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Wednesday, 8 March 2000
Page: 14188

Mr NAIRN (5:01 PM) —The dairy industry has come a long way since the early sixties when I used to go and visit my uncle up on the north coast of New South Wales, near Smithtown, and helped milk the cows in his dairy in the mornings and afternoons during my school holidays. We have seen a drastic change in the industry since those days, in many respects for the better because we are now looking at a lot of exporting that just was not done back then. Dairying in Eden-Monaro, the electorate that I represent, is a very important industry. Along the coast, in the Bega Valley and in the Eurobodalla it is a substantial industry. Historically, it has been a very substantial industry and has contributed to the sort of lifestyle and culture that has been created in that area. There are 154 dairy farms in my electorate along that part of the coast and I would remind the House of some of the names of the very famous milk products that have come out of that region over the years, particularly in relation to cheeses—Bega, Tilba, Bodalla, Kameruka. They are household names right around Australia and they come from this one small area down on the far south coast of New South Wales.

The history of deregulation is a long one and in many respects the move towards it started quite some years ago when the Victorian industry got rid of their quota system. I think that was 10 or more years ago. Going back to the early 1990s, the previous Labor government introduced the DMS scheme. When you look back at that, it was basically putting a buffer into the industry leading up to deregulation. If the people from the Labor Party were honest with themselves, they would admit that really was the reason why they put that buffer in, to enable the industry to do the further restructuring that would be required to be able to cope with deregulation. The DMS scheme saw consumers paying a higher price for milk, which was then used to compensate the dairy industry. The industry has known since the introduction of the DMS that deregulation would be inevitable once the DMS ended. I think this is particularly apparent given the Victorian domination of milk production in Australia. It produces something like 63 per cent of Australia's milk.

Many dairy farmers have been planning for that change and many have not. The debate in my electorate has certainly been intense. Farmers quite rightly concerned about a potential drop in income have expressed their concerns about deregulation. Throughout this debate over the last 12 months we have had representations made here in Parliament House from people in parts of my electorate. A group called Concerned Dairy Farmers—in particular Bill Caldicott and Tony Allen—from my electorate down in the Bega-Cobargo area were quite forward in putting the case of many dairy farmers against deregulation. I ensured that those people were able to come here and put their case in Parliament House, meet with the minister, meet with the government members policy committee and discuss all of these issues.

At the same time I was meeting with members of that group down in the electorate as well so that I could understand what they were putting forward. In the early days of the debate they were putting forward a national regulation scheme, basically a milk pool, something that the dairy industry itself had actually looked at and determined could not work. You would have to have 100 per cent agreement right across Australia for such a scheme and clearly you were not going to get that support out of Victoria where the bulk of the milk was being produced. I also met with many other dairy farmers in my electorate at a variety of meetings to hear their views. There was a variety of views and there is no surprise about that: everybody is in a different situation and sees the issue in a different way. I made sure that I met with that broad cross-section of people, including the elected members of the dairy farmers associations down there, not just one group. I met with them all and made sure that all those views were taken into account when I made representations to government. That was in stark contrast to a few Labor people who wandered around the electorate at times during this debate—they did not really wander very far as they tended to fire press releases from Canberra or elsewhere—or talked only to one small group, the people who were very strongly opposed to deregulation.

It was a good populist line. It was a good emotional line to take out there to the rural areas—that deregulation will be the end of the earth, and all that sort of thing. It is easy to create emotions within small communities which might think they will suffer as a result. That was the populist line taken by local ALP representatives in Eden-Monaro. Not once did they bother to go to talk to the rest of the farmers or to talk to the elected representatives of the dairy industry in my electorate.

In isolation, keeping the quota system which exists in New South Wales is what everyone wanted, and I understand that. It is not a bad deal when you have a quota, with a guaranteed price for a particular part of your milk production—in some cases, all of your milk production—but we cannot live and trade in isolation. I understood the diverse views and ensured that everyone had access to the minister and the government member policy committee. No-one could argue that they were not listened to in this debate.

