John Cobb (Calare, National Party, Shadow Minister for Agriculture, Fisheries and Forestry) Share this | Link to this | Hansard source

The object of the Dairy Adjustment Levy Termination Bill 2008 revolves around two main issues. The first one is the cessation of the Dairy Adjustment Authority. The second one is the cessation of the 11c levy which consumers pay on milk products unless the products are refined or processed to the point where they have a higher than 12 per cent butterfat content. We do not oppose this bill. We are in agreement with it. The industry always knew that the levy and the authority had a sunset clause. It was not as a result of anything that the federal government of the day did. It was as a result of the deregulation of the dairy industry—a decision within the dairy industry itself and a decision by the state governments involved to accede to that.

However, the money set aside to help the industry adjust was a loan from the Commonwealth, in effect. It has mostly been paid back. There was some $200 million still owing as of July this year. Based on the average rate of collection from consumers, by some time around February 2009 that should have been paid back to the Commonwealth. I think that, as of April of this year, payments to the industry were finalised. As I said, there was still $200 million owing to the Commonwealth as of July.

I think that, obviously, that 11c should not be collected past the time when the Commonwealth is no longer owed money. I think it is incumbent upon the minister and the department to see to that. I expect that they will do their level best to ensure that money is not collected past the date when it is no longer necessary to do so. There is no need for consumers to pay money which, as this bill stipulates, will only go back to the Commonwealth. I think that, given the industry’s position, they would be upset as well if money did continue to be collected past that time. This bill exists in spite of the fact that there always was a sunset clause on the original bill put through in 2000 by our previous government. Despite that, this bill is necessary to ensure that there is no time lag or as little lag as possible between money not being owed to the Commonwealth and the collection of that money.

But the big issue here—and I think it is an issue for all parties in the industry and especially the government of the day—is to watch and make sure that those people who process or, more particularly, retail milk, be it the big supermarkets or anybody else, bring the price of milk down by the 11c that is involved in the collection at the moment. The parliament—whichever side, be it the government or the opposition—and certainly the industry have a vested interest in this and we owe it to the consumers of Australia to ensure that 11c does come off the retail price of milk.

While we are talking about the dairy industry, let me say that deregulation was a tumultuous issue for the industry in the various states. The industry has adjusted far better than anyone might have imagined at the time. There were very disparate views amongst the various states. The main players were Victoria, Tasmania, New South Wales and Queensland, and of course there is dairy in other states. The export market opening up to the extent it did certainly has made the dairy industry very competitive around Australia.

Dairy is an industry, particularly in New South Wales, that has always produced on a level basis. That is, to a large extent, because it is an irrigation industry. Years ago, when I was president of the New South Wales Farmers Association, I went down the Murray in times of previous water shortages and I was somewhat surprised to learn that the people in those days who paid the most for temporary water were dairy farmers. That is possibly not true today but it certainly was eight or 10 years ago. Dairy farmers would outbid the rice growers, the horticulturists and others for temporary water because they had to have continuity of production.

Given what I have just explained, the irrigation industry is important—whether it be bore irrigation, river irrigation or whatever it might be—because it is an intensive industry in agricultural terms. It is also important that we look at the National Plan for Water Security instituted by our government previously. The only plan the current government seems to have to deal with water security is to buy water—and that, once normal seasons come back, is going to hurt all our industries and our towns to an enormous extent. I believe it is incumbent upon the current government to look more at a plan for the way they deal with the irrigators, be they dairy farmers or anyone else, because that continuity of supply is so important. It is important not just to our dairy farmers and our irrigators but also to the communities that live along the rivers, particularly the Murray, and in Tasmania and other places.

For those who depend upon river irrigation we need to have a plan and we need to have structural adjustment, which has been wiped out—as the last lot of Senate estimates revealed—by the current government in the current National Plan for Water Security. That is the plan that is being put forward or dealt with by the government. It only involves buying water. It is not a plan which looks at the needs of the industry and the needs of rural communities in the Murray-Darling basin.

The history of dairy farming in Australia is a long one. When we lost our close ties to the UK, when the UK joined with other European countries in the economic union, it had a profound effect on Australia—far more than on New Zealand or anywhere else—but the dairy industry has modernised over the years. It is a tough industry. It has done a fantastic job of dealing with the modern strictures of production. Dispite the ruptures that existed in 1999 and 2000 when the dairy industry deregulated, it has come to terms with that deregulation and it is one of the bright spots in Australian agriculture, in terms of trade.

I think the industry needs to have a minister and a government that are well aware how important it is to everybody—not just those within the Murray-Darling basin but in Tasmania, Queensland—

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

Ms Marino interjecting

John Cobb (Calare, National Party, Shadow Minister for Agriculture, Fisheries and Forestry) Share this | Link to this | Hansard source

and even in Western Australia, as the member for Forrest quite rightly points out. There is a very important industry there and a very tight and efficient one. I think that the Minister for Agriculture, Fisheries and Forestry may not actually want the portfolio of agriculture, but the fact that he has it means that he has a duty, not just to this government but to the agricultural industry, to look at its policy and needs, to defend it where necessary and to take up the cudgel when other sectors of the government might take actions which reflect badly on it.

As I said, all of agriculture in Australia is efficient and tough. The dairy industry has been through tougher times than some; I hope it does not strike them again. I hope trading schemes do not bring it to its knees. I do not think it will be brought to its knees, because it is a very efficient, very good industry. It has become one of the bright spots in Australian agricultural trade, along with others.

I will repeat what I said: the minister does not represent the government in this case; once you become the minister for agriculture you are representing agriculture, whatever your opinions on global warming are. It is not as reported. I realise very well there are changes in temperature. It is the decisions that are drawn from that information and what we do with that information that I question from time to time, and with very good reason. Agriculture is one of those industries that at this point in time pretty much cannot escape being a negative when it comes to carbon. The dairy and grazing industries in particular cannot escape it. But they deserve a minister who will go out to fight for them. They deserve a minister who will do his best to understand them and meet with them whenever they need to see him. There is no older industry in Australia than agriculture. And around the world I do not think there is a better one, either—be it dairy or anything else.

We support the bill. We appreciate the fact that the minister, it would seem, is doing his best to end it so that there is not an overflow of income being taken from consumers. One of the issues that the industry was very strong about in 2000, when the package was first introduced, was that if any money were left over it should be returned to the industry. I hope that what is being done with the bill means there will be very little left over. As I said earlier, before the minister arrived, I think the big issue for him, his government, the industry and us is that we see the price of milk come down by 11c.

