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Thursday, 11 May 1989
Page: 2366


Senator KNOWLES(8.23) —I support the responsible and measured stance on this legislation that the Liberal-National coalition has adopted. As a representative of a major wheat producing State I firmly believe that the coalition approach to deregulation of wheat marketing offers the best long term protection of the interests of wheat growers. I think it is a particularly important stand that we have taken given the fact that many wheat growers have been concerned about deregulation while many other wheat growers in fact have been firmly behind the proposal. With 4.8 million tonnes harvested by the middle of January, my State of Western Australia was 2 million tonnes ahead of the next best State, New South Wales. As a Liberal, I am convinced that we cannot create incentive, increase national wealth and maximise individual reward for enterprise and effort through industry regulation. Australians cannot enjoy the benefit of a supposedly free society without total economic freedom. At the very least, regulated industries and marketing systems must show cause why they benefit producers and why deregulation will supposedly do harm. The coalition does not believe in a dogmatic and gung ho approach to deregulation in all matters, nor do we believe in taking precipitate action in any one industry while other producers and providers of labour and other services remain in cosy monopolies. This is why we are supporting these Bills under firm conditions and why we are moving to amend them.

It is not good enough, however, to stand here and say that because there are faults in what is essentially deregulatory legislation, it must be rejected wholesale. It is not good enough to say that because the Hawke Labor Government is putting them forward they must therefore be fundamentally bad. Heaven only knows we see enough legislation that qualifies for that. There are other pieces of legislation that we see from week to week and we do not oppose them just on that principle. The Liberal philosophy is opposed to imposed monopolies-to monopoly power that derives from the exercise of coercion or legislative restriction. While the greatest impediment to both human freedom and economic progress in Australia remains the exercise of monopoly union power, the coalition cannot blindly defend monopolies that may be more acceptable to many of the conservative voters. Australians, I think, are already cynical enough about their politicians and they have good reason to be cynical about knee-jerk opposition to Bills and about those who preach macro-economic deregulation, yet turn away from serious micro-economic reforms. Unless we consider this legislation on its merits, as we have done, and at great length, we will not have the right to expect that essential reforms in the industrial area will be accepted by ordinary Australians.

I think it is very important to note at the same time that while many of the wheat growers throughout Australia may in fact be opposed to the principle of this legislation, on other issues they are very much in favour of deregulation. What many of us find difficult to comprehend and explain to them is how those very same people can be in favour of deregulation on the one hand but only as long as it does not affect them. I think that is why we have taken a very measured approach, a very considered approach, to dealing with this Bill and what is best not just for the industry but for the individual wheat growers themselves. Unless we consider this legislation on its merits-as I say, we have done that-we are going to find difficulty right across the board in many other areas.

Having stated this broad principle, I remain conscious that the wheat growers that I represent do not want the overturning of the basic total wheat marketing structure. This reflects a degree of practical reality, as export deregulation would be both unrealistic and irresponsible. For this very reason, this Bill reflects the insistence of the Liberal and National parties that the Australian Wheat Board (AWB) retain its monopoly powers over export wheat. It is a matter of reflecting not just the wishes of wheat growers but also a sensible recognition that the international wheat market is corrupted by the subsidising policies for export wheat of the European Economic Community and the free-enterprise United States. Nonetheless, the fact that the United States of America chooses to subvert free market principles is not an excuse for maintaining full regulation within Australia. It is ironic for the President of the Grains Council of Australia last June to have urged the United States wheat growers to let the free market forces of supply and demand determine the price of wheat, and then oppose all domestic wheat deregulation. The evidence simply does not support the contention that regulation has been an unqualified benefit to wheat producers. Many wheat producers throughout this country agree with that statement.