So what has prompted this legislation? The Australian Dairy Industry Council, ADIC, which is the industry's peak body, came to the federal government. The council saw the writing on the wall and understood that many of their members could be hurt if an adjustment package was not put in place. The federal government could have said, `This is a matter for the states,' and done nothing. The member for Batman was in here earlier in the debate, criticising the government for leaving it up to the states to make these decisions. The man does not understand how this works. The federal government could not make a decision about deregulation, when the states were running quota systems. I remind the member for Batman that the states, constitutionally, are themselves—they have their own legislation. It was not a case of the federal government making a decision on deregulation; it was always the case that it required the states to make that decision. The government said that, if they did make that decision, it was prepared to do something nationally to assist, which is its responsibility. So it worked with the industry to put together an adjustment package to help dairy farmers if the states proceeded to deregulation.

We all know that the Victorian farmers, and subsequently the Victorian Labor government—even though they were indicating otherwise before they got elected—decided to deregulate. This prompted the dairy industry in other states to determine the view of their members. In my electorate, the local elected representatives of the industry organised meetings to canvass dairy farmers' views. In Bega, Max Roberts, one of the elected representatives for the region, informed me that 158 people attended the meeting. These numbers included sharefarmers, and 75 per cent of them voted to support the federal government's package. At the Moruya meeting, attended by 24 dairy farmers, only four opposed the package. So in my electorate more than 75 per cent of dairy farmers support the package the federal government has put together with the industry and which is the subject of this legislation.

This package is going to be vital for the dairy farmers in Eden-Monaro. I know that deregulation will have a large impact on many farmers, and that is why I have worked with the local industry to ensure the package assists them. We have heard also earlier on in this debate from the member for Batman, who made particular reference to Bega and my electorate. The member for Lyons subsequently did as well. The member for Batman initially—and the member for Lyons followed it up—referred to a study that was done in Bega on the potential effect of deregulation on the region. That study has provided some excellent information on what happens when major agricultural industries have to restructure. But the egg is on the member for Batman's face. He was quite critical, saying that the Howard government was not interested in knowing any of these things, and that it took the local community to do the study themselves. He clearly was not told by local Labor Party representatives in the region—because they never get out into the community at all—that part of that study was funded by the federal government. I wish he was here to learn something, but part of the funding of this study that was done by the local community came from the federal government. So there he was, standing up and making a big man of himself, saying that the federal government was not interested, when we had actually funded part of that study.

That study will certainly be a useful document, but it did not take into account the benefits that will come from the package that the federal government is now putting in place through this legislation. Although there are many challenges that we have to be very aware of and follow through on, we also must take into account the sorts of payments that will come from this package into the region, and the impacts of those payments were not taken up fully in the study that was done.

The member for Batman used the unemployment figures in the area to try to make out there was an even further crisis. I suspect he has egg on his face once again. He talked about the very high levels of unemployment, and he used a figure of 16.2 per cent unemployment in the Bega Valley, which he took from some figures released last week for small labour market areas. I have demonstrated successfully to the minister that there was a gross error in those figures, because an increase in unemployment in Bega Valley, with figures going up to 16.2 per cent in the December quarter, would have meant an increase in unemployment of 540 people. Interestingly, the Centrelink figures for the same quarter show that only an additional 40 people were receiving Newstart or Youth Allowance—less than one-tenth of the figure he claimed. So the unemployment that the member for Batman almost gloats about—and probably he was part of the cause of the high unemployment in the early nineties when he was in the ACTU, which he wants to get back to these days—are not correct. I think subsequent investigations within the department will show they are not correct. Anybody who understood the area would know that those figures were grossly wrong, but he and the other ALP representatives from the area have been running around saying, `Look at these dreadful figures.' If he was out there on the ground, he would know that they were rubbish, and we will subsequently prove that.

