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Wednesday, 27 June 2001
Page: 28732


Mr TRUSS (Minister for Agriculture, Fisheries and Forestry) (5:10 PM) —I move:

That the requested amendment be not made but that in place thereof the Dairy Produce Legislation Amendment (Supplementary Assistance) Bill 2001 be amended as follows:

(1) Schedule 1, item 3, page 4 (line 6), omit “2 types of SDA payment rights:”, substitute “3 types of SDA payment rights: basic market milk payment rights,”.

(2) Schedule 1, item 10, page 5 (before line 21), before paragraph (a), insert:

(aa) basic market milk payment rights;

(3) Schedule 1, item 10, page 6 (line 20), omit “2 types”, substitute “3 types”.

(4) Schedule 1, item 10, page 6 (before line 22), before paragraph (a), insert:

(aa) a type called basic market milk payment rights;

(5) Schedule 1, item 10, page 6 (after line 23), at the end of clause 37D, add:

(2) It is a policy objective that, if an entity is eligible to be granted a basic market milk payment right and an additional market milk payment right, the entity is eligible to be granted the payment right with the higher face value and is not eligible to be granted the other payment right.

(6) Schedule 1, item 10, page 6 (before line 24), before clause 37E, insert:

37DA Basic market milk payment rights—eligibility etc.

Basic eligibility criteria

(1) It is a policy objective that an entity is not eligible to be granted a basic market milk payment right unless:

(a) the entity has been granted a payment right under the DSAP scheme in respect of a dairy farm enterprise (the qualifying enterprise); and

(b) the entity held an interest (of a kind referred to in the SDA scheme) in that enterprise, or in any other dairy farm enterprise, at a time referred to in the SDA scheme; and

(c) the number (the market milk number) worked out in accordance with the following formula is at least 25.1 (rounding to 1 decimal place and rounding up if the second decimal place is 5 or more):

Note: See also subclause (4) for how those delivery numbers are worked out.

Calculation of face value

(2) It is a policy objective that the face value of an entity's basic market milk payment right is to be a share (worked out in accordance with the SDA scheme) of the overall market milk amount for the qualifying enterprise.

Interpretation

(3) For the purposes of this clause, the overall market milk amount for the qualifying enterprise is:

(a) if the market milk number is at least 25.1 and less than 30.1—$10,000; or

(b) if the market milk number is at least 30.1—$15,000.

(4) A reference in this clause to the total number of litres of market milk, or the total number of litres of manufacturing milk, delivered by the qualifying enterprise in the 1998-1999 financial year is a reference to that number as determined by the DAA to have taken to have been delivered by that enterprise in that year.

(5) This clause is subject to clause 37V (about the effect of death on eligibility etc. for the grant of payment rights).

(7) Schedule 1, item 10, (page 8), line 15, omit the heading, substitute:

37F Market milk payment rights—offsetting

(8) Schedule 1, item 10, page 8 (line 16), after “entity's”, insert “basic market milk payment right or”.

(9) Schedule 1, item 10, page 8 (line 29), after “entity's”, insert “basic market milk payment right or”.

During the debate on the bill in both the House and the Senate, we have heard opposition parties claim that the government's additional market milk payments would not adequately address the needs of some farmers who were previously reliant on market milk premiums. The opposition has argued that the government's focus on assisting those most adversely affected should be broadened. However, the opposition's amendment request, as I have already indicated, is not well-targeted and would increase the overall costs of the package by an estimated $60 million. It would increase the costs of the additional payments package to milk consumers by more than 40 per cent. This would be an unacceptable outcome. It would also strike at the integrity of the package, which was and is designed fundamentally to assist those dairy farmers who are faced with the biggest adjustment task.

The government is prepared to propose a compromise amendment which increases the coverage of the additional market milk payments in a targeted way but retains a focus on those most vulnerable farmers. The government's counterproposal would lower the eligibility threshold by 10 percentage points, from 35.1 per cent to 25.1 per cent market milk dependency. It will provide a minimum payment of $10,000 or $15,000, depending on the level of market milk deliveries. It would, therefore, be a more measured response to the adjustment challenge than that proposed in the opposition amendment request.

In effect, the government's new basic milk payment right sets a floor in the market milk payment for those enterprises which have a market milk payment dependency of more than 25 per cent. Enterprises with a market milk dependency of more than 25 per cent and less than 30.1 per cent would be eligible for a minimum enterprise entitlement of $10,000. From 30.1 per cent upwards, the entitlement would increase to $15,000.

Once market milk dependency reaches more than 35 per cent, the enterprise would then be entitled to the additional market milk payment currently provided for in the bill. As I have previously indicated, the bill provides for additional payments to be made, based on a sliding scale from 0.12c a litre for market milk deliveries of 35.1 per cent or more up to 12c a litre at 45 per cent and above.

It is important to note that an entity would be eligible for either the basic payment or the additional market milk payment, whichever is the larger. This means that, if an enterprise met the eligibility criteria for both the minimum basic market milk entitlement of $15,000 and for an additional market milk payment of $20,000, the enterprise would be entitled to the larger of the two, the $20,000. This entitlement would be shared among the entities in accordance with their sharing of the entitlements under the original package, provided they were still involved in a dairy farm enterprise on 21 May 2001. As with the additional market milk payment, farmers would have the choice of taking the basic milk payment as a lump sum or as a quarterly payment over eight years.

The new payment is expected to provide benefit to about 892 additional farm enterprises, with some 569 in South Australia, 129 in New South Wales, 134 in Queensland and 60 in Western Australia. The proposal is estimated to cost an extra $19 million and will require an extension of the 11c market milk levy for about two months.

As I have indicated previously, the government has moved promptly to address the concerns of vulnerable dairy farmers and their communities in the light of requests it has received from the industry and as reported in the ABARE report. Payments under the Supplementary Dairy Assistance Scheme, including the basic market milk payment, will be largely based on DSAP entitlements and information already available to the Dairy Adjustment Authority. Notification of the additional market milk and basic milk entitlements will be made shortly after passage of this bill, and payments can be made promptly on completion of acceptance processes. As this is the last week of the current winter sittings, I would again like to stress the importance of the passage of this legislation before parliament rises tomorrow. It is imperative that farmers who are in genuine need receive this additional assistance as soon as possible. There should not be a delay of two months or probably more if the government's compromise proposal is not accepted this week. I present the explanatory memorandum. Our compromise proposal goes a very long way towards meeting some of the proposals put by the Senate, and I urge its smooth passage. (Time expired)