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Monday, 8 October 1984
Page: 1830

Mr McVEIGH(8.01) —The Opposition, in speaking to this legislation, seeks to amend both the Meat Export Charge Bill 1984 and the Dairy Products (Export Inspection Charge) Amendment Bill 1984. In relation to the Meat Export Charge Bill, I move:

That all words after 'That' be omitted with a view to substituting the following words:

'whilst not opposing the provisions of the bill, the House is of the opinion that the date set for the coming into operation of the legislation should be 2 years after the date upon which it receives the Royal Assent'.

The amendment is seconded by the honourable member for Forrest (Mr Drummond). The Australian meat industry is in a volatile position. Cattle numbers are down from 33.4 million in 1976 to 21.8 million. There are expectations of slight but definitely not dramatic increases over the coming four to five years which perhaps will take the numbers to 25 million. The industry has experienced a decade of disinvestment and a severe crisis in the meat processing sector as well as one of the worst droughts experienced in this country. In reward for good behaviour, this socialistic, anti-rural Government, in its 1983-84 Budget, increased the slaughter levy by 200 per cent to $5.40 per head of cattle in order to fund inefficient export inspection services. By mid-1984 many abattoirs were refusing to pay the increased levies and the Australian Meat Exporters Federal Council, coupled with the support of producer organisations, had foreshadowed legal action to challenge the viability of the legislation.

The Minister for Primary Industry (Mr Kerin) has introduced legislation which will completely restructure the export inspection charging system. The legislation splits meat inspection charges into two components-a flat charge of $2.55 and a specific export component, setting the maximum rate for exports of 4 .8c per kilogram. Existing legislation sets a rate of $10.80 per head for uniform slaughter charges. It provides for regulations which set operative rates at 2.4c per kilo for exports and $2.55 for slaughter charges.

There is major opposition, and rightly so, within the industry to these proposals as they effectively disadvantage the export sector of the meat industry, which is most exposed to international competitiveness-judging from this Government's policy, a concept far from its interest-and is a spearhead of livestock markets in Australia. Although, as the Minister said in his second reading speech, the legislation does not materially affect the amount of revenue received, it drastically affects distribution between the export and domestic sectors, the export sector being made worse off with a 12 per cent increase, while domestic cattle inspection costs decline.

Is there any more blatant anti-export policy in existence? It appears to be the unwritten policy of this Government gradually to cripple the export earner of this nation. It is no wonder that the industry's export sector cannot cope with these new proposals against a background of disinvestment and unprofitability. It receives little assistance compared with most other industries-one-fifth of the average amount given to the manufacturing sector-and it already pays a disguised export tax via the tariff. If this Government had a bone of responsibility in its make-up, it would take note of the recommendations issued by the Interim Inspection Policy Council, which recently held an inquiry into the level of industry charging for export inspection service activities. Its key recommendation of a two-year moratorium and a retrospective reduction in the charging base back to October 1983, when the 200 per cent increase took effect, were completely rejected by the present regime. It is a matter of disappointment that, whilst the Minister agreed with the recommendation of his Council, he did not even put it to the Cabinet. That is disappointing. It raises the question: Why have an industry recommendation council if one bypasses and, in effect, laughs at its recommendations?

The Minister said that this charge was a discriminatory charge and a charge which would reduce the export competitiveness of the Australian meat industry. The Opposition has great difficulty in understanding the reasoning behind the Minister's statement. He would be far more honest if he took it on the chin and said that he is a member of a Cabinet which has an anti-rural bias and, notwithstanding his advocacy, it in effect laughs in his face. The Minister's second reading speech states:

Because of budgetary restraints . . . the Government did not agree that there should be a two-year moratorium on implementing the export charge nor that the reduced cost base be made retrospective to 1 October 1983.

The Government, unfortunately, seems to be able to find money for many other matters which are not necessary and which certainly do not contribute to creating jobs and creating opportunities for the development of this great nation. However, as a matter of priorities, in a tight budgetary situation in which limited funds are available for allocation, those priorities are beginning to display themselves when no allowance is made for an industry which earns for this nation $1.2 billion in export income.

The report to which I referred stated that the gross profitability of the export industry was only 2.2c per kilo. It concluded:

In the short term there is a compelling case for assistance to be given to the industry through a reduction in the export inspection charge.

It also stated:

What is clear from the Council's detailed examination is that it is hard to imagine a substantial increase in inspection charges (i.e. the 200 per cent increase in the 1983/84 Budget) coming at a worse time.