Deregulation of transport, handling and storage would, according to the expert findings of the McColl Royal Commission into Grain Storage, Handling and Transport, create a saving of $7 per tonne for grain producers in Western Australia. Some 40 per cent of the value of export wheat is consumed by these monopolies, forcing growers to pay 30 per cent more than they could expect in a competitive market. An Industries Assistance Commission report last year noted that of each dollar received by the Australian Wheat Board in 1986-87, 20c was consumed in transport, handling and storage. Marketing cost 10c and, of the 70c returned to the grower, 46c was consumed in farm inputs and other costs. Expressed in 1988 dollars, a tonne of wheat in the 1930s, with a gross price to farmers of $234, would pay more than twice average weekly earnings. In 1988, a tonne of wheat bringing $148 pays less than half one week's average wage of $481. So the figures really do speak for themselves.

Specifically, it has been calculated that in the 30 years between 1948-49 and 1978-79, the cost of wheat regulation, especially domestic regulation, was $1,122m. Deducting government assistance, the cost to growers, expressed in 1979 dollars, was just below $1 billion. I think in anyone's language that is a very big price to pay for regulation. I do not quote these figures to argue against the principle of a strong Australian Wheat Board. I do however consider that they underline the merits of greater domestic deregulation.

The Australian Bureau of Agricultural Economics at the beginning of this year predicted production levels of 13.5 million tonnes of wheat for the next five years, a static figure as farmers turn to livestock and more profitable crops. Again, it is clear that our wheatgrowers do not inhabit the best of all possible economic worlds, and it therefore is proper for their Senate representatives to consider possible and proper improvements. It must be emphasised that this legislation removes AWB monopoly control only-and I emphasise the word `only'-over domestic wheat sales that account for less than 20 per cent of total wheat grown in Australia. Of course, of this, more than a quarter of the stockfeed wheat is already deregulated. In fact, many would say that 90 per cent of stockfeed at the moment is already sold privately.

Domestic deregulation should not be seen as a sudden innovation, but as the continuation of a process already under way. Figures that were supplied to me recently in fact indicated that at least 11 per cent of human consumption wheat was already being sold privately. Of course, there were great benefits to the producers themselves, inasmuch as the cheque went straight to the producer instead of going through its natural course as has happened over the years.

The increased use of the permit system has raised the incomes of many producers by up to $17 per tonne. It has also led to a warning by Mr Clinton Condon, Chairman of the AWB, last July that the AWB was not able to compete properly on the domestic market. It is the view of the coalition, however, that the AWB should act in full competition with other traders on the domestic market. Support for deregulation, therefore, cannot be said actually to subvert the AWB.

Arguments that a loss to the pool of $7 per tonne under domestic regulation will occur have been produced by comparing the best asking prices on a single day with seasonal averages. A more sober assessment of a loss of $1.50 per tonne would be offset against other savings, including $2 gained in direct sales and savings through deregulation of transport and handling.

In the final analysis, it is probably well to remember that prices are not the same as returns to the grower. I think that is something that very much needs to be remembered. Moreover, it is inequitable that producers of specialised varieties of wheat should continue to meet the cost of pooling without benefiting from the service. Producers of fine quality wool would not appreciate a forced pooling with a lower quality product. I think that we need to draw the distinction between those two areas.

Prior to the introduction of this legislation, the coalition laid down a firm set of principles that I support, because they combine cautious and responsible deregulation with safeguards for the wheat grower. We have not wavered in our insistence that the export powers of the AWB be retained, and this has forced the Government to drop plans for weakening it. We are committed to deregulation in the complementary areas of transport, handling, storage and waterfront.

The Senate needs to be reminded that it is the coalition that has forced the Government to accept our position on these important issues because without one, we cannot effectively have the other, and we have been most insistent that those areas be very much a part of this legislation. They were not in the original Bill, they were not originally part of the legislation and we consider them to be most important. We believe that as a matter of justice, and to ensure the ability of the AWB to provide solid cash advances and to borrow necessary funds, underwriting should be guaranteed at 95 per cent and no less. We will continue to fight for this if necessary, even if unsuccessful with our amendments, which I understand the Australian Democrats may in fact now support. We are committed to maintain the position of the AWB as a strong domestic trader.