James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak to the Dairy Adjustment Levy Termination Bill 2008. The Australian government is acting to help ease the financial pressure on Australian working families by reducing the price of milk for Australian consumers. The Dairy Adjustment Levy Termination Bill 2008 will remove the levy on Australian milk consumers that has been in place for the last eight years.

The structural adjustment package made payments to 13,000 dairy farmers who were in the industry in 1999. Farmers received their final payment under the same scheme this year. The objectives of the dairy industry adjustment package, introduced in 2000, have been realised, and it is appropriate to both wrap up the administrative arrangements and terminate the consumer levy as soon as is practical, as soon as possible. This downsizing reflects that the authority has substantially completed its functions and can now be wound up.

Deregulation of the dairy industry occurred in 2000. Structural adjustment payments were provided to dairy farmers over eight years to assist them and their communities to adjust to the competitive, deregulated trading environment. As the final payments to farmers under the dairy industry adjustment package were made in April 2008, closure of the program will not adversely affect payment rights of dairy farmers.

The abolishment of the levy, which stands at 11c per litre of milk sold, will be welcome news for milk consumers. By removing this tax on milk, the government is providing financial relief for Australian families when they do their shopping. We are the government that is taking practical steps to reduce taxes on working families. One just needs to look at the budget to see that we are delivering tax cuts for Australians. Tax cuts in the 2008-09 budget delivered by the Treasurer meant that those who earned $40,000 a year had a tax cut of $20.19 a week, and those who earned $50,000 a year had a tax cut of $19.23. The government’s education tax refund and increases to the childcare tax rebate are examples of tax relief delivered by the government to working families in the budget.

There is an ever-increasing financial impact of rising grocery prices, particularly for low- and middle-income earners, and the government recognise that. We are listening to working families, and we are taking practical measures to relieve the cost-of-living pressures that exist today. It is important to reiterate that there are no new payments to be made under the levy to farmers, with the last payment being made in April this year. The Australian Bureau of Agricultural and Resource Economics found that strong growth in milk prices in 2007-08, when farm-gate prices rose by as much as 48 per cent, had helped with recovery from the drought year of 2006-07, and the industry is in a good position.

After the removal of the dairy adjustment levy, the government will collect $20 million per month less from Australian milk consumers. The removal of the levy will take some pressure off soaring milk prices and inflation, which is good news for the people of Dawson and good news for the people of Australia. Australian Bureau of Statistics figures on inflation show that the price consumers paid for milk grew by 12.1 per cent in 2007-08. That was a sharp acceleration after the past few years when milk prices typically rose at an annual rate of three to four per cent. The government expects that the removal of the levy will be passed on to consumers. The government, in passing this bill, will ensure that any complaints or suggestions of anticompetitive conduct in relation to the removal of the levy will be dealt with by the Australian Competition and Consumer Commission. The President of Australian Dairy Farmers, Allan Burgess, agreed with the government’s position that consumers should get the benefit of this measure when he said that he believed retail milk prices should drop 11c a litre when the tax is lifted. Mr Burgess is quoted in the article ‘Milk price to drop as tax goes’ in the Australian Financial Review of Thursday, 25 September 2008. He said:

From an industry point of view, that would be our expectation—that other people along the supply chain do not capture the benefit, but that the benefit flows to the consumer, as we all agreed in 2000 …

In the same article Mr Burgess said that the industry had ‘undergone a major adjustment as a result of deregulation but emerged as strong and internationally competitive’. The government could have kept the levy in place and allowed funds raised from the levy to continue to raise funds, but the government has made a decision that consumers come first. The other side of politics needs to hear that message loud and clear: this government is clear and decisive that consumers do come first. The fund into which levy payments were made stood at a deficit of around $205 million in July 2008. It is expected to be in balance in the first quarter of 2009. Amendments to the act will allow the Commonwealth to stop the appropriation of levy funds into the Dairy Structural Adjustment Fund as soon as possible after the deficit of the fund has been eliminated and there will be no further calls on it. With the passing of this bill the Dairy Structural Adjustment Fund will be closed once it has a zero balance.

In conclusion, the adjustment fund has fulfilled its purpose. It is timely to terminate the 11c-per-litre consumer levy on fresh milk sales which has funded the program. The government is making a responsible decision in passing this bill. I do commend this bill to the House.

I would just remind the other side that we have clearly said that we are putting consumers first, and we are being very practical and pragmatic in everything that we do here. I know that the minister, who is beside me right now, has made it very clear that this is something which he is very happy about—the way that we are moving forward. This fulfils the overall agenda of looking after low-income families in our community and reducing inflation on the grocery bill that comes to the family table.

There is nothing more basic, nothing at all, than milk. I remember a time, when I was at school, when we used to have good old-fashioned milk. I tell you what: these good old-fashioned teeth are the product of that good old-fashioned milk. I personally—and this is a personal view, not a government view; Minister, I hope you forgive me for saying this—think that was good for our kids, good for our generation. It is good for fighting osteoporosis, particularly for ladies aged 50 and above, because one of the key causes of the increase in the incidence of osteoporosis is a lack of milk and cheese. It is a direct result of that. So there are a wide range of benefits of milk. What greater incentive is there for the family to drink milk than to reduce the price of milk per litre by 11c? Personally I would love to see milk reintroduced into schools and I would love to back our Australian dairy-farming industry by helping facilitate that—but that is my own personal view, and I make that clear, Minister! I do not want to go beyond that, so let everybody hear that clearly! But I believe that was a good policy. It is good to look after our children, and that investment in milk for our children in the generations past has resulted in lots of long-term health benefits.

The levy on milk was introduced by the previous government, and you have to give credit where credit is due: in 2000 the dairy levy was a necessary thing, and we on this side of the House recognise that. We recognise that. We are pragmatic and we say, ‘Okay; where there is a need, meet the need.’ But now that the dairy industry is coming back into its own and its needs and the aims of the levy have been met, we can now say, ‘Okay, it is in good shape and we can now save the Australian consumer 11c a litre on milk.’ I think that is very important to remember—that we need to pass that on. I am so encouraged by Mr Burgess when he says that there is an agreement, and I hope that people do keep their word and they do pass it on in good faith. That deal was made under a previous government, and we want to see that honoured under this government as well. I have not overstepped the mark there, have I, Minister!

