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Thursday, 11 May 1989
Page: 2349


Senator TEAGUE(6.36) —The wheat Bills have led to a wide-ranging debate throughout Australia and much soul-searching by wheat growers, not least in my own State of South Australia where, for some 12 months, the Kerin package, as first proposed, was greatly debated in rural centres. Since that time there have been significant modifications to the original package of proposals and we have now before us the wheat legislation. From the outset I want to condemn the way in which the Government through the Minister for Primary Industries and Energy (Mr Kerin) has sought at every opportunity to play politics with this important industry. It may be that the Australian Labor Party is cynical about its very limited support in country areas. Whether we in this chamber can be cynical or not, it is the case that the Labor Government has not shown that it has at heart the interests of the industry, or the wheat growers and their families in rural areas. Rather it has tried to catch out the members of the Liberal and National parties who do have those industries, those growers and those families at heart.

At various points over the past six months the heartfelt concerns expressed by me, as a Liberal, and many of my colleagues in the coalition, have led us to be quite searching in our comments about the Kerin package. We have been aware that the Government failed to win the support of the industry and thus there have been many dialogues, meetings and deputations. Liberal and National Party senators and members have taken those discussions most seriously and have tried to understand the views being put forward by wheat growers. It is understandable that the Press and public observers have seen some tensions while we have tried to work out what exact form of amendments to the wheat package as proposed by the Government will be supportable by the main body of the industry and in the best interests of this country.

Even now there are some private judgments amongst my colleagues as to where that burden of amendment should lie. As is the case in any matter coming before the coalition, eventually all of those discussions percolate to a policy stand and a formal concluding debate and decision. The decision that concluded that 12 months of debate was the statement of our primary industry policy of 4 April this year which was adopted unanimously in the coalition. As it is a brief and quite formal public statement, Mr Acting Deputy President, I seek leave for this public statement of policy to be incorporated in Hansard.

Leave granted.

The document read as follows-

As part of the restructuring and reform of the Australian economy, the Coalition is committed to the completion of the deregulation of the domestic wheat market. So that the burdens of restructuring are fairly shared, this deregulation should occur in conjunction with progress being achieved in certain areas which impinge on that market and which are mentioned below.

In addition, the Coalition is absolutely committed to all possible action being taken to minimise the impact on the domestic wheat market of extreme corruption in world wheat markets. This goal should be pursued in concert with the commitment to deregulation of the domestic wheat market.

The Coalition believes that complete deregulation of the domestic wheat market should proceed in conjunction with:

reasonable progress towards deregulation in the transport, handling, storage and waterfront areas to reduce the many cost burdens placed upon wheat growers by high levels of regulation, restrictive work practices and anti-market abuses in those areas;

a 95% underwriting guarantee to provide a satisfactory first advance or cash trading option for the Wheat Board;

the maintenance of the Wheat Board's existing powers in relation to exports; and

the Board having the capacity to remain a strong trader competing on fair and reasonable terms with other domestic traders.

Any legislation presented by the Government will be assessed against the position set out in the preceding paragraph.

If the Hawke Government is seriously committed to deregulation of the domestic wheat market on fair and reasonable terms, it will present a legislative package in accordance with the criteria we have set out.


Senator TEAGUE —I thank the Senate. This conclusion is a genuine compromise on all of the representations that Liberal-National Party members brought to this concluding debate, taking into account all that we had heard and all that we had come to understand about the dimensions of the debate. There is an enormous priority in this country for micro-economic reform, for deregulation, for getting away from each industry in Australia a clutter that adds cost, or for removing barriers that restrict the choice of various elements in an industry. So, this was a major consideration in coming to this compromise statement. On the other hand, there is a legitimate concern expressed by any one industry to ensure that it is not being singled out to have some new heat of the marketplace, or some change from an orderly marketing system, thrust upon it in the name of the highly commendable micro-economic reform, if that is not going to be fully able to be coped with by that industry in the short term, or if it is unfairly a pressure being put upon that industry, but not all.

The statement which I have had incorporated in Hansard and which is the policy of the coalition, after a preamble, concentrates upon four criteria for the deregulation of the domestic wheat market. These are four criteria which all coalition members support. The first is that there should be reasonable progress towards deregulation in the transport, handling, storage and waterfront areas to reduce the many cost burdens placed upon wheat growers by high levels of regulation, restrictive work practices and anti-market abuses in those areas. Of course, we want to reduce the cost burdens upon wheat growers.

