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Thursday, 24 June 2021
Page: 72


Senator DUNIAM (TasmaniaAssistant Minister for Forestry and Fisheries and Assistant Minister for Industry Development) (15:36): I present government responses to committee reports as listed on the Dynamic Red. In accordance with the usual practice, I seek leave to have the documents incorporated in Hansard.

Leave granted.

The documents read as follows—

AUSTRALIAN GOVERNMENT RESPONSE TO THE SENATE ECONOMICS REFERENCES COMMITTEE REPORT

Australia's Dairy Industry: Rebuilding trust and a fair market for farmers

June 2021

Introduction

On 14 September 2016, the Senate referred an inquiry into the Australian dairy industry to the Senate Economics References Committee for inquiry and report, in order to establish a fair, long term solution to Australia's dairy crisis, with particular reference to fresh milk security and:

a. the legality of retrospective elements of milk contracts

b. the behaviour of Murray Goulburn; and

c. any other related matters.

On 17 August 2017, the Committee released its report. The Australian Government thanks the Committee for the time and effort put into the inquiry into the dairy industry and all those dairy forum and representative organisations who contributed to the inquiry. The government has considered the report and provides its response to the Committee's twelve recommendations.

Significant activity has taken place in the dairy industry since the release of the Committee's report. These include the sale of Murray Goulburn to Saputo and the appointment of KPMG to undertake the solvent winding down of the Group. Additionally, the ACCC had instituted proceedings in the Federal Court against Murray Goulburn alleging it engaged in unconscionable conduct and made false or misleading representations in contravention of Australian Consumer Law, resulting in significant financial penalties.

From 2016-18, the ACCC held an inquiry into the competitiveness of prices, trading practices and the supply chain in the Australian dairy industry. On 30 April 2018, the ACCC released its Dairy Inquiry Final Report including a key recommendation for government to introduce a mandatory code of conduct for the dairy industry.

The government introduced the Dairy Industry Code of Conduct (the Code) which came into effect on 1 January 2020, following three rounds of industry consultation. The code is a mandatory industry code under section 51AE of the Competition and Consumer Act 2010 and includes mandatory requirements about the conduct of business relationships between farmers and processors. The code provides clear pathways for lower cost dispute resolution to support farmers and processors address contractual issues in a fair and transparent manner.

In line with feedback received from the dairy industry, the code prohibits:

retrospective pricing step downs

unilateral prospective step-downs except in exceptional circumstances

unilateral changes to agreements except in narrowly defined circumstances

processors withholding loyalty payments from farmers who are changing processor, and

exclusive supply arrangements where the conditions would be to the detriment of dairy farmers.

On 7 October 2020, the government announced its Ag2030 plan to support the Australian agricultural industry to grow to $100 billion by 2030. Through Ag2030, the government is working to ensure Australian agricultural producers receive maximum returns for their hard work and are supported by vibrant rural and regional communities. The Ag2030 plan sets seven themes for action: Trade and Exports; Innovation and Research; Biosecurity; Supply Chains; Stewardship; Human Capital; and Water and Infrastructure.

A crucial initiative under the Supply Chain priority of the Ag2030 plan is the ACCC inquiry into perishable agricultural goods, to consider whether there are market imbalances in domestic fresh food supply chains. This inquiry also examined whether the Dairy Industry Code of Conduct should be extended across the entire domestic supply chain to include retailers and their dealings with processors. The government initiated this inquiry in response to ongoing concerns expressed by farmers across dairy, horticulture and other perishable commodities that unfair treatment by retailers continues to be evident. The ACCC provided its report on this inquiry to the Treasurer on 27 November 2020. The government continues to consider the findings and recommendations of the report.

Government assistance to dairy industry

The Australian Government is driving a more profitable, resilient and sustainable dairy sector. In addition to implementing the Dairy Industry Code of Conduct on 1 January 2020 and announcing the Perishable Agricultural Goods Inquiry, the Government has also committed:

$14. 78 million to 2024-25 towards dairy export projects to identify the regulatory hurdles for domestic dairy manufacturers to become exporters, align food safety regulations and work towards reduced regulatory intervention through improved data collection.

$10 million to assist dairy farmers to upgrade or invest in energy efficient equipment to reduce their energy costs.

$8.1 million in the 2019-20 MYEFO in additional funding to the ACCC Agriculture Unit to boost its examination of competition and unfair trading issues. This included the creation of a specialist role with specific responsibility for dairy.

$4.75 million in the Kids to Farms program to help educate children about agriculture through activities such as farm visits, virtual technology 'in-class' experiences and developing information resources for classrooms.

$3 million in grants to support farmer groups to set up farm cooperatives and other collective business models.

$1.5 million total to Dairy Australia and Australian Dairy Farmers to increase business resilience, risk planning and financial and legal literacy for farmers, as well as investigate ways to provide farmers with more say over how they sell their milk.