The Opposition has already secured the acceptance of amendments that protect the marketing powers of State statutory bodies dealing with grain. Unless so amended, clause 88 could have put an end to these boards in a sweeping and most arbitrary manner. In the Senate, we are seeking, as I say, a 95 per cent underwriting guarantee, and the assurance that of eight nominated members of the 11 Australian Wheat Board members, five will be wheat growers, as will the Board Chairman. I think that is a very very sensible move. We are also moving to allow greater input from the Grains Council of Australia as to the spending and management of money from grain growers paid into a levy fund.

The major principles that I have outlined here tonight are not some kind of temporary response to a particular situation. They form the coalition policy on wheat as an integral part of our primary industry policy. So one has certainly not been a knee-jerk reaction to the other, and any attempt to paint it as such is certainly fallacious. What is certain is that a Liberal-National government will ensure that the wheat industry alone does not experience deregulation. Reforms in the areas of shipping and waterfront will be a major priority.

Australia has a coastal shipping service where, according to the Industries Assistance Commission, an estimated $860m in cost savings will have an ultimate bearing on the rural sector. The coalition will strive to make it internationally competitive. That is certainly something that the Government has failed to do. It tends to close its eyes to anything that happens on the waterfront. To this end, over five years we will phase out absolute prohibition of foreign competition in coastal shipping through a more lenient granting of single voyage permits. We will deregulate in a careful and measured manner, with a 10 per cent to 15 per cent tariff initially to enable Australian shippers to adjust.

On the waterfront, a coalition government will implement the reforms that the latest report has shown to be most essential. Foremost of these is the promotion of enterprise-based employment, with employers and employees free to negotiate their own wages and conditions. Industry-based employment, on the waterfront and in shipping is a root cause of inefficiency, uncompetitiveness and restrictive practices. Australian competitiveness, and rural export industries, cannot suffer while maritime and waterfront unions are exempt from the normal disciplines faced by other Australian workers in the labour markets and while their monopoly power is upheld. Unions simply cannot continue to determine who works where and for whom. The list of outrageous behaviour on the waterfront just goes on. These practices are affecting our primary producers and thereby affecting all Australians. A coalition simply will not allow that to continue.

I simply mention these related areas to wheat marketing to make it clear that a future coalition government would be of the opinion that regulation must proceed on a very broad front, not the narrow front that is being considered by the Government. Australians who believe in free enterprise, and who are inclined to praise the Labor Government for some minor deregulatory initiatives, ought to realise that there are definite limits to what can be expected from a Party beholden to the Australian Council of Trade Unions and answerable to all the other unions.

The Labor Party will not take on the Seamen's Union of Australia or the Waterside Workers Federation of Australia, and therefore we will not have the necessary deregulation and efficiency in this vital section of the export chain. I might add that I believe that only a coalition government will have the courage to act in this area and that is just simply a matter of fact. The Australian Labor Party has failed the test of commitment to a genuine free market because it will not apply free market disciplines to its own supporters. After the passage of these Bills, this charge will not be able to be levelled against the Federal coalition.

On the other hand, we have the born-again regulators, the Australian Democrats, jumping on every discredited economic bandwagon in the quest for any votes they can get. In fact it is not often that I might say that Senator Maguire speaks some sense, but I suppose in the debate this afternoon he certainly exposed some facts about the motives behind the Australian Democrats and their leader Senator Haines in her publicity seeking attempt to gain a lower House seat. I think their position in many of these debates is simply an extension of that-they will do anything and make any decision, according to which way the wind is blowing and if in fact there is a vote in it. So anxious are they to shackle business enterprise that I guess it is fair to describe them as political bondage freaks.

I believe that throughout this debate the coalition has upheld a sensible and proper mix of deregulation and safeguards necessary for Australian wheat growers. Should our amendments be successful, the end result should be an Australian Wheat Board giving the best possible service and end returns to growers. Just as financial deregulation has strengthened the major Australian banks to the national good, so should the AWB emerge the stronger for this limited competition.