John Cobb (Calare, National Party, Shadow Minister for Agriculture and Food Security) Share this | Hansard source

I speak on the Sugar Research and Development Services Bill 2013, the Sugar Research and Development Services (Consequential Amendments and Transitional Provisions) Bill 2013 and the Sugar Research and Development Services (Consequential Amendments—Excise) Bill 2013.

The sugar industry is a great example of an agricultural industry on which our country was built. Australia's sugarcane is grown in high rainfall and irrigated districts along coastal plains and river valleys on well over 2,000 kilometres of Australia's eastern coastline between Mossman in Far North Queensland and Grafton in New South Wales. Queensland accounts for about 95 per cent of Australia's raw sugar production and New South Wales for about five per cent—although the new development in the Ord is expected to bring WA into the equation.

Information from canegrowers is that there are approximately 4,400 sugar growing farms operating along Australia's eastern seaboard. While the average size of a cane farm is 100 hectares, some are in excess of 1,000. While there are still a number of smaller farms, like most farming enterprises in Australia, the average farm size is increasing each year as the number of growers contracts and the areas farmed by their grain farming businesses expand.

The Australian cane industry produces 30 million to 35 million tonnes of cane each year which, when processed, equates to around four to 4½ million tonnes of sugar. The Australian sugarcane industry is recognised worldwide for its cutting-edge technology and sustainable cane growing.

The Australian sugar industry is not just one of the world's most efficient and innovative producers and exporters of sugar; it is also the leader in the adoption of sustainable farming practices. In continuing the industry's fine tradition of progressive research and development, the industry has been very proactive and engaged in a formal review and reform of sugar research, development and extension for some 2½ years, dedicating significant industry time, money and energy.

The industry commissioned Port Jackson Partners to conduct an initial review and then appointed Frontiers Insight to consult broadly and develop an implementation plan for reform. More than 100 written submissions were received for the initial report and more than 200 meetings across industry have been conducted since August 2010, including a public roadshow in early 2012 that saw more than 1,000 growers come to an agreement for a proposal. The proposal involved moving from three separate industry-backed research bodies to a single company, combining assets and activities of the Sugar Research and Development Corporation, BSES and Aspects of Sugar Research Ltd. The government drafted legislation and regulations necessary to recognise the new industry-owned company, Sugar Research Australia, as the industry services body funded by a statutory levy of 70c per tonne of sugar cane, paid equally by growers and by the mills. The levy will replace the existing SRDC levy of 14c per tonne, BSES service fee of 55c per tonne and research elements of SRL activity estimated at 5c per tonne.

All levy-paying businesses have the opportunity to vote on the new arrangements, including on the increase in the levy. In August 2012 the Australian Electoral Commission, on behalf of the Australian Sugar Industry Alliance, polled all 4,441 eligible sugar cane growers, with 3,373 valid votes cast. It was as near to three quarters, or 75 per cent, as you are likely to get. Eighty-four-point-three per cent of these votes supported the proposal. This represents 64 per cent of all cane growers, whether they voted or not. Seven million of eight million companies representing 99 per cent of cane processed in 2011 also supported the proposal, including the Australian-owned mills.

I will read a short quote from a letter from the CEO of the Australian-owned Mackay Sugar: 'You are well aware of the significant efforts of the Australian sugar industry to reform our research sector over the past three years. I am also aware you have been sent information detailing the comprehensive consultation communication and democratic efforts the industry has undertaken to get to this unprecedented level of industry support and commitment. As one of three remaining Australian-owned and predominantly grower-controlled sugar mills in Australia, Mackay Sugar sees this reform as absolutely essential, particularly in light of changing mill ownership and structures.'

The legislation was then introduced, and included the Sugar Research and Development Services Bill 2013, the Sugar Research and Development Services (Consequential Amendments and Transitional Provisions) Bill 2013, and the Sugar Research and Development Services (Consequential Amendments—Excise) Bill 2013. It provided the mechanism to implement key elements of reforms to sugar research and development—in other words, R&D—arrangements. Under the reforms the Sugar Research and Development Corporation and BSES Ltd will be wound up and their assets and R&D functions, along with the research coordination activities of SRL, transferred to the industry-owned company, Sugar Research Australia Ltd.

SRA is a company limited by a guarantee operating under the Corporations Act 2001. Operating one industry research body should deliver increased R&D efficiencies. The new company should, therefore, have the capacity to better integrate and avoid duplication of R&D activities across the sugar industry supply chain, leading to a wider range of research opportunities and increased industry and public good benefits. The industry-owned company will be funded by a statutory levy of 70c per tonne of sugar cane, processed or sold for processing, to be paid 35c per tonne each by growing into new businesses. The new levy will replace the existing sugar R&D statutory levy of 14c per tonne and incorporating existing voluntary contributions that fund the industry-owned BSES Ltd. All persons who pay the statutory levy will be eligible to register for membership and then be eligible for voting rights in the company.

