by a record crop, a record proportion of which was weather damaged. Therefore, we had a very high price net return to the farmers followed by a very low value crop. Underwriting is not for rain insurance. That is why the high year was taken out to accord basically with the underwriting principles.

There has also been debate about the domestic value of wheat for home consumption. It was agreed among the Government, the States and the growers that we should have additional verifiable costs. The States have a role in respect of domestic pricing and, as we all know, handling, transport and storage. When the question of verifiable additional costs was put to the States the range they put to the Government was between $9 and $21.30. The Commonwealth allowed a $6 fobbing factor in the calculations but the imputed value of interest could not be agreed on. The question of the allowance for local flour millers picking the eyes out of the wheat was impossible to calculate as Australian standard white is sold at the ASW price. What was agreed was that the $16 would suffice for this year but we would have a recalculation after one year to see whether we could get more agreement between the States on what is a verifiable additional cost that local consumers should pay. So the price was fixed at $195.25 as against an expected international price this coming year of about $US150.

The coalition, if one can still call it that-I understand that the biggest problem it has now is to find a deputy for the honourable member for Bennelong ( Mr Howard) after the election-has shown that it has been confused and ignorant. There are always two policies because the honourable member for O'Connor and perhaps the honourable member for Maranoa (Mr Ian Cameron) are a lot more free enterprise-that is the Liberals, they are trendy. But they have had a policy for quite a while now. They do not believe that any Board should have the power of compulsory purchase; that no board should have a statutory monopoly on sales; that no board has the power to exact a compulsory levy from purchasers; and no board has the power to determine the variety of the goods produced. That is Liberal Party Federal Council policy of May 1982.


Mr McVeigh —That has changed. We have superseded that one.


Mr KERIN —That is very good, that one has been superseded; but that was the Liberal policy and there was not a mutter about that when the Party was in government. Now we have a new Liberal-National Party policy; we are not quite sure. I have read it and it is just a series of platitudes upholding the status quo. But of course the honourable member for Darling Downs who poses as Opposition spokesman on primary industry, does not really understand the wheat industry. I find that remarkable because I understood that he used to grow wheat .


Mr Fisher —He is also on the Wheat Board.


Mr KERIN —That is even more staggering. At a meeting in Adelaide on 14 June he told the South Australian Rural Media Association that the domestic price of human consumption wheat was the same as the guaranteed minimum price. That is how much he knows about it. When the Hawke Government freed the Australian Wheat Board to borrow abroad, saving it tens of millions of dollars, the honourable member was about the only person who opposed it until the wheat growers got on to him and told him what he was doing. When I was recently in Toowoomba the honourable member for Darling Downs was running around with a story that the price of bread should drop.


Mr McVeigh —You said that, you galah!


Madam DEPUTY SPEAKER (Mrs Child) —Order! The honourable member for Darling Downs will please stop interjecting.


Mr KERIN —He failed to understand that we have to get the Act through the Parliament before there is the potential for the price of bread to drop. The honourable member just does not understand rural issues and this is why he resorts to abuse rather than constructive comment. That is why we get all this nonsense about blackmail, prostitution, treachery, sedition and seduction. This is the usual thing. There is no criticism of the 95 per cent net and the wheat growers would not have got that from Peter Nixon. He would have stood over the wheat growers and they would have caved in. He would have given them 85 per cent gross as recommended by the Industries Assistance Commission.

The main criticism, of course, is the reduction in the grower majority from 10 out of 14 to six out of 11. What the Opposition has really picked up is the agro -political line, and that is fair enough. It has always been agreed that the present 10 would remain until 30 June and as the honourable member for Bendigo ( Mr Brumby) has explained, I have extended that to 30 September so that it is in legislation. The big worry, of course is that if the Government changed there might not be any willingness to carry out the agreement that has been agreed with the Wheatgrowers Federation. There will be a review of membership after this season and before the next. That has been agreed for quite a while and the States know about it. What will mainly be reviewed will be in the working of the consultative mechanism between the Wheatgrowers Federation and the Wheat Board and the way in which additional expertise on the Wheat Board has had an effect. The Government will review this in consultation with the Board itself and the Wheatgrowers Federation.

There has never been any intention to move away from a grower majority and six out of 11 is still a majority. In general there is nothing magic about a grower majority. The Australian Dairy Corporation has a grower majority and it has some problems. There is always a problem in looking at each statutory authority and one of the determining factors in the Government's approach is whether there is an inherent conflict within the Board. When we have processors and producers on a board, as we do with the dairy industry and the meat and livestock industry, we have an inherent conflict. That is why we moved with respect to the Australian Meat and Livestock Corporation to have not necessarily a grower majority. That seems to be working out all right. What we are doing with the Wheat Board is exactly the same thing that was done with the Australian Wool Corporation many years ago. That has worked out very well indeed. So the Government's approach is commodity by commodity.

What is different about the wheat industry? There are quite a few things. First of all, the crop is acquired; the growers have a clear and absolute interest; and, as well as that, the States have a clear and absolute interest. The States are involved constitutionally and legislatively with respect to domestic pricing , and handling storage and transport. Therefore, we cannot get away from a grower majority-no government should think of that-and we cannot get away from State representation. Two people per State has been the status quo. So the choice is either two per State or one per State. There is a grower majority in the proposal. It was always agreed with the Federation that we take the existing Board through to at least 30 June. There is no problem in respect of the Government's attitude as far as a workable selected grower majority is concerned . It is not opposed by the Government. This legislation allows a change following a review. I have given assurances to the Wheatgrowers Federation of this review in April-May 1985. I must say that the Wheatgrowers Federation has been tough but fair. It understands all the aspects of this because I have taken it fully into my confidence during the negotiations of this agreement.