Let me give one example: In my State of South Australia, growers have a free choice, without restrictions, as to the form of transport that they use to take grain to a port. They can use their own truck to take their wheat 200 kilometres, say, to Port Lincoln, or they can use their own truck to take it five kilometres to, say, Woodener, to a silo, and there the silo, through the cooperative bulk handling company, transports the wheat by rail to Port Lincoln. Or they can contract a trucking firm to take their wheat either the short distance or the long distance. There is a free choice and in fact it is a market choice for the grower. If his vehicle is not strong enough or efficient enough to bear the strain of the long distance, he will choose to take on a trucking company. If he thinks, because of his proximity to a rail head, that there is a genuine advantage in using rail, he will use rail.

This is not the case in New South Wales, not only with regard to transport in these elements but also at the waterfront. There are barriers to the free and efficient use of the waterfront in New South Wales. In fact, I will come later on to some very sharp contrasts in other areas of grain handling between my State of South Australia, which is so very well developed-it has probably the best grain handling system in the world-and the eastern States such as New South Wales. Clearly, there is a pressing urgency to gain deregulation on the waterfront and in transport and other areas, such as we have outlined in that first criterion and, I must say, particularly in the eastern States.

Let me say something about storage. Even as a South Australian senator, who on perhaps only a couple of occasions a year, drives through the countryside in New South Wales and Victoria, compared with my 20 to 50 times in South Australia, I have seen, over many years now, temporary grain storage in New South Wales. On the side of the road, in someone's paddock, will be a great heap of grain lying on tarpaulins on the ground, with a tarpaulin on top and some car tyres holding it down. It looks highly temporary and one wonders whether or not the grain industry is in the twentieth century. Whereas, in my State of South Australia the growers themselves have paid for a $1 billion silo storage system which is systematically all over rural areas. We have a very large grain belt in my State and every town one goes to has its large silos. It is, as I say, the most efficient and best established infrastructure for grain storage and handling anywhere in the world. I commend the growers of my State of South Australia that this is the case, that they have achieved this. Moreover, no-one can allege that there is one government dollar in it. At no stage did the growers of South Australia gain one dollar from the State Government or from the Commonwealth Government-not one dollar from the taxpayers generally-to pay for that silo system.

So, when they have elected grower representatives on the board of the cooperative grain handling company, they have control-that is, grower control-of the silo system, and they have total freedom of choice in their transport arrangements to the silo and they have full confidence in the Australian Wheat Board, we can understand how, despite the Minister for Primary Industries and Energy pointing up some of the obvious difficulties with grain in New South Wales and Victoria, the South Australian growers, even when they listened a great deal, were saying to us, `Well, we don't see any particular reason to move from the status quo. We must say that we have not asked for a change. We don't welcome a change. We recognise that the present law in Canberra that regulates these matters will expire in June of 1989. We know that there needs to be new legislation. But, as to this Kerin proposal which would deregulate domestic marketing and do all sorts of other things to the Australian Wheat Board with regard to exports and so on, we still do not understand why these reforms are necessary. As our representatives in Canberra, please do not thrust them upon us'.

I, along with my colleagues in the Liberal and National parties, genuinely responded to those very clearly expressed views in the industry. Hence we have the other three criteria which the coalition adopted as the basis, or the criteria on which we could go on to the advantages of micro-economic reform that I referred to earlier. The first of the other three criteria was the 95 per cent underwriting guarantee, to provide a satisfactory first advance or cash trading option for the Wheat Board. This is a very important provision, a very important goal. Because the Labor Government has not sought to represent the views of the wheat industry in this matter, this Bill does not have that. It has a 90 per cent underwriting guarantee, becoming, in a matter of years, an 80 per cent guarantee, and then no guarantee at all. So, the Bill that is before us has 90, becoming 80, becoming zero. The coalition's firm view is that that underwriting guarantee should be at the 95 per cent level.

I do not need to remind the Senate that the phrase `95 per cent underwriting guarantee' is itself a brief description of a quite complicated formula, but that formula is well known within the industry. In fact, it takes into account wheat prices in recent years as well as an estimated price for the current year and takes an average of them. The 95 per cent is related to that. Without going into that detail, the important aspect of the underwriting provision is that it activates a guaranteed price to growers where the guarantee is given under the existing legislation by the Commonwealth Government. If there is a shortfall in the money to be paid to growers, it is made up by the Commonwealth Government, using taxpayer funds. The only time that that has been activated was in respect to the 1986-87 crop and there is likely to be an estimated payout of $220m. I say `there is likely to be' because it is not actually completed yet. It will be of that order.