Assistance is also available through:

the $5 billion Future Drought Fund to provide ongoing and sustainable funding to help build drought preparedness, resilience, and to help with recovery efforts

the Farm Household Allowance, which supports farmers and their partners in financial hardship, regardless of the cause

the Rural Financial Counselling Service, which provides free financial counselling to farmers and small related businesses in, or at risk of, financial hardship

the Regional Investment Corporation, which administers the delivery of farm business concessional drought and investment loans and national water infrastructure loans.

Recommendation 1:

The committee recommends that the Australian Competition and Consumer Commission (ACCC}, as part of its inquiry into the Australian dairy industry, evaluate the extent to which the code of conduct will reduce power imbalances between farmers and processors, and recommend improvements to the code that may better achieve this outcome. Any outcomes from the ACCC inquiry should be incorporated in the proposed review of the code after its first year of operation.

The government notes the recommendation.

The government notes the recommendation refers to the voluntary industry code, launched by the peak industry body for the Australian dairy industry, the Australian Dairy Industry Council (ADIC) in June 2017 to help ensure greater transparency and fairness in milk supply and pricing.

In December 2019 the Government introduced the mandatory Dairy Industry Code of Conduct in response to the ACCC Dairy Inquiry Final Report which concluded that the introduction of a mandatory dairy code of conduct could help address power imbalances in the dairy industry between farmers and processors by improving the quality of information and price signals, enable fairer allocation of risk, and remove restrictions on farmers' ability to switch processors.

Through its inquiry the ACCC considered the effectiveness of the voluntary code and reported that it had a positive impact on some contract terms offered by some processors to some farmers for the 2017-18 dairy season. In particular, processors that signed on to the code made improvements to contract terms for setting and varying prices, exclusivity supply clauses and loyalty and other bonus payments. However, the ACCC found that the non-enforceability of the voluntary code was an inherent weakness which could not be addressed by industry alone.

The Australian Dairy Industry Council commenced a review of the voluntary industry code to address the findings of the ACCC's dairy inquiry, which was released in April 2018. During the process of completing this review - and in light of the ACCC's findings and recommendations - the peak body for dairy farmers, the Australian Dairy Farmers (ADF) changed its position on the best approach to implement the code and requested that it transition to a mandatory code of conduct.

The mandatory Dairy Industry Code of Conduct came into effect on 1 January 2020 and includes requirements about the conduct of business relationships between dairy farmers and processors. All farmers and processors are bound by the requirements of the code with some exceptions for small businesses. The code replaces ADIC's voluntary code and seeks to address market failures that were not sufficiently addressed in provisions of the Competition and Consumer Act 2010 (CCA).

The ACCC's perishable goods inquiry report, released on 10 December 2020, made some initial observations on the mandatory Dairy Industry Code of Conduct. In particular, the ACCC identified a number of positive developments in terms of the operation of the Dairy Code including evidence of competition among processors on raw milk prices after prices were announced on 1 June 2020; and increased transparency as farmers were able to access price information a sufficient period ahead of needing to make a decision about which processor to supply.

Recommendation 2:

The committee recommends that the ACCC consider how collective bargaining in the dairy industry could be strengthened to enable these provisions to be more widely used and to assist in addressing the power imbalance.

The government notes the recommendation.

The government supports the intent of this recommendation and notes that changes to the Competition and Consumer Act 2010 (CCA) from November 2017, made it easier for small businesses to lodge a notification to obtain legal protection from competition laws to collectively bargain with a customer or supplier. More generally, it is a matter for the ACCC to determine whether or not to allow collective bargaining should businesses request to do so.

The CCA generally requires businesses to act independently of their competitors when making decisions about pricing, which firms they do business with, and the terms and conditions of doing business. Competitors who act collectively in these areas are at risk of breaching the competition provisions of the CCA. However, as noted in the Senate report, businesses can seek ACCC approval to provide protection from legal action under the CCA. Approval is not automatic, and the ACCC assesses each application to decide if the public benefit outweighs the public detriment.

In the dairy industry, dairy farmers have been collectively bargaining with milk processors since 2001. The first authorisation was to one group of farmers, followed by ACCC authorisation to Australian Dairy Farmers (ADF) in 2002 to apply broadly to dairy farmers collectively negotiating with dairy processors. In 2011, the ACCC granted a 10-year renewal to ADF to collectively bargain with milk processors. This authorisation enables dairy farmers to form and register collective bargaining groups under ADF's existing authorisation without having to separately apply to the ACCC.

As part of the terms of reference of its Dairy Inquiry, the ACCC considered the role of collective bargaining and its effectiveness in the industry. The ACCC Final Report 2018, while not disregarding collective bargaining as an option in the future, did not consider this measure was a broad remedy to address imbalances of bargaining power between processors and farmers in the dairy industry. It instead recommended the implementation of a mandatory code of conduct for the dairy industry, which was progressed by government and took effect on 1 January 2020. The code improves the balance in bargaining power between dairy farmers and processors and replaced the previous voluntary industry code.

Recommendation 3:

The committee recommends that any review of the code of conduct for contractual relationships be undertaken by an independent party that can objectively assess whether the code is working as intended and consider if a mandatory code would be more appropriate.

The government notes the recommendation.