In summary, the Minister appointed an advisory group to take evidence. His whole idea in restructuring the various statutory authorities is to obtain consensus. However, when this industry policy group ascertains the position, advises the Minister, tells him of the difficulties, he completely ignores it. What is the sense of having an industry policy council if one is just going to laugh at it? If I served on such a policy council I would resign because, in effect, the Minister is saying to me: 'I have no confidence in you'. I do not think it is possible to have two shillings each way in matters like this. One either believes in a policy or subscribes to a philosophy or one does not. There is absolutely no way whatsoever in this situation that the Minister can be Mr Nice Guy without having the courage of his convictions and putting the recommendations to the Cabinet.

The Minister himself appointed this industry policy group. He received the full support from the Cattle Council of Australia, the Sheepmeat Council of Australia and the Australian Meat Exporters Federal Council. So he had total agreement from the committee of review, the people concerned in the production of the product and the people who were exporting. Yet, the Minister did not even put the recommendations to Cabinet. He was scared. He lacks intestinal fortitude, and that is what concerns me.

I want to say for our part, so that there will be no confusion whatsoever, that it is the Opposition's policy to act fully upon what we believe are most learned recommendations. We do not laugh at those most learned recommendations, as does the Minister. It is our policy to pay the full cost of export inspection services consistent with what is done in both the dairy and egg industries. I might say that the governments of our competitors, New Zealand, the United States of America and Argentina, pay the full cost of inspection services. So I have great difficulty in comprehending how we can remain internationally competitive with these countries when we have a government which imposes very high costs-as much as $10 and $11 per head-on high quality export cattle grown in my own State. I do not know how we can remain internationally competitive when these costs are not applied by our competitors.

It is ironic to note that while this Minister pays lip service and offers sympathy in his actions he fully rejects the recommendations. The Minister has made public statements on the subject. I would not accuse the Minister; I am far too kindly a soul to do that. Perhaps because he was a little nervous and in a bid to win votes, particularly at the coming election, he has recognised that a levy is a disincentive to exporters and he is unhappy about that. Crocodile tears are absolutely no use to farmers and meat producers who are going broke. The honourable member for Maranoa (Mr Ian Cameron), the honourable member for Mallee (Mr Fisher) and the honourable member for Riverina (Mr Hicks) know what I am talking about; they understand the situation. The honourable member for Corangamite (Mr McArthur) knows that farmers cannot live by tears. They have to be presented with something of real substance. I would have thought that an ounce of action is worth 100 tonnes of sympathy. I ask the Minister to give us an ounce of action rather than just the 100 tonnes of crocodile tears that we get from him.

This matter is further compounded when we read that the Minister, when he fronts up to people, admits quite openly that the administration of inspection charges is inefficient, that the costs could be cut by up to $12m. But only a few days before when addressing the Sydney Rural Press Club he said that he was concerned about our rural policies and that these costs were going to increase Commonwealth revenue by so many millions of dollars. He thought that when we gained office after 1 December we would continue with these inefficient policies and fail to update the procedures he is introducing. There is absolutely no way in the world that when we are in government we will stand idly by and see meat inspectors in the Northern Territory being on full pay and doing no work. There is no way in the world that we would put up with that sort of academic nonsense.

Mr Ian Cameron —Give them the sack.

Mr McVEIGH —The honourable member for Maranoa took the words out of my mouth. He said: 'Give them the sack'. But the Minister would not have the courage to do that. He would go along with his socialistic ideas of the international brotherhood of man and say: 'You cannot sack them. You must pay them to live in glorious luxury while the meat producers of Australia go broke'. But the Minister himself said, notwithstanding the criticism that he gave at the Sydney Rural Press Club, that we should not fund these amounts unless we expend X millions of dollars. He said that the administration of the inspection charges is inefficient and that costs could be cut by up to $12m.

Madam Deputy Speaker, I know that you would be like me. You would have extreme difficulty in understanding the motives of a Minister who in one forum can make himself popular criticising the Opposition for being efficient, realising that many areas of the inspection service could be cut down. When faced with a pre- election commitment situation in respect of which he has to try to buy votes, he is not responsible and does not act like a statesman. He admits that he could cut inspection costs by up to $12m. I am a fairly simple sort of soul and I ask him why he does not cut this $12m now and not in two months or three months time . What is the Minister going to do about this inefficiency? Being unhappy is simply not good enough. The farmers in the bush do not really worry about whether the Minister is unhappy or happy. What they want is an efficient service which they do not have to pay through the neck for. The saying that actions speak louder than words has never been more appropriate. When this Government has to account for its actions at the polls, the Australian people will voice their rejection.

