John Forrest (Mallee, National Party) Share this | Hansard source

The member for Lyons challenges me to respond. My recollection of abattoirs in the Middle East is that I simply remember all the flies! But I am grateful that in Australia this is a great industry; it certainly is in my own electorate. That is why I am delighted to have an opportunity to speak in support of this legislation, the Agriculture, Fisheries and Forestry Legislation Amendment (2007 Measures No. 1) Bill 2007.

The purpose of the bill is to amend the Australian Meat and Live-stock Industry Act 1997 to introduce greater flexibility for the disbursement of funds derived from the collection of compulsory levies and charges on the slaughter of cattle, sheep and goats. While the debate this evening has been a fairly wide-ranging one about a whole host of associated matters, my intention is not to be diverted by those but to speak to the features of the bill.

The amendments in the bill will ensure that the legislative framework is in place to allow the meat processing industry to change its structural and funding arrangements for delivering marketing and research and development services. The meat processing industry is a valuable part of Australia’s beef, sheepmeat and goat meat trade. As the member for Barker has said, it is a significant regional employer of about 25,000 people, mostly located in regional Australia. It has an annual turnover of $15 billion and earns $7 billion a year in exports.

Indeed, my part of the world is engaged in some very large investment, and I speak very proudly of the honour of representing the Woodward family at Swan Hill—a small-medium enterprise, a family-owned operation, whose investments are creating employment capacity for Swan Hill. It is actually the last remaining significant abattoir in the whole of my electorate now. It is not quite the size of the abattoirs boasted of by the member for Barker, but it is one of which I am immensely proud anyway.

The capacity of this whole industry to add value to Australia’s economy is strengthened through the collective funding of its marketing and R&D programs. The 1997-98 red meat industry restructure allowed the meat processor industry to fund its marketing and R&D programs through a voluntary contributions system. A strong friendship with the Menegazzo family has made me acutely aware of the complaints of a voluntary contribution system, which I will refer to shortly.

However, the industry made it clear that, after 30 June 2007, members would no longer participate in the voluntary system because of entities which persistently refused to contribute. These so-called ‘free riders’, as they were referred to, reap the benefits of a collectively-funded R&D without cost and therefore operate with an unfair commercial advantage. Up until recently, these free riders had represented only a small percentage of the industry. However, during industry discussions on renewing the voluntary contribution system’s three-year agreement cycle, a number of the large processors indicated—and this was very much the case for the Menegazzo family—that although they were keen to keep this system, their ongoing support was conditional on the free riders beginning to pay their share of the contributions.

By mid-2006, industry negotiations had not been able to encourage the free riders to join the voluntary system in a voluntary way. If the larger processors opted out of the voluntary system, it would have meant funding would not have been sufficient to meet the sector’s whole-of-industry commitments under the red meat industry memorandum of understanding. So a ballot was conducted by the Australian Electoral Commission in December 2006 on the future of the funding arrangements. The outcome of the ballot saw an amazing 73 percent in favour of the move to a statutory levy system and for the funding to be directed to the industry’s existing service provider, Australian Meat Processor Corporation. The ballot also supported a new levy rate as recommended by the industry’s peak body, the Australian Meat Industry Council.

The government agreed to bring about the funding changes through an amending bill, resulting in this legislation before the House tonight. The bill will: (a) allow the minister to determine a meat processor industry body, to receive revenue obtained by the Commonwealth from compulsory levies imposed on the red meat industry under another piece of legislation, the Primary Industries (Excise) Levies Act 1999; (b) include the capacity for the minister to declare that a body be recognised as the meat processor marketing body and/or the meat processor research body—two activities badly needed: fundamental research and important marketing activity; and (c) allow for controls over who receives disaggregated levy payer information held by the Department of Agriculture, Fisheries and Forestry and also for what purposes the information can be provided.

In highlighting the key elements of this bill, it is important to highlight the existing arrangements, which will be superseded once the measures in this bill come into effect. The current arrangements established under the 1997-98 restructure accommodated the red meat industry’s wish to be viewed as one industry. However, provision was also made for sectors within the industry to have some autonomy and self-determination—either growing cattle or processing them, or whatever. This meant that some sectors could choose to be funded through voluntary contributions from its members. Levies that would otherwise apply under a statutory scheme would have their operating rates set at zero and no revenue would be collected against these levies.