The government notes the voluntary industry dairy code of conduct was launched by the peak industry body for the Australian dairy industry, the ADIC in June 2017. ADIC reviewed the voluntary industry code after twelve months of operation and sought to address the findings of the ACCC's Dairy Inquiry, which was released in April 2018. During the process of completing this review—and in light of the ACCC's findings and recommendations—the peak dairy farmer body, Australian Dairy Farmers—changed its position on the best approach to implement the code and requested that it transition to a mandatory code of conduct.

On 13 December 2019, the government announced the mandatory Dairy Industry Code of Conduct. The Code came into effect on 1 January 2020 and includes mandatory requirements about the conduct of business relationships between dairy farmers and processors.

To support education and compliance of the Code, the ACCC established the Dairy Consultative Committee as a forum for dairy industry representatives to discuss issues related to the implementation of the Code. The establishment of the Committee was part of the Australian Government's injection of $8.1 million in the 2019-20 Mid-Year Economic and Fiscal Outlook in additional funding to the ACCC Agriculture Unit to boost its examination of competition and unfair trading issues. The ACCC has also established a Dairy Specialist role in its Agriculture Unit to provide additional expertise and to raise industry awareness about the Code.

On 22 October 2020, the ACCC announced it would introduce a class exemption in early 2021 that will provide immediate legal protection for small businesses to engage in collective bargaining. The class exemption will apply to a business with an aggregated turnover of less than $10 million in the financial year preceding when it joins a collective bargaining group. This class exemption will remove the need for these businesses to seek authorisation or lodge a notification, meaning that they could access the exemption without delay or additional cost and realise the benefits of collective bargaining. The ACCC will engage directly with agricultural industry associations in 2021 to explain how the class exemption for collective bargaining may be beneficial and how businesses can access the regime.

Recommendation 4:

The committee recommends that representative organisations of the dairy industry, together with retailers, develop an education campaign to promote awareness about the dairy industry so consumers can make informed choices when purchasing dairy products.

The government notes the recommendation.

The government supports the intent of this recommendation, recognising that it is a matter for industry to determine whether or not to implement the recommendation.

The government further notes that Dairy Australia, as part of its research, development and extension work for the benefit of Australian dairy farmers, promotes the advantages of dairy through a number of campaigns and partnerships.

In particular, the Dairy Matters campaign, uses ads across TV, cinema, websites and social media to highlight the dairy industry's values, standards and commitments. This campaign also answers consumer questions on the healthiness of dairy foods, animal welfare, and environmental and social concerns.

In particular, the Dairy Matters campaign was launched in 2019, across TV, cinema, websites and social media to highlight the dairy industry's values, standards and commitments. This campaign also answers consumer questions on the healthiness of dairy foods, animal welfare, and environmental and social concerns.

Dairy Australia reports positive results from the campaign. Of the 30 per cent of the key audience who saw the campaign:

89 per cent agreed it is 'important to support the Australian dairy industry'

78 per cent agreed they 'feel more supportive towards industry'

69 per cent agreed they 'would pay attention to Dairy Australia material' "

Annual consumer research undertaken by Dairy Australia has shown improvements in trust and perception since the development on the new strategy in 2018:

Overall consumer trust in the industry has shifted from 68% in 2018 to 74% in 2020

Changemaker trust in the industry has shifted from 71% in 2018 to 80% in 2020

Additionally, the Australian Government has delivered the new $4.75 million Kids to Farms program to help educate children about agriculture through activities such as farm visits, virtual technology 'in-class' experiences and developing information resources for classrooms. Kids to Farms aims to increase understanding of where and how food and fibre is produced and importance of farming to Australia's way of life. The program will run over three years from 2019-20 to 2021-22, concluding on 30 June 2022.

Recommendation 5:

The committee recommends that dairy processors set opening prices conservatively so that any downward pressure from market forces will not result in retrospective price step-downs that have devastating impacts on dairy farmers.

The government notes the recommendation.

The government supports the intent of the recommendation, noting that it is a matter for individual dairy processors to negotiate their pricing strategy with their dairy farmer suppliers.

The government recognises there is an imbalance in the sharing of risk between farmers and processors, particularly in instances of processors implementing step-downs.

In line with recommendations from the ACCC Dairy Inquiry Final Report and industry consultation feedback, the introduction of the mandatory Dairy Industry Code of Conduct prohibits retrospective step-downs in all circumstances (sections 27 and 39 of the Code).

Prospective step-downs are prohibited except in limited exceptional circumstances (section 28 of the Code) involving an extraordinary event (such as an emergency or change in market· conditions). Exceptional circumstances are limited to circumstances which are temporary and must involve an extraordinary event which is the result of causes located outside of Australia, has a highly significant effect on supply, demand or costs in the dairy industry and is not a result of decisions by processors.

The Code places no restrictions or obligations on either processors or farmers with respect to an increase (or 'step-up') in milk price, either retrospective or prospective.