The legislation is not without controversy and highlights the fact that Labor left this too late to deliver on the most basic reforms sought by industry and supported by a majority vote. The government introduced two bills on 5 June and, due to its habit of leaving things to the last minute, it has had to introduce another bill on 18 June to fix up problems with one of the original bills. The last bill was required to separate the taxation and non-taxation elements of the original consequential amendments bill as required by the Constitution. It is not the nature of the mistake that is the issue, although it does seem to be significant. It is a patch-up job, and the expectation is that everything else will just blindly fall into line without trying to evaluate the amendment arrangements in the hope that there will be no more problems to come.

There is a minor point also that again highlights the lack of attention to detail: the definition of a season in the Sugar Research and Development Services (Consequential Amendments—Excise) Bill 2013 is 'from 1 March to 28 February the following year'. I have never claimed to be Einstein but it is obvious even to me that every four years there will be a day that is not covered by the definition of a season—29 February each leap year. So if a cane processing establishment wanted to use some creative accounting, it may be able to avoid paying the levy. This may be unlikely but the point is: why leave a gap in the definition of a season and invite trouble?

There is a very short time frame for the legislation to take effect—1 July 2013, which is just 12 days from now—which is far from ideal and highlights a lack of basic government process. The Gillard government is caught up in bickering and infighting instead of running the country. However, amendments include changes to the Primary Industries (Excise) Levies Act 1999, the Primary Industries Levies and Charges Collection Act 1991, the Primary Industries (Excise) Levies Regulations 1999, the Sugar Research and Development Corporation Regulations 1990 and the Primary Industries Levies And Charges Collection Regulations 1991. The amendments made by the companion bills will start taking effect from 1 July 2013 so that industry will be provided with certainty about the imposition of the levy and when the increase to the levy rate will come into effect.

The R&D activities of the SRDC and 75 per cent of its assets will be transferred to the industry services body on the date it is declared as such. The remaining assets will be held by the SRDC to cover wind-up costs until it is abolished on 30 September 2013, and any remaining SRDC assets and liabilities will be transferred to the industry services body on 1 October 2013. While most of the industry supports this, those who oppose it are strongly opposed to it. The fairest thing would have been to allow time for a Senate inquiry to examine the individual concerns. I do not believe it would have changed where we are at, but I do believe they should have had the opportunity to do that.

In the interests of certainty and in recognition of the long process it has taken to get to where we are today, we have taken the responsible position of supporting this bill. I have spoken with all the MPs and senators with interests in sugar growing areas and, while there were some concerns from their constituents, most were very supportive of the reforms. The Australian sugar industry alliance, the ASA, representing 80 per cent of growers and 99 per cent of rural sugar milling production, has led the reform and obviously supports it. Canegrowers represent around 80 per cent of the canegrowers in New South Wales and Queensland, with 19 offices, and they strongly support these reforms.

Given the short time frame, we then tested how the peak body view was represented regionally by speaking with Rocky Point Canegrowers, Mackay Canegrowers and Childers Canegrowers, who confirmed their support for the peak body's position. A number of small organisations such as Pioneer Canegrowers Organisation, which represents 100 larger growers, and Kalagro Canegrowers Organisation, which represents approximately 180 sugar cane growers within the Burdekin region, were also contacted. They confirmed that they support the reforms but have some concerns. They are concerned that the consultation process and the new organisation will not seek views from smaller organisations. They are concerned that having the levy collector and researcher contained in the one body will be a conflict of interest. They are concerned that foreign ownership of the mills and influence on the organisation and marketing may not be in growers' interests. They are concerned about the ongoing obligation for millers to contribute, as they have only committed to five years. There is concern that sugar research will be too focused on sugar production and will not commit enough funds to diversification and the co-benefits of cropping arrangements, and because of this it does nothing to address the long-term viability of farmers and only addresses the short- to mid-term perceptions of millers. Amalgamation of research bodies is supported but the loss of regional research stations such as Bundaberg raises concerns.

Australian Cane Farmers Association, which I understand represents about five per cent of the industry, have similar concerns as the above groups, but their level of concern is greater, and they do not support the reform model. They support the retention of the BSES and SRDC. While their concerns are legitimate ones it appears that many of their concerns can be dealt with in the funding agreement and with appropriate consultation. So it is important that these groups are appropriately represented in the consultation plan, as it is appropriate for all industry-levy payers to be consulted on the operation of the company and to contribute to its priority-setting process. The growers did reiterate to me that they were concerned about the priority-setting process.

We will be monitoring this process closely to ensure that it reflects the views of the whole industry. We take the process of government very seriously. This is a sensible reform, supported by the majority of industry. There does seem to be legitimate concerns, and a good government would have given us time to properly address them. But we have to make the best of it. In the far-less-than-perfect time frame we have had, we have taken a very close look at this bill and, on balance, have decided that it is definitely in the best interests of the sugar industry, and the coalition will support it.

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