The overall package means that something like $1.63 billion will be distributed to dairy farmers over the next eight years, at the rate of 46.23c per litre of fresh drinking milk sold in 1998-99 and 8.96c per litre used in the processed milk market. What that means for Eden-Monaro is about $40 million over that eight years, or something in the order of a quarter of million dollars on average to each farmer. Of course, there will be much higher payments to some and lower to others.

That is a significant assistance in the restructuring process. I should add here that we have heard nothing but silence from the New South Wales government on what they might do to assist even further. I remind the House that they are in receipt of substantial payments under national competition policy that they could use to buy back their own quota system, which would go even further to assisting the restructuring of the industry in New South Wales. But we have heard nothing from them. They constantly whinged and carried on, saying that the federal government was driving this when in fact it was the marketplace and the Victorian dairy industry that was driving deregulation. At the end of the day, they certainly made their decision to also deregulate. But they do have responsibilities in the quota system that they run, and they are receiving payments from the federal government that they could use.

The future for dairy farmers is in fact very bright, contrary to what the member for Lyons, who talked about the European Union subsidies, said. What he did not say was that, with the very high subsidy in the European Union, they have had an attrition rate of people in the dairying industries much greater than that in Australia. I should also remind the member for Lyons that, under the Crean-Kerin plan, the number of dairy farmers has gone from about 30,000 down to about 13½ thousand. I do not recall any restructuring package for the dairy industry under that plan. I do not recall any specific retraining mentioned in all of the rhetoric that he was throwing around. I just remember extremely high unemployment rates of over 11 per cent for the nation and high rates right through the region. I would just remind him of those figures.

But the future is very promising. Information put out by the Australian Bureau of Agricultural and Resource Economics in the last couple of weeks said:

Manufacturing export milk prices will improve in 2000-01, up from a 10-year low. Farmers should get 10 pc more for manufacturing milk in 2000-01, despite the likelihood of industry deregulation.

It went on:

The international spot price for cheese is tipped to jump 12 per cent, to $US2,000 a tonne. Milk powder prices will rise by 11 pc to $US1,530/t and butter prices will climb marginally, to $US1,380/t.

These are good prospects for the future. And there are good prospects for the future in my electorate down in the Bega Valley. The Bega Co-Op has certainly been working towards this for some time. I will quote some statistics. People have talked about the industry going backwards, but in the period July 1998 to June 1999, total Bega production rose by 7.71 per cent, or 10 million litres. The average Bega dairy farm produces over a million litres of milk. This is the highest farm average for a factory area in Australia and New Zealand and is well above the New South Wales state average of 710,000 litres per farm. Given that Bega production rose by 10 million litres overall, it is the equivalent of 10 extra-average Bega farms, or an extra 14 state-average farms coming into the Bega Valley in that 12-month period. All indications are that that growth has continued.

The Bega Co-Op has been gearing up for deregulation for the last six years, with a major capital works program that will allow all the valley's milk production to be processed, value added and placed on any supermarket shelf in any part of the world. I would remind people also that five years ago Bega Co-Op exported not a single dairy product. It is now exporting something in the order of $30 million a year. With new markets, a strong economy and low interest rates, they have been able to make that investment and get into export. They are now exporting 60 per cent of their product whereas five years ago they were exporting nothing. That is a growing industry with a bright future. They made a $20-million investment recently in the packaging and cutting plant. They have employed another 110 people. More recently, they have in fact employed 12 people from the Heinz cannery in Eden that closed down last year, as members of the House will remember. Those 12 people who have experience in food processing are now working for the Bega Co-Op. So I think that is a very good story for the future. We will be there with a restructuring package, making sure that the farmers are assisted so that restructuring can occur and this great potential of further export is realised

Even though deregulation will present some challenges for dairy farmers and communities in my electorate, I believe the future is very bright indeed. I think we have to acknowledge that and work to make it even brighter still and create many more jobs for young people, particularly in my region.