The Code also improves information and pricing transparency by requiring all processors (other than those that meet the Code's definition of a small business entity) that intend to purchase milk during the next financial year to publish standard forms of milk supply agreements on their website before 2 pm on 1 June (AEST). Section 14 of the Code also provides that a processor must publish a statement justifying the prices offered in each standard form of a milk supply agreement that it publishes on its website.

Requiring processors to publish one or more standard forms of agreement on a set date each year improves farmers' ability to compare prices and conditions across processors.

Recommendation 6:

The committee considers that an independent review of the government's dairy support package be undertaken to determine whether it has been effective in improving outcomes for affected dairy farmers and whether it has delivered value for money.

The government notes the recommendation.

At the time of the Senate inquiry, a dairy support package had been announced by the government on 25 May 2016 to provide support for Australian dairy farmers who had their incomes retrospectively cut by Murray Goulburn and Fonterra.

Key elements of the dairy support package were:

Dairy Recovery Concessional Loans

More Rural Financial Counsellors in dairy regions

Additional support to process claims for Farm Household Allowance (FHA)

Dairy Industry Liaison Officer

Mobile service centres redirected to affected dairy regions

Establishing a commodity milk price index

Additional support through the Tactics for Tight Times program.

Individual assistance programs are reviewed as appropriate. For example, the commodity milk price index was reviewed and then ceased in May 2019. In addition, new measures are announced where these are warranted.

Since 2016, the government has provided additional support to drive a more profitable, resilient and sustainable dairy sector. Following three rounds of consultation with the dairy industry, the Dairy Industry Code of Conduct came into effect on 1 January 2020 which includes mandatory requirements about the conduct of business relationships between farmers and processors. The Code provides clear pathways for lower cost dispute resolution to support farmers and processors to address contractual issues in a fair and transparent manner.

Additionally, on 26 August 2020, the government announced the ACCC would undertake the Perishable Agricultural Goods Inquiry to consider if there are market imbalances in the domestic fresh food supply chains. This inquiry will also examine whether the Dairy Industry Code of Conduct should be extended across the entire domestic supply chain to include retailers and their dealings with processors.

In addition to implementing the Dairy Industry Code of Conduct and announcing the Perishable Agricultural Goods Inquiry, the Government has also committed:

$14.78 million to 2024-25 towards dairy export projects to identify the regulatory hurdles for domestic dairy manufacturers to become exporters, align food safety regulations and work towards reduced regulatory intervention through improved data collection.

$10 million to assist dairy farmers to upgrade or invest in energy efficient equipment to reduce their energy costs.

$8.1 million in the 2019-20 MYEFO in additional funding to the ACCC Agriculture Unit to boost its examination of competition and unfair trading issues. This included the creation of a specialist role with specific responsibility for dairy.

$5.1 million under the Rural Research and Development for profit program towards three projects led by Dairy Australia.

$4.75 million in the Kids to Farms program to help educate children about agriculture through activities such as farm visits, virtual technology 'in-class' experiences and developing information resources for classrooms.

$3 million in grants to support farmer groups to set up farm cooperatives and other collective business models.

$1.5 million total to Dairy Australia and Australian Dairy Farmers to increase business resilience, risk planning and financial and legal literacy for farmers, as well as investigate ways to provide farmers with more say over how they sell their milk.

Assistance is also available through:

the $5 billion Future Drought Fund to provide ongoing and sustainable funding to help build drought preparedness, resilience, and to help with recovery efforts

the Farm Household Allowance, which supports farmers and their partners in financial hardship, regardless of the cause

the Rural Financial Counselling Service, which provides free financial counselling to farmers and small related businesses in, or at risk of, financial hardship

the Regional Investment Corporation, which administers the delivery of farm business concessional drought and investment loans and national water infrastructure loans.

Recommendation 7:

The committee recommends that the ACCC specifically address the issue of unfair contract terms within the dairy industry and provide guidance as to whether milk supply contracts, in- principle, fall under the scope of the unfair contract term laws. Further, the ACCC should provide guidance as to how milk supply agreements and contracts could be developed under a code of conduct for contractual relationships to be compliant with unfair contract laws.

The government notes the recommendation.

The government notes the ACCC Final Report included findings on contracting practices, and that the report identified that in some milk supply contracts, there were potential breaches of the unfair contract term protection provisions under the Australian Consumer Law. For parties covered by the mandatory Dairy Code of Conduct, a number of these concerns have been addressed through provisions relating to good faith requirements, unilateral changes to agreements, and loyalty payments.

On 6 November 2020, Commonwealth and state and territory consumer affairs ministers agreed to strengthen the existing unfair contract term protections in the Australian Consumer Law. Key reforms include:

making unfair contract terms unlawful and giving courts the power to impose a civil penalty

increasing eligibility for the protections by expanding the definition of small business and removing the requirement for a contract to be below a certain threshold

improving clarity on when the protections apply, including on what is a 'standard form contract'.

These reforms will help reduce the prevalence of unfair contract terms in standard form contracts and improve small business confidence when entering into contracts.

Whether or not a milk supply contract falls within the scope of the UCT laws will depend on the details of that contract and the circumstances of the businesses entering into the contract.