In winding up, I would say that I have put forward the government’s logic and the pragmatism of this government—its ability to acknowledge when it is necessary for certain things to be done or bills to be passed. But, when the need for those bills has passed, it is time to move on, and what better way than to deliver an 11c-a-litre saving to every individual and every family in this nation. They can move on and drink lots more good old-fashioned milk. I commend the bill to the House.

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

I thank both sides of the chamber for previously enabling me to give an MPI speech, which has got massive publicity. This very morning on the Sunrise program they were quoting the price growers were being paid for pumpkins and the price Woolworths and Coles were charging for pumpkins. For the benefit of the chamber, it was $2 that the growers were being paid—my growers are paid less than that—or 18.5c a kilogram, and customers were being charged $8 a kilogram inside the retail stores. I am sifting out the figures now on meat, because they look to be worse than eggs, milk, sugar and potatoes. We just picked six items that everyone will use over the next two days. We are asking what is going to happen with this 11c on milk. Mr Burgess said he will pass it on, but for how long is he going to pass it on? They said when the industry was deregulated that they would pass on the savings to the public. They did. It was 116c and it went down to 113c for four months, and then it went up to 157c. So, yes, they passed it on for a few months until after the government inquiry was over and then shot the price up to 157c a litre for the Australian consumers.

I would ask the minister while he watches this 11c go back to the consumers, under the Dairy Adjustment Levy Termination Bill 2008, as I know he will, to read the dairy inquiry report. Maybe he has not got time to do the research needed. I am not using any spot figures—I used a three-year average for milk so that we were not dealing with peaks and troughs. The three-year average price for the consumers was 116c and the three-year average paid to the farmers was 53c. That is about a 100 per cent mark-up. Within an indecent two years of deregulation the price to consumers went up 40c to 157c and the price to the farmers went down 30 per cent; from 53c it fell 19c a litre. So the consumers paid 41c a litre more and the farmers got paid 19c a litre less. If you ask where does this come from, look for the money trail. Ever since the Phoenicians invented money, you can rest assured that the reasoning behind this is the gold trail. The money leads back to Woolworths and Coles. That 60c a litre extra profit they made, less the 11c, translates into many millions of dollars of extra profit.

It is mind-boggling what they did. But the worst part about this was the deceit by the ACCC. There were really only two months in which you could have taken the prices so that it looked good for Woolworths and Coles, and they were the exact two months that the ACCC used. If they had gone back a month before or gone a month in advance, it would have been different. It is impossible to look at that report without saying, ‘This report was doctored up.’ It just is impossible. In 35 years I do not think I have ever used the word ‘conspiracy’, and I would not raise the issue except that Mr Samuel brought out another report and, God bless Sunrise, every time Mr Samuel said, ‘Oh, there is a huge chain from the farmer through to the shelf. They have to be processed; they have to be packaged. This is very expensive,’ Kochie on that program would flash up a picture of the potatoes with the price they were charging and the price that the farmer was getting, which was a 400 per cent difference. They just kept flashing it up. What sort of chain have you got with the potato? You put it on the back of a truck, you take it out and you put it on the shelf.

Again, the minister’s attention really needs to be focused on the fact that three of those items that I mentioned—eggs, milk and sugar—were the subject of arbitration. There was a fairness tribunal, and in each of those cases the difference was around 80 or 90 per cent. When the fairness tribunal operated, there was an 80 or 90 per cent difference. When the fairness tribunal was removed and we went into the wonderful free market situation that has brought us subprime, the mark-up went to 270 per cent. It went from about 80 per cent to 270 per cent on those three items. There is just no justification for that. I can tell you: my family have been retailing in Australia on my father’s side for about 140 years, and you cannot justify those sorts of mark-ups.

When we take the 11c off milk, yes, I would hope that that the government monitors, and monitors ruthlessly, that 11c going back to the consumer but that, in so doing, the government takes into account the difference between what the farmers are being paid and what the retailer is taking from the consumer. That has got to colossal proportions. It is no reflection upon you, Minister—it has built up in the period prior to you coming to this position—but we need action on this. As to the proposal going forward that we have a maximum difference between the farm price and the retail price, it is very crude, but, really, after giving this many, many years of thought, I cannot see any other way of attacking this problem than to go at it in that crude manner. It would be wonderful if the government would force capping and divestment on Woolworths and Coles, but, after my screaming for that for seven or eight years and having no movement at all on it, that may be a journey too far away. But, clearly, if you are after a competitive market, competition should be put in there.

Anyone can read the transcript of the committee of inquiry on fair trading, referred to as the Woolworths and Coles inquiry or the Baird inquiry, and have a look at all the other countries on earth. There is no other country on earth where the top two companies have 25 per cent of the retail market. The English are screaming at the moment because three companies have nearly 40 per cent of the market, but no two of them have over 25 per cent of the market in Great Britain. What we are saying here is that no other country brooks this—and the United Kingdom is far worse than any other country on the planet, including America, I might add, in spite of Walmart’s very significant position.

We are saying that two companies have 86 per cent of the market. Mr Samuel said 70 per cent, and I would point out to the minister that, when Mr Samuel said 70 per cent, it is very hard to say that that was an unconscionable and conscious untruth, because his own previous report on the industry showed 68 per cent. This was in 2003 or 2002—one of those years. ACNielsen said 74 per cent, the ABS series said 68 per cent, and there was a third series which was in between the other two. It was a series formulated for a government inquiry. But if you add the two per cent annual growth rate that they have had and sustained since 1991 then you have to come up with a figure of 86 per cent. They had over 74 per cent back in 2003, and their own annual reports skite about their market growth. If you take their market growth figures, which they themselves are skiting about, then you have a figure of over 86 per cent. It is naive and stupid to talk about free competition if you have two companies holding 86 per cent. They would have to be stupid and brainless not to take advantage of that situation. In fact, they probably would not be doing the right thing by their shareholders if they did not take advantage of that situation.

In the sugar industry deregulation they handed themselves a rise of some $300 million, when you add the extra the consumers paid and the diminution to the farmers, which was about 50 per cent in that case. So they made about $300 million there. In the egg deregulation they made about $400 million a year, and out of the dairy deregulation they made $1,000 million a year. Those profits have been eaten up in their untrammelled determination to wipe out a little tiny bit of competition that is still out there. They will put out an awful lot of money, and they do not show huge profits because that might get them into a bit of trouble with the trade unions and with the government. It is not a good idea to show profits in a profit and loss statement.

