Sharman Stone (Murray, Liberal Party) Share this | Hansard source

I too rise to participate in this debate on a most important matter, especially if you represent regional Australia and in an electorate dependent on exports. Across Australia, we export about 55 per cent of all of our farm production. That includes 75 per cent of our fish products, 60 per cent of our forest products, most of our cereals and a significant proportion of our dairy powders, cheeses and drinking milks. In fact, it has long been known that the biggest export out of Geelong port is dairy milk powders.

We have new exports emerging which are going to be increasingly valuable, especially if we get the quarantine services and marketing right. They are the standardbred horses and breeding materials that are now being exported as part of the racing industry, with bright new prospects in the rapidly evolving Chinese market. I am particularly interested in the exporting of horses and their breeding material for the racing industry because much of that industry is based in my electorate—at Echuca, Avenel, Shepparton and Nagambie—and it is brilliant country for raising some of the fastest horses, we argue, in the world.

All of these exports are dependent on Australia retaining its reputation for exporting products and services which meet importer standards and, we would argue, go beyond the minimum importer standards. We know that our country-of-origin labelling—'made in Australia', 'produced in Australia', 'grown in Australia'—carries with it at the moment, in the mind of the consumer and in the mind of importers in other countries, values which include fresh, chemical free, uncontaminated and true to specification, and we can sometimes charge a premium for our foods with those particular characteristics.

We know of the terrible concern in China when they discovered that their imported infant formula and some of their domestically manufactured infant formula was poisoning and killing their babies. There are food scares regularly reported globally, whether it is the horsemeat contamination of beef throughout Europe or the most recent one, today, where pig DNA has been found in chocolates in Malaysia, where the chocolates were claimed to be halal. There is an extraordinary range of food contamination that goes on globally, whether it is because of poor hygiene or it is the unintended consequence of countries' inspection services not being adequate or there is not a culture of clean, green food production like we have and nurture in Australia.

Long ago, the principle of full cost recovery for our export inspections was debated and agreed to. There are some who still argue—and I am sometimes with those people—that, like some of our key competitors who also charge for export inspection services, those fees should find their way back into the industries in research and development and other supports. But we are not debating the issue of full cost recovery today; we are looking at the current legislation governing the charging of export inspection services. The legislation has for some time included technical defects and they have not always been equitable in the way that the fees have been allocated across exporting industries or sectors. Some producers have not been required to pay establishment registration charges for plant products like cut flowers, dried fruits, nursery stock, nuts, seeds, timber products and some tissue cultures.

The Export Legislation Amendment Bill 2014 and the cluster of related bills are not supposed to impose any extra charges at all but rather to bring everyone into the same net of paying for export inspection services or registrations. In particular, smaller exporters will now also be required to meet some of the full cost recovery. There are 676 establishments with export fruits, grains and vegetables now paying registration fees, but there are another 269 exporters who have not been charged those fees. The current registration costs in horticulture vary from $2,844 or so to over $8,500. So, as you can see, these are not insubstantial registration costs, but some have been applied to some businesses and not to others. Clearly, that is inequitable.

Currently, the Department of Agriculture cannot charge for the quota certificates an exporter must obtain to take their product into some markets which have strictly enforced quotas. This will be corrected through the amendments contained in these bills. I do not think many people would argue with establishing equity across export services. But what we do have to watch is that, in arguing for and imposing full cost recovery, we do that in a way that we all agree is appropriate and that is not in any way inflated to cover other costs for the department. We have a set of principles that were agreed as appropriate for applying full cost recovery, including key principle 3:

Any charges should reflect the costs of providing the product or service and should generally be imposed on a fee-for-service basis or, where efficient, as a levy.

Key principle 6 states:

Where possible, cost recovery should be undertaken on an activity (or activity group) basis rather than across the agency as a whole. Cost recovery targets on an agency-wide basis are to be discontinued.

Key principle 10 states:

Agencies with significant cost recovery arrangements should ensure that they undertake appropriate stakeholder consultation, including with relevant departments.

That is to ground-proof their estimations. Key principle 12 states:

Agencies are to review all significant cost recovery arrangements periodically, but no less frequently than every five years.

These principles are in the Australian government cost recovery guidelines of July 2005. So we have the guidelines and we have the principles, but there is a lot of argument about how much is being attributed to a full cost recovery charge, and I think that is a debate that we need to look at very carefully, because it is all about competition.