So much for the Meat Export Charge Bill in respect of which I have indicated we will move an amendment. We will do so for the simple reason that the policy group asked by the Minister to make a recommendation said that there should be a moratorium for two years on inspection charges after meat had been slaughtered and was waiting for export. We believe that the Minister, if he had been fair dinkum, would have accepted that recommendation and would have shown some concern for the industry. The Bills we are debating are Budget Bills which deal with Government revenue. We, of course, have given a solemn undertaking in respect of such Bills. I would like to pay tribute to the Leader of the Opposition (Mr Peacock) who, as a man of his word, has indicated all along that we would not stop the passage of Budget Bills. It is the responsibility of the Government to indicate what financial controls it is putting before the Parliament. But we, for our part, will not back down from our pledge not to stop Budget Bills. The honourable member for Kooyong has been a man of principle and solidarity in the period that he has been Leader of the Opposition.

Notwithstanding the enormous pressures that have been placed upon him, he has not deviated from that policy. I believe he should stand very high indeed in the eyes of the Australian population for adhering to his statesman-like statement, unlike some of our colleagues in another place. I know that the honourable member for Maranoa and other speakers will cover matters in more depth in their speeches as well as these aspects that I have had the opportunity of only glancing over.

I also want to talk about those very important areas of primary industry, dairying and egg production. Efficient, consistent and quality export inspection procedures in any industry are essential ingredients to maintaining good trade relations and international competitiveness. The Bills concerned with the dairy, meat and egg industries are aimed at amending the charging procedures for export inspections to reflect the changes in the manner of export inspection procedures yet to be implemented. In considering the dairy industry the Government seems to have become slightly over-enthusiastic and to have jumped the gun. It is proposing legislation to change present charging methods on the basis of new procedures before these procedures, still in their trial stages, are even finalised-appropriately a typical case of the egg before the chicken.

Opposition members, as well as industry, are totally unsatisfied with these Bills, and justifiably so. The Minister claims that the Department of Primary Industry has been having extensive consultations with the industry on these new inspection procedures, saying, and I quote from his second reading speech:

New procedures have been developed in close association with the industry concerned.

This appears to have been the case with the egg industry but not so with the dairy industry. One of the nation's largest export dairy industry firms, Ibis Milk Products, in which the Department of Primary Industry is experimenting with new procedures on a trial basis, has had to date one meeting six months ago and, I have been led to believe, one since. Firms are still awaiting further meetings and satisfactory explanations. They have now been informed that the new procedures will not come into being until next year as the Department has decided that research must still be done. This loose association, which the Minister is so fond of spouting about, appears to have been slightly one-sided. The Department of Primary Industry has sent out an enormous amount of literature that is inconcise and confusing, with no feedback from the firms themselves. Meeting times have been continually changed by the Department putting them off over the past 12 to 18 months. Maybe there are internal discussions but no research has been done at the factory floor level. No real explanation has been forwarded and the firms have been able to do no adequate costing. The Department expects that charges will fall but cannot say for certain, nor can it say what the new charges will be. The DPI claims that costs will decline because inspectors will cease to be full time and will become part time. No explanation has been given as to what will happen to the superfluous inspectors. Although the Commonwealth will meet the expenses of changing over to this new system, the effects on the export dairy industry have the potential to be crippling because there simply has not been adequate advice given to the industry. This record, to clear-thinking people, constitutes grave doubts as to this Government's ability responsibly to administer its duties. The underlying theme of this new charging arrangement is based on the user pays principle. These charges are part of a scheme to recover 50 per cent of the costs of inspection by the Commonwealth. In effect, it makes the producers pay for any government input, whether they want it or not and regardless of whether or not the government laboratories are efficient, requiring that testing go through laboratories, thus making its laboratories pay, as one producer said. Prior to the present charges, which came into effect on 1 January 1983, no charges for DPI inspectors were implemented. This is an attempt by this Government to try to recover from the industry half a million dollars. Of course it is our policy that the total cost for DPI inspectors will be met by the Commonwealth. Under the present system, testing from the independant laboratory is for manufacturers' own use to monitor this product's progress, to ensure DPI requirements are met and that State quality levels are also met; this usually being a test for salmonella and, depending on where the product is to be exported, the specific requirement of that country.

