Stewart McArthur (Corangamite, Liberal Party) Share this | Hansard source

I am pleased to contribute to the debate on the report by Commissioner Terence Cole QC into the inquiry into certain Australian companies in relation to the UN oil for food program. I make some brief comments on these matters because of my longstanding interest in statutory marketing, which the honourable members would be aware of. We have had a number of debates about these matters. Commissioner Cole’s report is a very comprehensive analysis of the concerns regarding the conduct of AWB and AWB staff in wheat shipments to Iraq under the UN oil for food program and payments to Iraq contravening the UN sanctions.

The Leader of the Opposition and the member leaving the chamber have been left red-faced by the release of the report because they have been arguing for a whole year about the possible contents. There has been much bluff and bluster over the past year by the Leader of the Opposition and the shadow minister for foreign affairs, but the Cole inquiry has found that there was no wrongdoing on the part of the government or any of the ministers. For all the talk of smoking guns, the Labor Party has suffered a misfire in this debate. Instead of spending the past 12 months developing policies and undertaking the real work of opposition, the Leader of the Opposition and the shadow minister have been clutching at straws, chasing the Cole commission, waiting for Cole to deliver the bullets that Labor was waiting to fire at the government. Instead, the Cole report clearly shows there was no wrongdoing on behalf of the government. The only political bullets resulting from this report are the ones fired into the election hopes of the Labor Party, because Labor’s allegations against the government have been demonstrated to be without foundation.

I call on the Labor Party to read the Cole inquiry report and to recognise the reality that the government and the ministers have been completely exonerated by the commissioner in the 2,000-page report. In case the Labor Party choose not to read the report, I quote an important element in the report which puts the lie to the Labor Party’s attacks over the past 12 months. In his report, Commissioner Cole stated:

There was a lack of openness and frankness in the AWB’s dealings with the Australian government and the United Nations. At no time did the AWB tell the Australian government or United Nations of its true arrangements with Iraq. When inquiries were mounted into its activities, it took all available measures to restrict and minimise disclosure of what occurred.

That is in volume 1. Then Commissioner Cole found that the government and the United Nations were deliberately deceived by the AWB over the full nature of its dealings with Iraq. The AWB intentionally and dishonestly concealed information from the Australian Department of Foreign Affairs and Trade and from the United Nations.

A commission of inquiry was undertaken by the government and, as many members present would know, the outcomes of commissions of inquiry are never predictable. The outcome of the Costigan royal commission in, I think, about 1982 was unpredictable and the Fraser government—my own side of politics—had a number of problems when the unravelling of that royal commission took place. However, in this case we found that the government was open. They appointed a very respectable commissioner in the Hon. Terence Cole. They have 2,000 pages of documents, letters, emails and detailed information that the commission has put on the public record.

Obviously, in the last 24 hours I have not read the report, but I have perused the documents and I am most impressed with the detail, with the forensic evidence that is available and the amount of background information that the commissioner has extracted from witnesses, from those people who were associated with AWB, the departments and other parties. Today in the parliament the Prime Minister made these points very clearly in the debate—that the commission was open and transparent and that the commission was formed with a view to finding the truth and tabling all documents.

Like the Prime Minister, I do not accept that the terms of reference were too narrow. Here we have a commission of inquiry and we have the experience of the Costigan commission, the Petrov commission and other commissions. The duty of the commissioner or those running the commission is to find the truth through any avenue they think fit. In my assessment, this is a first-class report. It is tabled in the parliament for everyone to read.

I make the observation that fundamental to this whole debate is the fact that the AWB enjoyed a good reputation amongst farmers, amongst those who support the single-desk proposition, amongst people who have argued the case for statutory marketing for the last 30 years. So, whilst there were some allegations in the wheat fields around the farms that maybe the AWB was not doing the right thing, that was not validated, as we know. The AWB did their best to conceal this information. It was the good reputation of those personnel, farmer members and others, that I think did not help anyone who had even the slightest concern that the AWB was not doing the right thing.

Commissioner Cole in his report asked why the AWB sought to deceive the Australian government and the United Nations to do whatever was necessary to retain the trade with Iraq. I make the observation that this wheat trade to Iraq was critical to the AWB’s operations. It had been going on for a number of years, it formed a major part of the marketing arm of AWB, it was lucrative and it was longstanding, and I think there was a culture in the AWB to maintain this market at any cost. In answering this question, Commissioner Cole made the following statement—and this is really the key of why I put these remarks on the public record:

The answer is a closed culture of superiority and impregnability, of dominance and self-importance. Legislation cannot destroy such a culture or create a satisfactory one. That is the task of the boards and the management of the companies. The starting point is the ethical base. At AWB the Board and management failed to create, instil or maintain a culture of ethical dealing.