General information about the application of the law is available on the ACCC's website (https://www.accc.gov.au/business/business-rights-protections/unfair-contract-terms). Businesses or farmer representative bodies should seek legal advice if they have concerns about a contract or any of the terms of that contract.

Recommendation 8:

The committee recommends that the House of Representatives pass the Competition and Consumer Amendment (Small Business Access to Justice) Bill 2017.

The government notes the recommendation.

The measures proposed in the Competition and Consumer Amendment (Small Business Access to Justice) Bill 2017 were enacted through the Treasury Laws Amendment {2018 MeasuresNo. 5) Act 2019.

Recommendation 9:

The committee recommends that the government prioritise action to reduce the regulatory burden across the cooperative sector and support programs to facilitate the establishment of new cooperatives.

The government agrees to the recommendation.

The government agrees to this recommendation, noting that $3 million was committed in 2019 for a Starting Farms Cooperative Program to provide grants to assist farmer groups to establish farm cooperatives and other collaborative business models. The initiative builds on the government's $15.2 million Farming Together Pilot Program, which was launched in 2016 as part of the government's Agricultural Competitiveness White Paper.

Under the Starting Farm Co-operatives Program, the Government is providing $2.5 million over two years to the Business Council of Co-operatives and Mutuals to assist farmers, fishers and foresters to learn more about co-operative approaches and their benefits. The measures include provision of an information hotline, workshops, educational material, and financial assistance to fund fees for training courses relevant to establishing co-operative business models.

$500,000 is also being provided to the Southern Cross University to support the legacy of the Farming Together Pilot Program through a series of case studies and updated learning materials.

Co-operatives and other collaborative business arrangements have potential to hand more control back to farmers while reducing costs and improving production efficiencies. A collaborative model allows farmers to function like a larger body while retaining their own independent business structure. This will enable them to take greater ownership along the supply chain and may boost their bargaining position and deliver increased returns at the farm gate. Increased returns are important to the profitability of Australian farmer, fishers and• foresters and to the sustainability of economies in regional communities. In 2018-19 there were over 2,000 co-operative and mutual enterprises in Australia, many of them regionally based.

The government recognises the importance of the co-operative model and its potential contribution to supporting the goal of growing a $100 billion agricultural sector by 2030.

The government also recognises the importance of removing inefficient or ineffective regulation to reduce costs on individuals, businesses and the wider community. In the October 2020 Budget, the Government reinforced its commitment to a renewed deregulation agenda to ensure regulations are fit-for-purpose and support economic recovery as a key pillar of the JobMaker Plan.

In conjunction with the continued funding to support the Deregulation Taskforce, the Government has committed to a stewardship approach to regulatory policy and established a regulator performance role within the Department of the Prime Minister and Cabinet.

Recommendation 10:

The committee recommends that regulatory agencies, particularly the ACCC and ASIC, review their approach to publicly releasing information about investigations; with a view to providing greater general information about current enforcement activities and relevant issues of public concern.

The government notes the recommendation.

The government recognises the frustration of dairy farmers at the long periods of time between commencement of investigations and the provision of public information about the progress of investigations.

The government considers that individual regulatory agencies are best placed to determine what and how much information should be released to the public regarding ongoing or completed· investigations.

The ACCC updates its compliance and enforcement priorities policy annually and releases the document publicly. It has also developed a Media Code of Conduct relating to its enforcement work to "balance fairness to individuals, companies and businesses involved in ACCC investigation and enforcement action with informing the public about the ACCC's enforcement work..."

ASIC has outlined its approach to commenting publicly on its regulatory activities in a publicly available information sheet. Both agencies must weigh the potential public benefits of any statements they make against the potential prejudice that may be caused to individuals or businesses under investigation or subject to enforcement action. The agencies themselves are best placed to make this judgement.

Recommendation 11:

The committee considers that the proposed Dairy Commodity Price Index is of limited value and its development should not be continued

The government notes the recommendation.

The Commodity Milk Price Index (CMPI) was launched in July 2018 to deliver greater price transparency and help dairy farmers understand and interpret market signals. In line with the commitment, the CMPI was reviewed after 12 months of operation to determine its effectiveness.

The findings of the review demonstrated that the CMPI did not successfully deliver greater price transparency nor improved market signals for the Australian dairy industry. As a result, operation of the CMPI ceased in May 2019.

Industry has been working on a Milk Value Portal, which has just been released. The portal has been developed by the Australian Dairy Products Federation with support from Dairy Australia. The portal allows dairy farmers to understand the weighted average raw milk value based on aggregated farmgate milk price data from processors.

(https://milkvalue.com.au/milk-prices/farmgate-milk-value-tool/)

Recommendation 12:

The committee recommends that an independent review of the Dairy Services Levy and Dairy Australia be undertaken by government to provide assurance to dairy farmers that they are receiving value for money from the Dairy Services Levy and the benefits of the levy are being fairly distributed across farmers in all dairy-producing regions.

The government notes the recommendation.

