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Wednesday, 5 October 1983
Page: 1340

Mr SNOW(11.44) —The honourable member for Darling Downs (Mr McVeigh) has discussed at some length the Dairy Industry Legislation Amendment Bill and also the associated Bills-the Dairy Industry Stabilization Levy Amendment Bill and the Dairying Industry Research and Promotion Levy Amendment Bill. I wish to raise the issue which he has mentioned with regard to PT Indomilk. But let us be clear on the meaning of the Bill. As the Minister for Primary Industry (Mr Kerin) explained when he introduced the Dairy Industry Legislation Amendment Bill, the amendments are intended to bring up to date the Corporation's power over contracts for the carriage of dairy products by sea to places beyond Australia; to provide a legislative basis for the manner in which the Corporation administers certain provisions of the export return pooling scheme and to make other minor adjustments to the scheme; to require the Australian Dairy Corporation to credit any surplus or debit any deficit incurred by it in respect of its export sales of dairy produce to accounts maintained under the export return pooling scheme; and to bring into line with current levels the penalties for offences under the Act.

The existing legislation is administratively unworkable. In just seven months this Government has commenced to improve the mess of dairy legislation in our national laws. The amendments mean that exporters will receive directly the proceeds of their export sales and will remit to the Corporation any required contribution to the export return pooling scheme. The amendments will facilitate the recovery from exporters of amounts which they are required to pay under the export return pooling scheme. The amendments also give legislative authority to the ADC to credit surpluses to pool accounts, debit deficits and give legal procedure to factories to pass levy refunds on to exporters.

The honourable member for Darling Downs has raised the matter of PT Australian Indonesian Milk Industries Inc. I remind him that its losses commenced in 1981. Unlike the Opposition, this Government is prepared after only seven months in office to do something about the mess. The previous Government was in power for two years after the losses commenced. The honourable member for Darling Downs failed to mention the fact that the industry has benefited from some of the profits that have been received by the ADC, and the dairy industry has gained from the operations of the subsidiary. He has tried to confuse the industry by confusing trading profits with non-trading profits. He does not help the industry at all by confusing that issue and by obscuring the real fact that the industry has had some benefit from profits. I believe that PT Indomilk will be able to trade out of its present difficulties. As the shadow Minister for Primary Industry explained, there have been difficulties in trading and these are still going on. However, there should be-I believe that with the Government' s co-operation there will be-a way of trading out of these difficulties.

When dealing with one of the other Bills which are being debated cognately today, the honourable member for Darling Downs spoke about the objection by Wander (Australia) Pty Ltd to its product, Ovaltine, not qualifying for a refund of levy on export under the Dairy Industry Stabilization Levy Amendment Bill. Ovaltine apparently contains just 18 per cent of leviable dairy products, far less than the 50 per cent limit. I am sure, from the Minister's exchange across the table with the shadow Minister, that he is giving sympathetic consideration to the representations of Wander.

I also refer to the Dairy Industry Research and Promotion Levy Amendment Bill 1983 which accedes to the recommendations of the Australian Dairy Corporation and the Australian Dairy Farmers Federation that falling export returns necessitate more active promotion of dairy products. It is good that the Opposition has welcomed this Bill and will co-operate with us in securing its passage, particularly in regard to cheese. Cheese is the largest single dairy product sold and, unlike other dairy products, its market is expanding. This makes cheese a logical target for promotion. Cheese demand increases as consumer demand increases, and with the hoped for improvement in the national economy there could well be an increase in cheese demand. Therefore cheese should be the dairy product which is the most responsive to additional promotion. The Australian Dairy Corporation, in its 1981-82 annual report, stated that it:

. . . believes that cheese consumption can be increased from the current 6.9 kilograms per head per annum to 8.4 kilograms per head per annum by 1986.

The Corporation's marketing strategies are aimed at increasing cheese consumption. The ADC's annual report stated:

The National Marketing Department of the Australian Dairy Corporation has proposed a doubling of the levy for promotion to finance a greatly extended national cheese campaign.

Most of the other dairy products, perhaps with the exception of milk products such as flavoured milk, would be less likely to have the same potential as cheese to respond to additional promotion. The nature of products such as butter , milk powder, et cetera, ensures that the elasticity of demand is low. In other words they do not respond to changes in income as much as cheese and, say, flavoured milk. Perhaps the best that can be achieved for these other products is the maintenance of the existing market share. This is the case with butter which holds about 40 per cent, by value, of the yellow fats market. The Dairy Corporation has stated that its objective will be to maintain that position.

The importance of marketing has been emphasised by the Australian Dairy Corporation. The principle of market improvements and streamlining of the industry so that it can better market has been supported by the Minister. There can be no doubt that the recent Industries Assistance Commission report on the dairy industry sidetracks the real need of marketing in the dairy industry, even though it purports to support that need. The IAC thinks a lot of airy-fairy nonsense if it thinks that Australia can isolate itself from the corrupted world dairy markets. Dairy markets are affected by dumping and other international rorts and there is no way that we can isolate ourselves from that fact.

The IAC makes a misleading assumption. It talks of Australians paying 6c a litre more than they should for milk when really no more than 1c of that 6c can be said to go to the dairy farmer. It is the responsibility of city newspapers, which reported that misleading assumption and misled city consumers, to straighten out this matter, state the truth and explain to people that not more than 1c of the 6c mentioned in the IAC report can be said to go to the dairy farmer. The IAC has made an error, in its desire to free the national market between States, by taking no account of the fact that local arrangements are always the prerogative of the States. It is very easy for the IAC to make a simple statement about the need for freedom of trade when it knows that it is hard to get the co-operation of various State governments, which have various dairying policies and interests, in ensuring the freeing of the market within the country. So in short, Australia has to accommodate manipulated overseas markets either by controls or by increasing domestic promotion, or both. It also has to accommodate the fact that there are separate State markets which are primarily the prerogative of State Governments.

In conclusion, I say that the Government has been presented by the previous Government with dairy legislation which is in an unholy mess. The legislation is often administratively impossible; hence the introduction of these amendments at this early stage of the period of the Hawke Government. The Minister for Primary Industry is doing a stirling job in tidying up that mess.