If you charge the consumers 41c a litre more for the milk, and pay the farmers 19c a litre less for the milk, and you multiply that by the litreage in Australia you have over $1,000 million of extra and unconscionable profit. The price that was paid within two years of dairy deregulation was a farmer committing suicide every four days in Australia. As I have said in this place on many occasions, we are the government of Australia. This parliament is the government of Australia. It was not penguins in Antarctica that caused that huge increase in farm suicides. It was decisions taken in this place that caused that massive blow-out in suicides in Australia—the shame of this nation.

I attended a lecture from the long-serving Dean of the Faculty of Economics at the University of Queensland—probably the most distinguished faculty of economics in Australia. He said that this country had three great shames: the way we treated the first Australians; the way we treated the men that came home from Vietnam; and what we did to the dairy farmers. I added to that what we did to the Jews, in not allowing any of them to come to Australia when Hitler was persecuting them. We allowed 15,000 in, and six million of them died in Europe—and we can be very ashamed of ourselves there—and 28,000 women and children died in the concentration camps under the British in the Boer War. I would add those two great shames to this nation, but there was no doubt that the dean of the faculty was talking about a great shame to this nation.

I remember vividly, and I will to the day that I die, when Julian McGauran came into our party room and said: ‘I have heard people talking about the deregulation of the dairy industry. That would be the worst smash in Australian agricultural history. Mr Leader, we want to put this to rest straight away.’ Some two hours later, after Mr Causley, Mr Anthony, another member and I had all spoken at great length and with great passion, it became rapidly obvious that the frontbench not only was not going to oppose deregulation but was actually going to facilitate it. The National Party says it was the fault of the Labor government, and Mr Truss put out the infamous press release and said that every farmer would get $150,000 on condition that every state deregulated. Whether Mr Amery was going to do it or not do it, we do not know, but within two hours Mr Amery had his hand over his heart, saying, ‘I did not want to do it, but the federal government has forced me to do it.’ That was a fair call. Within two days, Mr Palaszczuk had his hand over his heart, saying, ‘I did not want to do it, but the federal government has forced our hand; I could not deprive my poor farmers,’ et cetera.

If you want to sheet the blame home, I think the leadership of the industry has something to say. We have counselled the minister on many occasions not to listen to peak bodies, but I was just speaking to one of my dairy leaders in North Queensland, and he said, ‘Yeah, we note the part that Pat Rowley played.’ It does not excuse you in this place if you say, ‘A farm leader gave me this advice.’ God gives you a brain to think with. You must know that, if you deregulate this industry and there are only two people to sell to, you are going to be slaughtered. And of course they were.

It is interesting to reflect upon the fact that Julian McGauran said as he walked out—I do not think he would object to me saying this—‘That is the finish of us.’ And it was. The National Party held 19 seats then. They are now down to nine seats. Julian joined the Liberal Party. I became an Independent. Ian Causley resigned from parliament. Larry, because he was in the cabinet and was a man of very great honesty and decency, did not go public, as some of the others of us did. He was in cabinet, he had to take his pain and he lost his seat in parliament. There is another member—his name will come to me shortly. Really, the party was never going to come to that dreadful blow. But an interesting reflection upon the National Party in this place is that their now leader is Warren Truss. It fascinates me. Then they wonder why they have gone down to nine seats.

I do not come in here to make a political point, much as I enjoy making it. I attended many rallies, and copped a hiding, and in some centres my vote went down badly as a result of taking a stand. But it would be the height of hypocrisy for me to fight against the deregulation of the sugar and dairy industries by the previous government and to fight against the deregulation of the egg industry, the tobacco industry and the maize industry and then not fight on behalf of employees for the same right to collectively bargain. We think we should get so much. What we were asking for might have been a bit outrageous—as a one-time, for a short time, trade union representative. The employer says: ‘That is ridiculous. I will go broke if I pay that.’ Then you sit down and you have an arbitration commission, a fairness tribunal, that says what is fair—what the workers should get and what the employers should get.

The current Prime Minister gave an absolutely brilliant speech here on IR. He was quoting, at St Arnaud’s, the founder of the arbitration commission in Australia when he said, ‘A contract made by one person is not a contract; it is simply a determination by one person what he thinks he is going to pay the others.’ If the income for the cobbler goes down, so will the income of the shearer. I am quoting verbatim from his speech—and I might add that the Prime Minister quoted from that speech.

I feel that without arbitration we are not quite a civilised people. We are in a savage world where dog will eat dog and the most powerful will dominate—Darwinism, survival of the fittest, which reached its crest of course with that evil man Adolf Hitler. But we also saw the failure of that as a philosophy. It might be a law of nature, but it is not a philosophical point of view to have. Our society has retreated into a dog-eat-dog world, and Woolworths and Coles are the biggest dogs out there, so they get to chew up all the rest of us. That is not the way that it should be. There should be a fairness tribunal in there. I put up with preaching about competition for the last 20 years—listening to Mr Keating and then, later on, Mr Costello telling us all about competition. Well, it has been a wonderful success story! This subprime crisis has cost this country $600 million, I think, in the first two months of its collapse. We have now gotten ultimate judgement upon where they are going. (Time expired)

Mike Symon (Deakin, Australian Labor Party) Share this | Link to this | Hansard source

I will probably not be as entertaining as the member for Kennedy, but I am here to talk about the price of milk, and I rise to support the Dairy Adjustment Levy Termination Bill 2008, which will amend the Dairy Produce Act 1986 to finalise the Dairy Structural Adjustment Program. This program has largely achieved its original purpose and it is the priority now to reduce the impost of this levy on the milk-buying public across Australia and certainly in my own electorate of Deakin.

This bill minimises levy collections over what is actually needed for the program, and ultimately it will close the Dairy Structural Adjustment Fund, which holds the revenue generated by the levy. The removal of the dairy adjustment levy will mean that the government will collect $20 million per month less from Australian milk consumers. This should hopefully occur in the first quarter of 2009, once the Dairy Structural Adjustment Fund becomes solvent—that is, there is still money going into it. At the moment the levy is collected on the retail sale of cow’s milk and broadly covers whole milk, modified milk, ultra heat treated milk—UHT—and flavoured milk, such as Big Ms and the like.