The government has a statutory funding agreement with the dairy industry services body, Dairy Australia, to ensure appropriate accountability and governance arrangements for its research and development activities. A requirement of this funding agreement is that Dairy Australia undertakes an independent performance review every five years. The government works with Dairy Australia to develop the terms of reference for the review, and extensive stakeholder consultation must be included in the process.

Dairy Australia's latest independent review of performance was conducted in March 2017. It found that Dairy Australia met all of the obligations of its statutory funding agreement with government. It also found that corporate governance of the organisation is strong, the board and management are highly competent, and the company's processes are robust. Dairy Australia's next review will be undertaken in 2021 and a report will be provided to government.

All dairy farmers have the opportunity to share in the research, development and extension that Dairy Australia undertakes on their behalf. Decision support tools, research underpinning cattle genetic gains, best practice husbandry, and environmental programs all have national applicability. Additionally, Dairy Australia's Regional Development Programs receive levy funds based on regional milk production. They use these funds for research, development and extension that is best suited to local needs. In doing so, they are able to leverage private and in- kind investment through local buy in. This is a significant benefit of the model.

The government notes that on 17 October 2019, the Senate referred an inquiry into the performance of Australia's dairy industry and the profitability of Australian dairy farmers since deregulation in 2000, to the Rural and Regional Affairs and Transport References Committee for inquiry and report. Amongst other terms of reference, the inquiry will look into the ability of Dairy Australia to act independently and support the best interests of both farmers and processors; and the funding of Dairy Australia and the extent of its consultation and engagement on the expenditure of levies revenue. The government looks forward to receiving the Committee's report and will provide a response in due course.

AUSTRALIAN GOVERNMENT RESPONSE TO THE SENATE LEGAL AND CONSTITUTIONAL AFFAIRS REFERENCES COMMITTEE REPORT

Ability of Australian law enforcement authorities to eliminate gun-related violence in the community

June 2021

Introduction

On 19 June 2014, the Senate referred the following matter to the Senate Legal and Constitutional Affairs References Committee (the committee) for inquiry and report:

The ability of Australian law enforcement authorities to eliminate gun-related violence in the community, with reference to:

(a) the estimated number, distribution and lethality of illegal guns, including both outlawed and stolen guns, in Australia;

(b) the operation and consequences of the illicit firearms trade, including both outlawed and stolen guns within Australia;

(c) the adequacy of current laws and resourcing to enable law enforcement authorities to respond to technological advances in gun technology, including firearms made from parts which have been imported separately or covertly to avoid detection, and firearms made with the use of 3D printers;

(d) the extent to which the number and types of guns stolen each year in Australia increase the risk posed to the safety of police and the community, including the proportion of gun-related crime involving legal firearms which are illegally held;

(e) the effect banning semi-automatic handguns would have on the number of illegally held firearms in Australia;

(f) stricter storage requirements and the use of electronic alarm systems for guns stored in homes;

(g) the extent to which there exist anomalies in federal, state and territory laws regarding the ownership, sale, storage and transit across state boundaries of legal firearms, and how these laws relate to one another; and

(h) any related matters.

The committee tabled its report, 'Ability of Australian law enforcement authorities to eliminate gun-related violence in the community', which included nine recommendations, on 9 April 2015. The report included a supplementary report titled 'Report by a majority of Senators attending the inquiry', which included a further five recommendations.

The Australian Government's response to the report is set out below. The response addresses all 14 recommendations contained in the report and the supplementary report.

Preamble

The Australian Government is committed to keeping our communities safe through the fair regulation of firearms.

Whilst the regulation of firearms in Australia is primarily the responsibility of State and Territory governments, the National Firearms Agreement sets out a national approach that should be followed by all jurisdictions.

The technical elements of the Agreement were updated in 2017 following a recommendation of the Joint Commonwealth-NSW Martin Place Siege Review.

The objective of the update was to ensure that Australia's firearms regulations, which had not been substantively reviewed for almost two decades, keep pace with advancements in technology and changes to the firearms market.

In addition to incorporating advice from all Commonwealth, State and Territory law enforcement and justice agencies, the review of the Agreement involved consultation with the firearms community (industry and recreational groups), community safety organisations and individuals to produce sensible, practical changes where required.

The updated Agreement amalgamates the 1996 National Firearms Agreement and the 2002 National Handgun Agreement into a single point of reference for firearms regulation in Australia. The Agreement articulates a commitment by the Commonwealth, state and territory governments to a set of minimum standards for the regulation of firearms.

In 2017, the then Law, Crime and Community Safety Council agreed to hold a national firearms amnesty from 1 July to 30 September 2017. The aim of the amnesty was to reduce the number of unregistered firearms in Australia. The amnesty did not target legally registered firearms and did not involve a buyback. The amnesty provided an opportunity for those individuals who possess an unregistered firearm to hand it in without fear of being prosecuted.

The amnesty resulted in over 57,000 unregistered firearms being handed in for registration, sale or destruction. This represents a significant reduction in the number of unregistered firearms in the Australian community and contributes to a safer Australia.

At the November 2019 meeting of the then Ministerial Council for Police and Emergency Management, Council Members agreed to establish a permanent national firearms amnesty to commence in the second half of 2020 (delayed due to COVID-19 to the second half of 2021), which will be supported by regular information campaigns led by the Commonwealth.