Why change the status quo? There really have not been any changes since about 1946 or 1948. In those days about five million or seven million tonnes of wheat were produced. There were traditional markets. The Rural Credits Department of the Reserve Bank of Australia was used for finance and flour as well as wheat was sold. The world is now a bit more complicated. We produced last year some 21 million tonnes that was worth $3.1 to $3.4 billion. We do not export much flour. We are involved in international money markets. We are engaged in fierce international trading against subsidised exporters and we are dealing with credit markets.

The Australian Wheat Board is primarily an organisation concerned with the marketing and financing of wheat. It is involved in the use of commodity, currency and financial futures markets and there is a growing risk for mistakes in judgment to be made. I am not reflecting on the competence of the existing Board or the professional staff. But the collapse of the Continental/Illinois Bank and the problems of the Queensland grain growers remind us that no one is infallible. Many honourable members have said that one can buy expertise. That is okay but we have lost the General Manager of the Wheat Board. We then lost the Assistant Acting General Manager of the Wheat Board. The Wheat Board is also losing some of the people at the middle levels who have key expertise. When we have people dealing with that sort of money and people dealing in futures they acquire highly marketable skills.

The focus is on risk. The Government is addressing the problem of salaries. It was the focus on risk, the reliance on too few individuals, the reliance as far as finance is concerned on one individual on the Board, that prompted the Government. We also believe we need to get a more balanced board but one of a manageable size. CSR Ltd and other big companies have about 10 people on their boards. We do not want to push it out to 16. Those are the responsible reasons why the Government took the decision to put additional expertise on the Board in the finance and marketing areas. Many decisions on questions such as forward exchange cover, for example, are absolutely crucial.

Honourable members opposite seem to ignore the fact that taxpayers have a stake in the industry because they will bear the cost of wrong decisions in many circumstances. At one stage this year I was presented with a potential bill for $180m on underwriting. That figure disappeared because the calculation was made at the ebb of the market. But I put that figure forward to point out that the taxpayers have some stake in this industry. Cabinet was prepared to continue the 95 per cent net underwriting that the industry would not have got under Mr Nixon on the understanding that there would be more expertise on the Board, plus the changes made to take the high year out of the underwriting formula and a split guaranteed minimum price. This latter aspect was due to the record crop-as I have already said, it was 25 to 30 per cent weather damaged-and the problem with provisional allowances and dockage. The reason why 95 per cent was reasonable during the last plan was that the United States was backing the market and inflation was on a rising trend. Those situations do not prevail. Frankly, the reason why we took the decision to maintain 95 per cent net underwriting was to preserve the Wheat Board's absolute AAA1 credit rating on the American money market.

There is agreement with the Wheatgrowers Federation and the Government on most elements of the new package. I fall out with the growers on one fundamental concept. It is my firm opinion that people put on a board have a duty to act corporately-not just as a grower, a State person or a finance person but as a board person. The view put to me that we need two from each State because if one is away the State will still be represented is rather abhorrent. I would think that State interests would be preserved by the board acting corporately. The view put to me that we need two because they have to get back to all the growers in each State is also a nonsense because I do not think two people any more than three or four people can get back effectively to all the growers. I went through the Australian Wheat Board minutes covering a period of 15 months, the period I have been Minister. From a representational point of view in about 32 decisions out of 800 a grower majority would have been clearly needed.


Mr Hawker —They might be the critical ones.


Mr KERIN —I am not getting away from a grower majority. It is the job for the Wheatgrowers Federation, as well as owning and acquiring the crop and being vitally involved in the running of the Wheat Board, also to act as a critic of the Wheat Board, of the manufacturing arm of the wheat industry. I believe that by having this consultative mechanism with the Wheatgrowers Federation we will have a better understanding, and the Wheatgrowers Federation will have a better understanding, of the decisions being taken by the Board. The Federation welcomes that.

The honourable member for Bendigo canvassed other matters, and I too would like to canvass a lot of other matters but I have run out of time. I remind honourable members who seem to make great play of the fact that they have had a victory because I have moved amendments tonight that already in the legislation there is room for between five and ten grower members. That has never been under debate. These amendments simply give the Australian Wheat Board legislative backing to what was already agreed to by the Commonwealth, the States and the growers themselves. In other words, because the legislation makes no provision for a board beyond 30 September it will be necessary for the Minister to take back to Parliament the proposed structure following the review.

The Wheatgrowers Federation wanted an assurance on a couple of other matters. It wanted it specified in the Bill that any extra grower representatives on the Board will be nominated by the Australian Wheatgrowers Federation. I give a personal assurance that that will be done. That is actually already in the Bill but there has been some misunderstanding by the Federation. There is no question at all that the Wheatgrowers Federation will not be the body nominating the additional growers. Another concern of the Federation needs to be put clearly beyond doubt. It wanted it to be clearly specified that if there is to be any appointment to the Australian Wheat Board by the Board, that person will be the managing director. The problem with trying to get that into legislative form and so give that absolute guarantee-it will be covered in the amendment next year-is that there is no point in putting it in now because the Parliamentary Counsel has referred in the legislation to 'an officer', and no managing director is specified in the legislation. The reason for that is the agreement I reached with the Wheat Board that at this stage it did not want the newly appointed general manager to be regarded as a managing director until it took that decision and he was involved in it.


Madam DEPUTY SPEAKER (Mrs Child) —Order! The Minister's time has expired.

Question put:

That the words proposed to be omitted (Mr McVeigh's amendment) stand part of the question.