The proposed amendments in this bill will also reduce unnecessary levy collections and further imposts to households by reducing the levy termination notice period from 28 days down to seven days. The levy funded a number of measures to help dairy farmers adjust to the removal of state and Commonwealth government price support measures. The dairy adjustment levy has been imposed on milk consumers at the rate of 11c per litre of drinking milk since its inception in July 2000. Since then, around $240 million a year has been collected through the levy to provide payments to about 13,000 dairy businesses. Whilst the final payment was made to farmers in April 2008, the dairy adjustment levy has continued to pay off the interest on loans that the former government used to fund payments under the adjustment package.

Dairy farmers in Australia have now adapted to deregulation. Some did leave the industry with payments that the previous member spoke about; many are now in much better shape. When it comes to dairy, the state of Victoria is one of the larger agricultural employers. In fact, about 23,000 people work on or own dairy businesses and 60 per cent of them are in the state of Victoria. Currently 65 per cent of Australia’s milk production comes from the state of Victoria. Victoria’s production of milk increased by eight per cent over the last financial year.

And as we all know, increased demand and drought have forced milk prices up in recent years—a pricing phenomenon that we have seen across many items at the supermarket, such as fruit and vegetables and all sorts of other dry goods. And, as the member for Kennedy said, not all of that goes back to those at the farm gate. That is certainly an issue. He is quite passionate in pursuing that and puts it well.

As reported in the Australian Financial Review on 25 September this year, ABS statistics show that the price consumers pay for milk rose by 12.1 per cent in 2007-08. I am quite certain that that did not all flow back to the farm gate. The removal of the dairy adjustment levy will help offset some of this recent large increase in the cost of milk to the consumer. That is real money going back into the economy to be spent on other essentials for everyone’s day-to-day lives. It is very important to note that the government has requested the Australian Competition and Consumer Commission to monitor milk prices as the levy is finalised to ensure that consumers receive the financial benefit from removing the levy.

The price of milk is such a basic component of just about every household’s budget. It is not optional; it is a day-to-day need, especially for those households with children, where eight to 10 litres a week is quite a normal rate of consumption of milk. If fully passed on, the reduction in price of 11 cents per litre of milk should provide another dollar a week that can be spent on other basic necessities. To some people, a dollar a week may not sound like a lot of money, that is true, but to many others, whose entire income is spent on the basic costs of living, it is welcomed. If you were to save that, it would amount to $50 over a year. Again, that is not much to some, but is a help to the many people who are financially stretched between pay days or pension days. Of course, community groups and organisations that help those less well off will also benefit with this reduction in the price of a basic staple good.

In my electorate of Deakin in Victoria, the price of milk varies by large amounts, depending on the place of purchase and the brand and volume of milk. For instance, I regularly go grocery shopping. It is one of my little Saturday morning things I do when I can get out and about and I have a little free time. It is a task I enjoy because it allows me to keep an eye on what the real cost of living is in the area where I live; I think there is nothing better than pushing a shopping trolley around to find that out. At my local supermarket I can purchase a three-litre bottle of Home Brand milk for $3.19 or a two-litre bottle of Home Brand milk for $2.49. But, if I go to a convenience shop nearby, that same two litres of milk in branded form can cost $3.80 or more, although the product inside, I am sure, is exactly the same. The same supermarket I go to also sells one-litre cartons of Home Brand UHT milk for $1.09. A reduction of 11c a litre for a three-litre bottle of Home Brand  milk, if passed on to the retail consumer, in this case would take the price down to $2.86. In the case of a two-litre bottle of branded milk from the convenience store, it would be reduced to $3.58. And, in the case of the one-litre carton of Home Brand UHT milk, the cost would be down to 98c.

The important thing is that, wherever you currently purchase your milk from, it should be cheaper when this bill comes into effect next year. No matter what your income, that means a decrease in the weekly shopping bill, which means an increase in the rest of the household budget. I commend the bill to the House.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

It gives me a great deal of pleasure to speak on the Dairy Adjustment Levy Termination Bill 2008. The timely termination of this levy is good news for all Australian consumers. It is also good news that the government is following the successful protocol that was established under the Howard government. The Dairy Industry Adjustment Act 2000, which was introduced in 2000 to ‘smooth the move into a deregulated industry’, has been successful during its eight-year reign. It was widely accepted by key stakeholders, including industry representatives, dairy farmers and Australian consumers. The coalition supports the Dairy Adjustment Levy Termination Bill, as the levy has effectively run the course that the coalition had set out for it in 2000.The act has been triumphant in its aim to be cost neutral to the Commonwealth and to smooth the way for deregulation of the dairy industry.

I was then and still am today against the deregulation of the dairy industry. Deregulation was brought about by the state governments, driven by the Victorians. But, given the decision had been made by the states, the Commonwealth had absolutely no alternative but to provide economic support. At the time of deregulation, I was not in this parliament—I came in in 1996, lost in 1998 and came back in 2001. However, on 28 September 1999, the then Minister for Agriculture, Fisheries and Forestry, the Hon. Warren Truss, announced the government’s decision to provide a $1.8 billion structural adjustment package. He said:

… the package would assist restructure of the industry by helping farmers improve their efficiency and competitiveness after deregulation.

I say he was correct in his assumption. The overwhelming success of the legislative package is a testament to the superior management capabilities of the coalition and their ability to plan successfully for the future.

As I said, I support the government’s move to now terminate the levy as soon as practicable. Additionally, I welcome the move to reduce the levy termination notice period from 28 days to seven days, as this will bring about consumer savings earlier and will work to avoid overcollection by the Commonwealth. It is paramount that unnecessary household costs do not burden Australian consumers. The move to terminate the levy should signal an 11c-per-litre reduction in milk prices to consumers. Inflation figures from the Bureau of Statistics show the price of milk rose by 12.1 per cent in 2007-08; the move to terminate the levy will help to counteract that increased cost to consumers.

These savings will be a welcome relief to Australian consumers, who are in the midst of increasing household bills, interest rates, and general grocery and petrol prices due to the Rudd government’s inability to successfully manage the Australian economy. I am regularly contacted by constituents in the Paterson electorate concerned about the rising costs of living and raising a family. More needs to be done to help ease the pressures associated with these living costs, and this bill is but a small step in the long and arduous road ahead. The Rudd government must show an unwavering commitment to listening to the voices of all Australians and addressing their burgeoning costs.