Recommendations

Recommendation 1:

The committee recommends the Commonwealth government provide funding to allow programs, such as the National Firearms Monitoring Program and the National Firearm Theft Monitoring Program, and reports, such as those in the Firearm Theft in Australia series, to continue on an ongoing basis.

Response:

The Government notes this recommendation.

The Australian Institute of Criminology is undertaking a one off study on firearm theft employing 2018 data. The study is funded using an existing appropriation.

Recommendation 2:

The committee further recommends the Australian Institute of Criminology conduct within three years a review of current data collection and reporting arrangements, with a particular focus on:

the need for more accurate data on firearm thefts, the recovery of stolen firearms and seizures of illegally imported firearms

the quality and comparability of data provided to Commonwealth agencies by state and territory police; and

greater inter-agency co-operation with regards to data sharing.

Response:

The Government notes this recommendation.

In 2017, the Australian Institute of Criminology consulted with members of the Firearms and Weapons Policy Working Group about the feasibility ofre-establishing the National Firearm Theft Monitoring Program. At the time it was determined that State and Territory police resources were not available to provide data to an ongoing Monitoring Program. The Government will continue to work with States and Territories regarding the provision of data.

The Australian Firearms Information Network (AFIN) is designed to provide a consolidated national view of information on each known firearm in Australia, from the point of manufacture or importation through to destruction or exportation.

Recommendation 3:

The committee recommends that the National Firearms Agreement be updated to implement nationally consistent regulation in the following areas:

firearms, firearm parts and firearm accessories;

ammunition; and

the storage of firearms

Response:

The Government notes this recommendation.

Following a recommendation of the Joint Commonwealth-NSW Martin Place Siege Review, the Commonwealth, states and territories undertook an update of the technical elements of the 1996 National Firearms Agreement. The then Minister for Justice and Minister Assisting the Prime Minister for Counter-Terrorism, the Hon Michael Keenan MP, released the updated Agreement on 17 February 2017.

The updated Agreement amalgamates the 1996 National Firearms Agreement and 2002 National Handgun Agreement into a single point of reference for firearms-regulation in Australia. The review of the 1996 Agreement considered the advice of the Firearms and Weapons Policy Working Group, which took into account the issues raised in consultations with the firearms industry and community groups.

At the November 2019 meeting of the then Ministerial Council for Police and Emergency Management, Council Members agreed that the National Firearms and Weapons Policy Working Group would identify and develop solutions to areas of inconsistency with the National Firearms Agreement, and areas of inconsistency between jurisdictions that adversely affect public safety or the firearms community. The National Firearms and Weapons Policy Working Group is working to improve consistency with the Agreement.

The Government undertakes broader reforms to the regulation of firearms to maintain community safety. In 2020 the Government amended the Customs (Prohibited Imports) Regulations 1956 to restrict the importation of bump stocks. The Government also worked closely with State and Territory governments to regulate bump stocks in their jurisdictions.

Recommendation 4:

The committee recommends that the Commonwealth government, together with state and territory governments, establish national standards for the security of membership data held by gun clubs.

Response:

The Government notes this recommendation.

Recommendation 5:

The committee recommends that an ongoing, Australia-wide gun amnesty is implemented, with consideration given to ways in which this can be done without limiting the ability of police to pursue investigative leads for serious firearm-related crimes.

Response:

The Government agrees to this recommendation.

At the November 2019 meeting of the then Ministerial Council for Police and Emergency Management, Ministers agreed to establish a permanent national firearms amnesty to commence in the second half of 2020 (now delayed due to COVID-19), which will be supported by regular information campaigns led by the Commonwealth.

The permanent national amnesty will build on the success of the previous national firearms amnesty, which ran from 1 July to 30 September 2017. The amnesty reduced the number of unregistered firearms in Australia by encouraging Australians to surrender firearms in their possession for either registration or destruction. It successfully resulted in more than 57,000 firearms being handed in for registration, sale or destruction.

As with previous amnesties, a permanent national amnesty would make it easier for those who are in possession of an unregistered firearm to hand it in without fear of prosecution and improve public safety by reducing the number of unregistered firearms in Australia.

Recommendation 6:

The committee recommends that all jurisdictions update their firearm data holdings and ensure the data is transferred to the National Firearms Interface.

Response:

The Government agrees to this recommendation.

At the November 2019 meeting of the Ministerial Council for Police and Emergency Management, Ministers agreed to take a coordinated approach to address firearms registry issues.

In response to a recommendation of the Joint Commonwealth-NSW Martin Place Siege Review, the Australian Criminal Intelligence Commission undertook a data quality audit of the firearms information available in the National Firearms Licensing and Registration System. The audit identified issues with data quality, such as duplicate records, incorrect recording of serial numbers and missing fields. This information has been provided to the states and territories which administer the data.