A government grant, by legislation, of a monopoly power confers on the recipient a great privilege. It carries with it a commensurate obligation. That obligation is to conduct itself in accordance with high ethical standards. The reason such an obligation is imposed is because, by law, persons are denied choice with whom they may deal.

That comes from volume 1. It is on this question of monopoly power that I want to make some comments. The AWB has enjoyed these statutory monopoly privileges guaranteed by the Australian parliament so that it is a single-desk exporter. That has been a matter of some debate over previous years and is obviously currently a debate amongst Australian wheat farmers and members of this House. We have a position where the monopoly powers—and I emphasise the point—have been conferred by this parliament by way of statute, and the AWB that was created was a statutory authority of monopoly powers which was privatised in July 1999.

As members would know, the Australian Wheat Board and its former entities were created in the 1930s to sell wheat by way of export and by way of monopoly so that, in their view, wheat growers would obtain a better price in the difficult international markets. As members would know, the AWB, when it was privatised in 1999, created two classes of shareholders: class A, who were fundamentally wheat growers, and class B, who were on the stock market. This from the very beginning created an element of conflict between those class B shareholders and those normal wheat-growing members. That debate was pretty fierce at the time and, I think, did create a problem within the Wheat Board management position. So you had a monopoly and you had an attitude that was generated within the management and within the board that the Wheat Board could do no wrong, that they were representing the wheat growers at any cost and that they should maintain their markets at any cost.

I would like to draw a parallel with the Australian wool stockpile. This was the subject of a major debate in this parliament. As would be recalled, the Australian wool stockpile peaked at 4.7 million bales in the early 1990s and had a debt of $2.7 billion. They were very huge figures at the time and there was huge debate about the situation. I had some sympathy for Minister Kerin and those in the government at that time because of the pressures that were exerted by woolgrowers. I notice that the shadow minister, the former minister in the former government, is nodding in agreement that there was enormous pressure on government members to maintain the price of 870c.

This, again, was a monopoly position. Australian woolgrowers felt that they could dominate the world market—they could seek a price. So we have a similarity between the two situations. In my view, the woolgrowers unfairly influenced the government of the day and forced the minister at that time to raise the price to 870c. As a consequence, the wool reserve price scheme collapsed, there was $2.7 billion worth of debt, and nearly five million bales were locked up in stores all around the country. Some people even advocated burning the wool. That is how bad it got. It took about eight years of quite delicate and difficult sales of that stockpile of wool for the stockpile to be removed. So we have two similar situations. As people would know, I have always been concerned about statutory marketing—and I see you smile, Mr Deputy Speaker Haase. The debate is ongoing because of these conferred privileges both in the case of the Australian wool stockpile and the case of the Australian Wheat Board.

I would like to finish my brief remarks by quoting from the prologue of the Cole commission report, which I think summarises this debate. We have had hundreds of hours of discussion and debate about this over the past 12 months, but I think Commissioner Cole summarised it very well in his prologue, and I would just like to quote it for the record. It reads:

The consequences of AWB’s actions, however, have been immense. AWB has lost its reputation. The Federal Court has found that a ‘transaction was deliberately and dishonestly structured by AWB so as to misrepresent the true nature and purpose of the trucking fees and to work a trickery on the United Nations’. Shareholders have lost half the value of their investment. Trade with Iraq worth more than $A500 million per annum has been forfeited. Many senior executives have resigned, their positions being untenable. Some entities will not deal with the company. Some wheat farmers do so unwillingly but are, at present, compelled by law to do so. AWB is threatened by law suits both in Australia and overseas. There are potential further restrictions on AWB’s trade overseas. And AWB has cast a shadow over Australia’s reputation in international trade. That shadow has been removed by Australia’s intolerance of inappropriate conduct in trade, demonstrated by the shining bright light of this independent public Inquiry on AWB’s conduct.

I think the moral of the story is that any monopoly position—be it in the private market or in statutory marketing set up by this parliament—always has the possibility that arrogant and non-market behaviour will emerge.

We have seen it in other areas—for example, in silver mining, where the Hunt brothers thought they could corner the market. We have seen it in the wool industry. We have now seen it in the wheat industry, where there is an attitude of mind that the Australian Wheat Board can dominate the world market by their capacity to sell wheat in a monopoly position and ask all Australian growers to put their wheat through the Wheat Board. This is a great example of the problem of monopoly power, be it by a statute or be it by a group. I hope that, in the long run, these matters will be resolved.

I reject the allegations of those opposite that the government—the Prime Minister and ministers—were involved. In the final analysis, the Australian Wheat Board is an independent entity run by independent management, carrying out its duties on behalf of Australian wheat growers as it sees fit. The AWB was not an arm of government. It is very clear that both the former government and this government made it a separate entity with a separate set of arrangements, be it a corporation or a statutory company. I hope the debate will reach some good sense and that governments, farmers and everyone in Australia will learn from this very unsatisfactory and unhelpful set of events.

See this speech in context