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Tuesday, 14 October 2008
Page: 9092

Mr ZAPPIA (6:55 PM) —I too rise to speak briefly on the Dairy Adjustment Levy Termination Bill 2008, which brings to an end the collection of the 11c per litre levy that has been applied since the year 2000. At the time, the levy was introduced to fund an adjustment package for the dairy industry as it moved through deregulation. Over eight years around $240 million a year has been collected through the levy and used to provide payments to around 13,000 dairy businesses. The levy may have been well intended and I have no doubt that it did provide necessary financial assistance to dairy farmers during the transition period. Sadly, however, there were also cases where the funds were paid inappropriately, with one report from the Australian National Audit Office identifying some $200,000 which had been overpaid to farmers. It appears that the Dairy Adjustment Authority, which managed the levy that was collected and distributed the funds, did not have adequate controls or accountability standards in place in its administration of the levy.

There have also been reports that deregulation of the dairy industry has not led to lower milk prices, as expected. I have noted a number of reports, including one in particular that referred to milk prices in WA having in fact increased since the levy was introduced. Yet consumers paid $240 million a year because deregulation was expected to make the industry more efficient and therefore bring down the price of milk.

The important point I make about this bill, however, and the removal of the 11c levy is that it should lead to lower prices. I say ‘should’ because we are yet to see whether the full 11c will be passed on to consumers. I understand that the ACCC will be monitoring this situation, but as with all of these issues absolute control as to what the price should be will be near impossible to determine. The ACCC investigation into grocery prices highlighted just how difficult it can be to monitor food prices. When it comes to the dairy industry, I am also aware from reports in my home state of South Australia that dairy farmers get nowhere near the money that milk sells for in supermarkets and that there is a huge gap between the farm gate price and the retail price.

I note that in recent months, as a result of increased exports overseas, those prices have increased substantially and certainly to a point where it makes the production of milk much more viable for those farmers. But there is nevertheless still a very substantial gap between the farm gate price and the retail price that consumers pay at the supermarkets. Again, that has been the cause of both angst and concern amongst the industry and amongst consumers for some time. As a result of that low farm gate price for many years in my home state of South Australia, not surprisingly, what once was a very viable dairy industry has largely been wiped out in recent years. In 1980 there were some 1,780 dairy operators in South Australia. In 2007 that figure had reduced to 354. Certainly the levy and the adjustment scheme did not save the dairy industry in South Australia. In fact, if you look at the statistics relating to the dairy industry, it has been in decline across Australia since 1980. I quote from ‘Farm facts’ in a publication by Dairy Australia entitled Australian dairy industry in focus 2007:

The number of dairy farms has more than halved over the past two and half decades, from 22,000 in 1980 to just over 8,000 in 2007.

What is interesting about those figures is that the trend downwards in the number of dairy farms that we have seen since 1980 has hardly changed at all since 2000 when the levy was introduced. The gradual decline occurred regardless of the fact that we had in fact introduced the levy. So one has to question how effective the levy was in ensuring a sustainable dairy industry in this country.

My concern, however, is that, apart from the economic loss to my home state of South Australia from the decline of the dairy industry, there is an even greater concern—that Australia will see an increase in imports of overseas produced milk and milk products. Milk and milk products are used in so many foods we consume. Knowing where and how the milk is produced is important to me and I am sure it is important to every other Australian, particularly when one considers the effects of the milk product contamination scare we recently saw in China—and which we are seeing still. If the 11c reduction is passed on in full to consumers, it will bring a welcome reduction in the price of milk to consumers.

Right now, when the cost-of-living increases and grocery price increases are regular topics of discussion and debate, reducing the price of milk will make a difference. Milk is one of those essential, everyday needs of families—and even more so if there are children in the family. If $20 million a month is collected from this levy then that will mean that there will be $20 million a month that will go back into Australian households, and that is not insignificant. For those reasons, I commend this bill to the House.