In response to another recommendation of the Review, the National Firearms Interface, now known as the Australian Firearms Information Network, has been implemented. The Australian Firearms Information Network is an information sharing system that provides a national view of each known firearm in Australia, assisting police and other law enforcement agencies manage registration, licensing and movement of firearms entering Australia and moving between states and territories. Whilst the Australian Firearms Information Network provides a nationwide ability to track firearms from import or manufacture through to destruction or legal export, it is reliant upon quality data submitted to it by the states and territories. The National Firearms Licensing and Registration System was fully decommissioned in November 2019, making the Australian Firearms Information Network the source of national firearms data.

The benefits of the Australian Firearms Information Network as a national firearm system will be realised once all partners complete integration, which is expected to occur in July 2021.

Recommendation 7:

The committee recommends that Australian governments investigate the requirement for uniform regulations in all jurisdictions covering the manufacture of 3D printed firearms and firearm parts.

Response:

The Government agrees to this recommendation.

The manufacture of firearms and firearm parts by any means, including 3D printing, is regulated by existing state and territory government measures.

At the October 2018 meeting of the Ministerial Council for Police and Emergency Management, Council Members endorsed a nationally consistent approach to offences for the illegal manufacture of firearms.

Recommendation 8:

The committee recommends that Australian governments continue to monitor the risks posed by 3D manufacturing in relation to the manufacture of firearms and consider further regulatory measures if the need arises.

Response:

The Government agrees to this recommendation.

The regulation of firearms manufacturing is primarily a matter for state and territory governments. The Australian Government will continue to work with state and territory police and justice agencies to identify risks relating to 3D manufacturing of firearms and firearm parts, and to identify any appropriate nationally consistent measures that could be implemented as necessary.

Recommendation 9:

The committee recommends that Australian governments consider committing further funding and resourcing to assist in implementing the preceding recommendations.

Response:

The Government notes this recommendation.

The Government will continue to allocate funding and resources to priority areas which address crime in the community. The allocation of funds and resources by States and Territories is a matter for the governments of those jurisdictions.

Recommendations contained in supplementary report titled

Report by a majority of Senators attending the inquiry

Recommendation 1:

The majority of Senators attending the inquiry recommend that the Commonwealth commission a study into the social, economic and environmental benefits of hunting across Australia, similar to the report that was released by the Victorian Government in 2013.

Response:

The Government agrees to this recommendation.

In 2018, the Department of Health commissioned a report into the economic and social impacts of recreational hunting and shooting to:

estimate the gross economic contribution (i.e. the economic 'footprint') of recreational hunting and sport shooting in Australia

estimate the net economic contribution of recreational hunting and sport shooting in Australia, and

explore the impact of recreational hunting and sport shooting activity on health and wellbeing of hunters and sport shooters.

The report, subsequently published in 2019, found the Australian economy is $335m (0.02% of Australian GDP) and 3,300 jobs (0.03 per cent of Australia's total full time equivalent employment) larger as a result of the contribution of recreational hunting and sports shooting.

Recommendation 2:

The majority of Senators attending the inquiry recommend the Commonwealth establish a formal mechanism for industry and firearm user groups to be consulted on issues relating to firearms regulation.

Response:

The Government agrees to this recommendation.

The Government previously consulted through the Firearms Industry Reference Group, which comprised representatives from the firearms industry. The then Minister for Justice and Minister Assisting the Prime Minister for Counter-Terrorism, the Hon Michael Keenan MP, chaired the Group's meetings.

The Assistant Minister for Customs, Community Safety and Multicultural Affairs, the

Hon Jason Wood MP, conducted consultation meetings with the firearms community and gun control advocates in September 2019, February 2020 and September 2020. The Assistant Minister has committed to regular and ongoing consultation.

The Australian Government is committed to consultation to ensure the importation and regulation of firearms balances the interests of the broader Australian community to live safely and securely with the interests of those with a genuine reason and need to access a firearm.

Recommendation 3:

The majority of Senators attending the inquiry recommend the Commonwealth continue to pursue improvements in border control for detecting illegal imports of firearms and firearms parts.

Response:

The Government agrees to this recommendation.

The Government is committed to reducing gun-related violence in the community by continuously improving the capability of authorities to detect illegal imports of firearms and firearms parts. This is a key priority for the Government.

Recommendation 4:

The majority of Senators attending the inquiry recommend the Commonwealth review its contribution to firearms regulation in the context of the Reform of the Federation White Paper.

Response:

The Government does not agree to this recommendation.

The Government continues to work with State and Territory governments to appropriately and sustainably manage the division of responsibilities for firearms regulation between the Australian Government and state and territory governments.

Recommendation 5:

The majority of Senators attending the inquiry recommend state and territory governments investigate avenues to decrease regulation of the firearm industry to ease the economic burden on governments, industry and legal firearm users.

Response:

The Government notes this recommendation.

The National Firearms Agreement is now the single point of reference for firearms regulation in Australia, as it amalgamates the 1996 National Firearms Agreement and 2002 National Handgun Agreement.

The Commonwealth and the states and territories work closely together to develop a consistent national approach to the regulation of firearms, including minimising unnecessary regulatory burdens. The Government also works with stakeholders to address current issues faced by the firearms community.