I must insist that, whilst I do support the cessation of this bill, the government does not act hastily in its termination. The government needs to remain transparent and accountable in its actions and ensure that it is seamless in its movements to minimise any potentially negative side effects of its termination to Australian consumers and dairy farmers alike.

As I stand before you and represent constituents of the Paterson electorate, an area with very strong agricultural ties and home to many dairy farmers, I welcome the news from the NSW Farmers Association chairman, Adrian Drury, that the price dairy farmers receive for their milk will not be affected by the change. The notion that these farmers will not be affected by the termination of the levy is especially poignant during this time of drought. I would like to take the opportunity to remind the Rudd Labor government that the termination of this bill is not an indication for the party to rest on their laurels and waver in their commitment to serving Australian farmers, as they remain the absolute backbone of our country.

Working in an industry that has already faced countless challenges such as drought as well as rising feed, diesel and maintenance costs, dairy farmers nationwide are struggling to stay afloat. One of my constituents, Bluey Watkins, a dairy farmer from the Dungog region in my electorate, says the constant stress and worry of rising costs is almost too heavy a burden to bear and, one by one, smaller, independent dairy farmers are being forced off their land to look for other forms of income. Bluey had hoped that maybe with the removal of the levy, rather than the entire saving being passed onto the consumer, the proposed 11c reduction in price could have been split fifty-fifty between consumers and the dairy farmers themselves—anything to ease the burden on this struggling industry. He adds: ‘As long as it doesn’t disappear into the government coffers.’ He has his suspicions that, while the price of milk may initially drop in the response to public pressure, it will not take long for the price of milk to rocket back once all has settled regarding the removal of the levy. But, then again, we have not heard of the ‘milk watch’ program that would be implemented by the Rudd government!

Bluey—who runs a herd of about 450 head of milkers—has advised me that, while the farm gate price he receives for milk has increased from around 30c per litre to 48c per litre over the last five years, the industry faces constant pressures from skyrocketing production costs such as: grain having increased from around $150 per tonne to $450 per tonne—it has tripled in price; diesel fuel having increased from around 90c per litre to more than $1.80—it has doubled in price; and fertilizer having increased from $450 per tonne to $1200 per tonne—it has almost tripled in price.

We are talking about families that have farmed their land for generations being forced to abandon their heritage and livelihood as they are priced out by the supermarket giants. We hear all too often in the media about the tragic statistics regarding high rates of bankruptcy, depression and even suicide amongst our struggling farmers. As a nation we need to acknowledge the enormity of this issue and the dire consequences it is having for countless Australian families.

Again, in my own electorate of Paterson, Mr Bob Koppman, a former dairy farmer, was forced off the land and out of the industry simply because of the fact that the cost of production far outweighed the sale of the product. When I spoke to Bob recently, he advised me that there was so little regulation of costs within the industry that the independent producers barely had any chance to maintain a viable and profitable operation. Being forced to sell their properties and move away from industries that have often been family businesses and operations for generations is a tragic result for so many hardworking Australians.

During my time as the member for Paterson, over a period of 12 years on and off, I have seen the dramatic reduction in the number of primary producers in my electorate, all falling victim to rising costs and a flailing industry. The Dungog, Gloucester and Nabiac region was one of those regions dramatically affected by dairy deregulation. What the dairy farmers of the Paterson electorate cannot understand is the total monopoly of the large supermarket chains on all Australian agricultural products, and in particular fresh milk.

How is it that you can walk into a supermarket and get an enormous price variation on a two-litre bottle of milk—for example, $3.95 for the Pura brand compared to $2.39 for the Woolworths Home Brand? Yet at present the farmers are only getting around 50c per litre for their milk—almost what it costs them to produce it. These margins are not sustainable for any commercial operation. I would like to give you some further examples, similar to those I quoted when I spoke on other dairy bills years ago in this House. Why is it that at Woolworths a one-litre bottle of Coke costs $1.96, a one-litre bottle of water costs $1.99 and milk costs $1.25? A two-litre bottle of Coke costs $1.99, a two-litre bottle of milk costs $3.95 or $2.95—it depends whether you take the Pura or the Home Brand—and a bottle of water costs $2.93. It takes far more to put milk into a bottle and supply it to the consumer than either Coke or water.

It is the supermarkets who are reaping the rewards, and they are doing it on the backs of our hardworking farmers around this country. The supermarkets have an obligation to their shareholders, I acknowledge that, but they also have an obligation to their suppliers, the dairy farmers. Without the dairy farmers in Australia, where are the supermarkets going to get fresh milk? These farmers have worked for many years on the land and provided quality products for our supermarkets. The supermarkets, in turn, have made large profits from the agricultural sector. These people, our Australian farmers, do not want welfare. They do not want handouts. What they want is a fair day’s pay for a fair day’s work. If supermarkets continue to ignore this and continue to look after just the shareholders, instead of suppliers like my farmers, then a large proportion of dairy farmers are going to be wiped out and it will not be long before we are all drinking imported UHT milk.

As I said, two litres of generic milk retails for $2.39 and two litres of branded milk retails for $3.95, yet the dairy farmers get a very small piece of the pie—less than 20 per cent of the end price—for doing the largest part of the work. The supermarket tendering process is unfair and the amount of power the supermarkets have makes them a considerable force in this country. That power has been to the detriment of our farmers, and our dairy farmers are hurting like never before.

Ultimately, consumers need to feel secure that the removal of the dairy adjustment levy will not hurt their hip pockets and the weekly grocery bill. The government needs to ensure that the removal of this levy reduces the price of milk at the cash register for all Australians and that the full 11c reduction per litre is passed on to consumers. The now infamous Labor government’s attempt to monitor the prices in the fuel industry has been widely acknowledged to be more likely to increase prices for consumers at the pump. Ensuring the removal of cheap Tuesdays is effectively hurting working Australians even more. Fuelwatch became farcical as it became clear to the Australian public that watching fuel prices did not bring them down, especially in the towns that I am talking about where you only have one petrol station. There is not much point logging onto a computer to see what the price is when there is only one place in town.