In the case of the meat-processing sector, voluntary contributions fund its service company to conduct marketing and R&D on the industry’s behalf. The service company can also direct these funds to Meat and Livestock Australia Ltd to carry out agreed marketing and R&D projects as required under the red meat industry’s memorandum of understanding. The funds provided to Meat and Livestock Australia Ltd for research are included in Meat and Livestock Australia Ltd’s R&D total, and eligible activities attract a matching contribution from the Australian government—about which other members have waxed lyrical and claimed credit for. That is okay. It is a good model, and it is right that the rest of the world follows our orderly levy system, which covers a whole range of commodities.

The maximum level of matching funds committed by the Commonwealth is set at 0.5 per cent of the annual gross value of production for the red meat industry—which led to some management problems, if you like. The current arrangements provided for the minister to activate the statutory levy provisions in the event of a sector failing to meet its whole-of-industry obligations from the voluntary contributions. Commonwealth matching funds for research and development are provided to the industry research body, as envisaged by the government and the industry in the 1997-98 restructure agreement. The voluntary arrangements also enabled the service company to access payer disaggregated financial information. Existing legislation does not allow for such information to be passed to the red meat industry. In the industry’s interests, this is important information. It is disaggregated and de-identified but is important information for both sectors to have.

The proposed arrangements were set up to address these issues. The ballot conducted by the Australian Electoral Commission resulted in a clear majority support for the meat-processing sector’s collective marketing and R&D activities to now be funded by compulsory levies. Together with the other sectors of the red meat industry, it was also agreed that the funds raised by the compulsory levies should be channelled directly to the existing services body, the Australian Meat Processor Corporation Ltd, rather than to Meat and Livestock Australia, as provided for under existing legislative arrangements and the industry memorandum of understanding.

Statutory based levies and charges are generally paid to the consolidated revenue fund and appropriated for payment to a declared marketing body and a declared research body. The current provisions of the Australian Meat and Live-stock Industry Act allow only one industry marketing body and one industry research body—which the member for Barker has also explained. These separate entities will be declared by the minister. Activation of the compulsory levy provisions on the slaughter of cattle, sheep and goats without amendment to the Australian Meat and Live-stock Industry Act would result in all funds being directed only to Meat and Livestock Australia rather than to the Australian Meat Processor Corporation, which would have been contrary to the preferences clearly indicated by the industry.

This is an example of the government responding positively to an industry that is growing and one of which we are immensely proud. It is also providing important rural employment and investment in an important part of Australia.

The maximum level of matching by Commonwealth funds for eligible research expenditure will remain unchanged at 0.5 per cent of the annual gross value of production for the red meat industry, but it will be much easier to manage because the voluntary levy uncertainty will be removed. Access to disaggregated levy payer information is being processed separately through amendments to the Primary Industries Levies and Charges Collection Act 1991 which will come before the House shortly. However, these separate amendments will not provide for control over who can access the information and what it can be used for.

The bill provides for the minister to determine a body to be meat processor marketing or meat processor research body. However, reflecting an agreed industry position, the bill requires the payment of matching Commonwealth contributions for R&D expenditure to continue to be paid to Meat and Livestock Australia. It also provides for the control of who receives levy payer information and what it can be used for. These conditions are based on an existing model in the dairy industry—also an important commodity to my constituency of Mallee. We can rely on the provisions there to be protected. The bill will also repeal some provisions of the previous act for technical reasons. Provision to permit the raising of the necessary levies payable to the meat-processing marketing body and the meat processor research body will be undertaken by amendments to subordinate legislation.

I will conclude my remarks, so we might actually wrap up this bill this evening. Continued investment in research and development and innovation is vital for ongoing growth and improvement in the profitability and sustainability of Australia’s agriculture, fisheries, forestry and food industries. The importance of investing in R&D has been recognised through the government’s research and development priorities—policies of which I am immensely proud. The rural sector needs to be well positioned to respond to and manage change in order to maintain and improve its long-term profitability, competitiveness and sustainability. Climate variability, climate change and all the challenges associated with water have been included in these priorities for the first time, reflecting this government’s emphasis on assisting our industries to adjust to significant risk.

I am delighted to support this bill. Unlike the comments made tonight have suggested, it is an industry that acts in its own interest. The reliance on section 457 visas is an unfortunate advent. Around Swan Hill, the Woodward abattoir has to rely on it because the employment level at Swan Hill is at a historically low point. I think it is unfair to criticise the industry for not addressing training. The reality is that the people to do these tasks are not there. I will be looking forward to the growth of this industry so important to my electorate of Mallee. I welcome this bill and commend it to the House.

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