Currently in dairy factories there are no resident DPI inspectors. Products such as butter and cheese are put into cold storage and prior to being exported samples are prepared by the firm themselves or by individual autonomous laboratories. DPI then tests these on the basis of, first, taste, second, smell and, third, sight. The product is then placed on a four tiered grading level. Charges for this grading will now, under the new proposal, become separate, an additional charge on top of the inspection fee. DPI samples for the Australian Government, where the individual analyst tests the same percentage of sample as the Government laboratory. However, results from the Department are usually received after the goods are exported. Hence it acts more as an auditor than as an analysis of approval or even back up to independent firms.

The entire concept of inspection is to be completely changed. Under the proposed legislation the DPI will receive one sample, that being in the form that the product is exported-a bag, box or crate for each days manufacturing- indiscriminate as to the quantity produced per day, hence the sample for a firm which produces six boxes a day or half a box a day. These are then randomly chosen and tested. So not every batch will be analysed. It is then up to the company to pay for this analysis. It is in effect random sampling of selected bags. Ground rules for the new inspection procedures have yet to be fully established. Therefore the proposed charging is perhaps not only premature but also based on incorrect assumptions. Hence, I have placed amendments before the House which will amend this Bill until such time as the new proposed procedures are finalised.

The egg industry differs from the dairy industry in that it relies less on export earnings for survival; so much so that exports incur a loss to the industry, and it is hoped the future national export level will drop to 3 per cent. For every dozen eggs we do not export the price on the local market is reduced. Hence it is in all interests that we reduce the level of surpluses. Currently, each Egg Board floor has a permanent resident DPI inspector regardless of the percentage of eggs exported. Under the new proposed arrangements the board will now contact the DPI when it is packing eggs or egg products for exports. According to the industry, adequate consultation and research has been undertaken; hence the proposed new inspection methods will be efficient and they have the full support of industry members. The Opposition's policy concerning the egg industry is consistent with its policy on the dairy industry, where it will meet the entire costs of export inspection charges.

The purpose of the Egg Export Legislation Repeal Bill 1984 is to repeal the Egg Export Control Act 1947 and the Egg Export Charges Act 1947, effectively abolishing the Australian Egg Board, as it was the Egg Export Control Act 1947 which provided the legislative basis for the establishment and functioning of the Board. The Australian Egg Board, initiated by the Government and commencing operations on 1 January 1948, grew out of a drive for a more orderly marketing of export surpluses, and the need to provide safeguards for contracts between the United Kingdom and the Commonwealth following the termination of control under war-time national security egg industry regulation. In practice, the Australian Egg Board sets the terms and conditions of exports while the State egg boards, under export licences, carry out the physical packing and handling of eggs and egg products for export.

It became clear that not only was the existence of surpluses incurring a loss; the administrative operations of the boards have been costing a substantial sum of money. Financing a board whose function is becoming obsolete is unjustifiable . Undoubtedly it is more beneficial not to export, yet morally little else can be done with the surplus. Offers to various governments to give these eggs away have been refused on the grounds that these countries desire help in the form of cash, medical supplies and capital equipment, not food, nor is it expedient to subsidise producers not to produce. The cost of exporting was met by the producers. It became evident that more responsible action was needed to co- ordinate the activities of State egg production, so in 1965 the Council of Egg Marketing Authorities of Australia, now the Australian Egg Marketing Council, was formed. Until then, interstate egg marketing was controlled by the State marketing boards.

Eventually the egg industry was obliged to develop a method to safeguard domestic pricing from illegal and interstate competition. In the same year a scheme has developed which provided for losses incurred from surplus egg sales to be shared equally by all producers. The legislation imposes a levy on commercial laying hens. The funds from the hen levy are essential for research in the industry, particularly into the areas of disease, nutrition, management, market research and development of new products using eggs. Once the surplus has declined substantially, the levy will no longer be necessary to subsidise the losses. However, industry sources desire that the levy not be phased out completely but only in part, as some level of research is essential for a continuation of a progressive industry. Hence, to ensure the maintenance of these funds, the framework or the levy must be kept in place. I ask the Minister to comment on that. Finally, I wish to place on record the sheer disgust of the industry--

Madam DEPUTY SPEAKER (Mrs Child) —Order! The honourable member's time has expired. Is the amendment seconded?

Mr Drummond —I second the amendment and reserve my right to speak.