We know that it costs substantially less in New Zealand for these fees and services. Recently I have had my attention drawn particularly to the concerns of Harness Racing Australia. Obviously New Zealand is our close competitor in terms of providing standardbreds and breeding material into the international market. Harness Racing Australia is the peak national body for the sport and business of harness racing across Australia. It represents more than 48,400 individuals involved in the process of producing and preparing standard-breds for racing in Australia and they directly spend more than $511 million annually, 64 per cent in regional Australia. As I mentioned before, there are some superb establishments in the Echuca, Shepparton and Avenel areas, as well as in Cowra, Bathurst and Wagga Wagga in New South Wales. We are very jealous of our reputation of producing superb standardbreds for racing in Australia and, increasingly, in international venues.

In their submission to the department on the Live Animal Export Draft Cost Recovery Impact Statement, the HRA has made some very compelling points. They pointed out that the impact of the proposed and unexpected export fee increases was enough to cause reconsideration of many industry breeding practices, in particular moving some operations offshore to New Zealand, where the cost of doing the same business is less, therefore making them much more competitive. That has impacts on employment and direct spending by Australians on this industry locally.

There are concerns about the lack of transparency, reasonable time lines and the flawed consultation and representation of the equine sector in developing the draft cost recovery impact statement. In fact they drew my attention to the principles that have been developed for full cost recovery. A long-term review is proposed for 2014-15 to look at these principles and consider the cost-based fees and charging mechanisms for each of the industry sectors. They are concerned that the introduction of the new fees is very precipitous and they will not have time to adjust.

They are particularly concerned about the quantum of the fee increases proposed on 1 July this year for both live horses and the undefined amount for reproductive horse materials, particularly as it threatens our international competitiveness with our near neighbour just as we see new trade opportunities with China developing in the horseracing industry. They argue that horse exports, particularly live horse exports, are different from sheep and cattle, because there may be multiple exit and entry situations. Fees are imposed each time and each way so there are both import and export fees when you send your horse out to race and you bring that horse back to retrain, ideally to race again. So we need to take into account the special circumstances of some parts of our live animal export industry.

We also have to make sure that our other export industries are not hit with such high additional costs or new fees that would make it more difficult for a new entrant to establish in the export market. I draw attention to one of my local abattoirs, Ryans at Nathalia. They are a tier 1 processor and they can export to 25 countries without export inspection. They operate on Australian standards and they process about 300,000 lambs a year. If they went to tier 2, they would have to pay around $200,000 per annum. They are a very small abattoir, one that just survived when totally inundated by the floods in 2012. They have only just recovered, so you can understand that they are very concerned. They would like to go to tier 2 as an exporter but the cost of $200,000 per annum in those new export inspection charges makes them think twice about being able to expand. That is a real concern.

There is also the piggery industry. I have some of the biggest piggeries in Australia in my electorate and I am regularly in contact with them, of course. They talk about how there does not always seem to be a sense of national interest with the inspection services provided. They talk about the gouging of carcasses when samples are taken for inspection where a small incision or slice would do without seriously devaluing the carcass as a chunk is removed as the carcass speeds by on the assembly line. They wonder why there is not more care taken to protect the value of the carcass and, indeed, the value of the export, when a little more care, attention and empathy for the viability of the industry is so needed. We have to make sure that the people who are doing these inspection services do have the national interest at heart. They are paid by the hour so it is not a case of having to rush to do the job. The abattoir would prefer that a better job be done. I have been told that you can have a loss of up to $40 per carcass due to the injudicious use of a sampling knife. I want to stress the importance of employing the right people to do these inspection jobs, not somebody who could not care at all or who sees the producer as 'the enemy'.

We also have another industry in my part of the world—the fruit growing industry—and I have some key domestic suppliers. Over 90 per cent of the kiwifruit grown in Australia is from the Goulburn Valley. The vast majority of pears are grown in the Goulburn Valley. One of my big exporters talks about the cost of their having to get their product out of the country. They say that unless they have 20 containers being exported at a time it really does not cover their costs for the inspection fees and services. Now 20 containers at some times of the year is not possible or a sustainable number of containers to be sent out of the country.

We have got to make sure that we continue to do a stunning job in our quarantine inspection services, or our customs inspection services. While we have had some hiccups referred to by the previous speaker with kangaroo meat substitutions—and I am sometimes quite sure, false allegations of growth hormones or other substances being found in product—mostly we have an enviable reputation in terms of our true-to-specification products being sold overseas. This is borne out by the numbers of investors from Singapore, China and Malaysia now trying to buy properties in Australia to take advantage of our superb production systems and inspection services.

But we have got to make sure that the full cost recovery system does not become injudiciously calculated; that we have a very efficient and effective, well-trained and empathetic inspection service; and that our exporters are supported in what they do by our government agencies—and that they are not seen as the enemy. Therefore I commend this bill to the House in its original form. I believe that our exports in the food sector in particular are going to be the replacement for the mining boom in the future, but only if we get it all right and that includes having appropriate inspection services at the border.

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