I hope that the Rudd Labor government will be able to ensure a more effective means of regulating milk retailers and protecting the hard-earned budgets of everyday Australians. On behalf of the constituents of Paterson electorate, I demand that the Rudd Labor government ensures that the Australian Competition and Consumer Commission regulates this reduction in milk prices for consumers and guarantees these savings for all. We do not want to see a ‘milk watch’. We do not want to see prices go sour. We want to see the consumer benefit, not the middleman and the supermarkets.

Chris Trevor (Flynn, Australian Labor Party) Share this | Link to this | Hansard source

I thank the previous member, Bob Baldwin, for his contribution. I also take this opportunity to salute him for his haircut. I salute him also because of why he did it—that is, to raise money for prostate and breast cancer research. Congratulations, Bob. In 2006 I walked 584 kilometres over 15 days, from Mackay to Gladstone, among other things to raise money for prostate cancer research. I commend Bob for his efforts.

I rise today in support of the government’s Dairy Adjustment Levy Termination Bill 2008. It is with a great deal of personal interest and affection that I comment on this bill and the Australian dairy industry today. My personal interest—as well as my professional one, being a member of parliament—comes from the fact that my late father, Allan Trevor, grew up on his father’s dairy farm. It is this experience of being raised on a dairy farm that helped shape my late father into the man that he was, and I would like to consider that it was this experience that helped him pass on to me the many virtues that he needed in order to operate and to survive on that family dairy farm. These virtues were of course strength, resilience and a healthy respect for hard work.

In order to expand on this bill today, I feel it is necessary to comment on the original dairy industry adjustment package, which this new bill aims to terminate. Over the past eight years we have seen significant change in the Australian dairy industry. We have seen deregulation and competitive forces enter the industry and, along the way, we have seen individuals, families and whole communities change completely. I feel that we have all been a part of this process in some way even if it has been merely as the humble consumer, now spoilt for choice in the supermarket aisle, with some of us blissfully unaware of any of the changes taking place behind the farm gate.

In the late 1990s, the issue of deregulation of the dairy industry seemed a hot topic. It seemed the subject of many debates over several years, with a Senate Rural and Regional Affairs and Transport References Committee report into the subject tabled in 1999. The committee’s examination of and report into the deregulation of the Australian dairy industry concluded, back in 1999, that deregulation was inevitable and that, if not handled by the government, market forces would guide the deregulation process. We could see a commercially driven crash of the industry. The then government decided that, rather than see this crash and rather than see invisible market forces control this process, it was preferable to see government intervention to ensure what the committee report called a ‘soft landing’ for the dairy industry.

With the inevitability of dairy industry deregulation on its hands, the previous government designed and implemented the dairy industry adjustment package, the frontier of this planned ‘soft landing’ for the industry. The dairy industry adjustment package was announced on 28 September 1999 and included a $1.8 billion adjustment package for the industry, made up of four parts. Firstly, we had the Dairy Structural Adjustment Program, which was to manage the allocation of $1.63 billion in payments for the affected dairy producers. Secondly, we had the Supplementary Dairy Assistance program, which allocated an additional $139 million in further assistance. Thirdly, we had the Dairy Exit Program, which orchestrated a completely optional, tax-free payment of up to $45,000 for eligible dairy producers to leave the dairy industry. And, lastly, we had the Dairy Regional Assistance Program, aimed at providing $65 million to assist communities heavily reliant on the dairy industry to adjust to deregulation.

The year 2000 saw the enactment of the Dairy Industry Adjustment Act, as well as the introduction of the four programs that I have just mentioned. We also saw the introduction of the dairy adjustment levy. The dairy adjustment levy was an 11c per litre tax that was imposed on liquid milk sales as part of these sweeping deregulatory reforms and it aimed to fund the series of assistance packages that were to be offered to dairy producers. The levy and the deregulation process aimed to be completed within an eight-year period.

It is now eight years on from the very first days of the Dairy Industry Adjustment Act, and we are here today to discuss the Dairy Adjustment Levy Termination Bill, a bill that will conclude eight years of industry reform for the dairy industry. In order to achieve this conclusion, the Dairy Adjustment Levy Termination Bill amends the existing legislative framework and finalises the dairy industry adjustment package by, firstly, terminating the 11c per litre levy imposed on retail milk consumers under the original dairy adjustment levy.

The Dairy Adjustment Levy Termination Bill will also draw to a close two related mechanisms of the original act—the Dairy Structural Adjustment Fund, used to hold revenue collected from the levy, and the Dairy Adjustment Authority, which for the past eight years has been the statutory authority established to determine eligibility payments to those affected under the deregulation scheme. It is worth noting here that the last and final payments made to eligible farmers from the Dairy Structural Adjustment Fund were paid in April of this year and that since then the Dairy Adjustment Authority has substantially completed its important functions. I am informed that the authority will be in a position to cease operation and management functions by the end of 2008.

With the last payment to farmers already made in April of this year, one could ask the question: why hasn’t the government moved to cease this 11c per litre levy already, rather than continuing to impose that cost on consumers? The answer to that is that the initial costs of the program and the initial payments made to farmers under this scheme were made using funds borrowed by the former government—that is, funds that were borrowed under commercial credit terms—and those funds of course attracted interest. Due to this fact, as of July 2008 the fund had a deficit of approximately $209 million. The continuation of the collection of the levy will have this deficit paid out by the first quarter of 2009.

The fund was always intended to be self-funded by the 11c per litre levy and not to be a drain on the public purse. Once the fund has reduced this debt level completely, the minister will move that the levy be terminated. In doing so, the government has allowed for improvements in the original legislation to minimise any large-scale overcollection of the levy by the government. This will be achieved by the government reducing the levy termination notice period from its current 28 days to only seven days, allowing for 21 fewer days that the levy is collected and imposed on Australian consumers.

The Dairy Adjustment Levy Termination Bill 2008 will also change the methodology by which the Minister for Agriculture, Fisheries and Forestry can forecast the new termination date and the date at which the fund should be completely repaid, as the minister will now be able to take into account accrued revenue—that is, levy fees paid by the consumer but not yet passed on to the adjustment fund. This cycle generally takes around 60 days. By allowing for accrued revenue to be calculated in the debt pay-off figure of the fund, we will see a termination in the levy much sooner, saving the Australian consumer money.

At 11c per litre, the time frame at which the termination of this adjustment levy will come may not seem important to those in the community who think that 11c per litre of milk is not a huge burden to bear. I believe that every cent counts in the household budget these days and that it would not be proper for any government to continue collecting a tax whose sole purpose had expired. As I stated yesterday in my comments on the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008, households and families today are under increasing financial pressure. We have already witnessed a 12.1 per cent rise in the price of milk from 2007 to 2008, so this levy reduction will be welcome news to many households across Australia currently doing it tough.