Frankly, this is in fact one of the major reasons why the legislation is before us in this form. The reason for the Kerin package was that the Hawke Labor Government, like any modern government in countries such as Australia, has financial restraints and does not like paying out $220m under existing legislation to a constituency which does not greatly support the Labor Party. No doubt there was a great deal of soul searching in the Labor Cabinet as to how this payout of $220m could be avoided in the future. The Kerin plan, as it was originally proposed many months ago, was even more draconian than the provision that is in this legislation with regard to the guarantee. So, it is very easy for the public not to be fooled that two of the major elements of this whole wheat package represent the Labor Party, firstly, gleefully trying to divide off various elements of the Liberal and National parties that are conscientiously seeking to be in dialogue about these matters with their constituents and, secondly, saving itself paying a bill for this $220m to a constituency which the Labor Party believes has seen through it and does not support it.

The third criterion is an absolutely essential one. Because it has been stated in our policy, it just had to be accepted by the Government. It is the maintenance of the Wheat Board's existing powers in relation to exports. Only over thousands of wheat growers' dead bodies would there be any change to the exclusive handling of the export of wheat by the Australian Wheat Board. Certainly, growers do not want any change to that provision, and that is the policy of the coalition. Thankfully, any ambiguities, any slippery slope towards departing from that in the Kerin plan, have been now, through Opposition pressure and industry pressure, removed from the legislation that is before us.

The fourth criterion is that the Wheat Board have the capacity to remain a strong trader competing on fair and reasonable terms with other domestic traders. Eighty per cent of wheat grown in Australia is exported. The Wheat Board, therefore, has control of the lion's share of the crop. Under the present legislation, it has control of the other 20 per cent-the domestic and stock feed elements of the wheat crop. Whilst there is this freeing up to competition of the domestic market-that 15 per cent part of the wheat crop-it is important that the Wheat Board be one of the principal players and that there be no unfair or unreasonable barrier to the Australian Wheat Board being a domestic trader in competition with all the others.

When we had adopted not only the full statement of our policy but in particular these four criteria, the coalition found that the Government was ready to introduce its legislation. Being aware of what he had decided, the Government naturally, and I think very wisely, itself amended much of the original Kerin package to approximate the policy that the coalition had put down. It was aware that the legislation needed to be passed through the Parliament. I acknowledge not only that the Government did amend the original Kerin package but also that that was very largely a result of the clear coalition decision on 4 April. We then found, on 13 April, when the legislation was introduced into the Parliament, that it was necessary to apply our policy and our four criteria to the legislation itself.

Because it was necessary to seek further amendments to that legislation, we have before us now a large number of coalition moved amendments that will bring the legislation much closer to the adopted coalition policy. Because of those amendments being approved by the coalition parties meeting together, I have been persuaded by my colleagues that with those amendments we should happily adopt this legislation. It is certainly the case that the legislation, as amended by the Opposition's package of amendments, will not endanger the prosperity of growers in Australia and will not in any radical way disrupt the wheat industry in any of the States of Australia, including my own State of South Australia.

Let me refer to the main amendment, as I see it, and that is for the 95 per cent guarantee. I have already indicated why it is so important. I support that guarantee at the 95 per cent level, as I support every other element of the adopted coalition policy. I have had discussions with wheatgrowers in my own State since the coalition's response to the legislation was made public, and I am happy to note that, whilst growers originally were entirely sceptical of the Kerin plan and entirely anxious about the deregulation of the domestic market, they have now come to be prepared to accept the legislation on the basis of the approved coalition amendments. I regard that as a very welcome flexibility in the growers and in the industry in my State. I commend those leading wheatgrowers who have been in continual contact with me over the last 12 months as we have gone through this discussion and debate together. I, jointly with them, believe that we have gained a great deal in the reassurances that are necessary to ensure that the industry is in continuing prosperity in my State.

One of the particular advantages that flow from the provisions of the legislation is that it gives a new, clear flexibility to allow a premium price to be given to a specialist grower. If a wheat grower seeks to produce a crop that was chemically free, or a crop that had high protein beyond the four standards for classifying wheat as it is received in the silos in my State, in the past that grower has not been able to gain the market price for the specialised product that he has produced, but rather has had to take the price that was the fair average for one of the four categories of wheat that obtained in the system. This legislation does, however, give a direct incentive for specialised products to be rewarded with a higher price. So, there will be a market mechanism that is a welcome change and is one of the genuine positives in the new arrangements.

I, for one, as a Liberal senator from South Australia, will be very vigilant with regard to the effect that this new legislation has on the grain industry in my State of South Australia and on the livelihood and prosperity of grain growers. I share their reassurance that there are some advantages in the new arrangements and that there are very unlikely to be any disasters. We will see how the new arrangements proceed season by season and, to the extent that there made need to be adjustments to ensure the prosperity of the industry and of growers, I am sure that such initiatives for change would come from the Liberal and National parties. I am happy, with my coalition colleagues, to support the amendments that will be moved by the coalition.