Collectively, throughout Australia, this 11c per litre levy generates approximately $20 million in revenue per month—so, when viewed nationally, we are not talking about small change. By passing the Dairy Adjustment Levy Termination Bill 2008 we will be saving Australian households a further $20 million per month in taxes, and this is especially significant given the recent need to boost demand within our economy and deal with the global economic crisis. I do note that, should the old termination time frames have stayed in place regarding the termination notice period and the method by which accrued revenue is treated, the government could have expected to collect an additional $50 million that would not be needed to pay off the fund’s balance. This is a government—my government—that believes that this $50 million belongs to the Australian people and not to the government.

Of course, the Australian Competition and Consumer Commission will be keeping a very close eye on the retail price of milk to ensure that, once this levy is removed, it is the Australian consumer that will benefit from a price reduction in the cost of milk and not other interested businesses along the supply chain looking to profit without any benefit to households. However, I share this view with members of the dairy industry itself, with Australian Dairy Farmers President, Mr Allan Burgess, also expecting retail milk prices to fall by 11c per litre after the levy is removed. I note with interest Mr Burgess comments on the deregulation process, stating that after undergoing major adjustment the industry has emerged as strong and internationally competitive.

My electorate of Flynn is home to some dairy-rich communities, including the famous township of Monto, which hosts the Monto Festival to celebrate, among other things, its rich dairy farming heritage. I was a proud sponsor of the event this year and look forward to attending the next Monto Festival.

I guess it is fitting that in the original deregulation act back in 1999 the word ‘adjustment’ featured many times, in the naming of the legislation and in its components. The word ‘adjustment’ does imply a sense of being a temporary measure, as we could not live in a world of adjustment, or limbo, forever. It instead has been a cathartic experience for all involved over the past eight years of deregulation, and I would like to take this opportunity to say thank you to everyone that has been involved in the process in any way: from the staff of the Dairy Adjustment Authority to the farmers, their families and the communities themselves. I know that at times this has not been an easy road to travel but you have attacked it with the very best of the Australian spirit. As the industry has changed forever and a new dawn rises on an era of Australian farming, those farmers and their families truly have earned a place in our history as both agricultural and economic pioneers. Given the government’s thoughtful approach and strong leadership on this issue, I commend the Dairy Adjustment Levy Termination Bill 2008 to the House.

Darren Chester (Gippsland, National Party) Share this | Link to this | Hansard source

It is with great pleasure that I rise to speak in relation to the Dairy Adjustment Levy Termination Bill 2008. The bill finalises the Dairy Industry Adjustment Program by terminating the dairy adjustment levy, winding up the Dairy Structural Adjustment Fund and terminating the Dairy Adjustment Authority, and I join the previous speaker in commending the staff of the authority and others who have been directly involved in the deregulation process.

I take this opportunity to refer to the deregulation of the dairy industry and the future of the industry in my electorate of Gippsland. Deregulation of the Australian dairy market involved the removal of price support mechanisms. As the minister noted in his second reading speech, the dairy adjustment levy was developed to help farmers adjust to the removal of state and Commonwealth price support measures. These measures resulted in payments to about 13,000 individual dairy businesses to assist in the transition process.

In relation to the 11c per litre levy which will be removed under this bill, there is an obvious need for those savings to be passed on to consumers. I urge vigilance at the checkouts—Australian mums and dads should be 11c per litre better off when the milk levy is removed, and I support the previous speaker in his remarks on this subject.

Regarding the dairy deregulation itself, according to a report prepared by economist David Harris with support from the Rural Industries Research and Development Corporation, the farm level adjustment mostly occurred in the first two years of the deregulated market. A number of farmers left the industry—some older farmers retired, some switched into alternative farm products and others found jobs outside agriculture. But Mr Harris reported:

… the impact on industry output was limited as the remaining farmers adapted to the new market conditions by improving the productive performance of their dairy enterprise. In general the response was to increase farm output - deregulation created growth opportunities for individuals in the fluid milk sector.

Some reacted by expanding herds and increasing land areas. But most made changes to improve the physical performance of their farms – greater carrying capacity, improved pasture management and increased milk yields.

The overnight policy change made the full impact transparent. It sharpened the incentive for farmers to make decisions about their future. It helped to speed up gains in per farm performance that typically flow from policy reforms.

I believe that the dairy industry has adapted to the changed operating environment. I am informed by Dairy Australia that there are now about 8,000 dairy farms and 1.8 million dairy cows in Australia, producing 9.1 billion litres of milk annually. This makes dairying Australia’s third largest rural industry, with a farm-gate value of $4.4 billion. It is important to keep in mind that Australia is a significant dairy exporter and accounts for about 11 per cent of total world trade, ranked third behind New Zealand and the European Union.

The dairy industry in Gippsland has adapted also to the deregulation in the industry. We can become a bit blase about facts and figures but, in the case of the Gippsland dairy industry, they are quite impressive numbers. The industry has about 1,750 dairy farmers and produces about 1.9 billion litres of milk annually, making dairying the biggest agricultural contributor to the Gippsland economy. The value of dairy product exports from my region is estimated to be about $665 million and the industry directly employs over 4,000 people, with a further 3,250 in the processing sector.

That is the picture of Gippsland on the broader scale. The dairy industry in the seat of Gippsland itself is concentrated mainly in the Macalister Irrigation District, which I will refer to more extensively later on. This is the largest irrigation area south of the Great Dividing Range. There are some other substantial dairy interests in the neighbouring seat of McMillan, but I will leave it to Mr Broadbent to extol the virtues of the dairy industry in his own region. Suffice it to say that the South Gippsland and Central Gippsland dairy farmers are among the most productive and efficient in the world. That is a description that easily fits the farmers in the Macalister Irrigation District. They are world-class producers and they are producing a world-class product.

By way of history, as far back as the 1840s, the region was recognised by early white settlers as offering productive and valuable grazing land. But the early settlers were exposed, unfortunately, to the vagaries of the weather patterns and rivers that would flood or run dry with the seasons. Even last year, we witnessed two major floods which had significant impact in the MID and caused enormous damage to natural assets and manmade infrastructure. In the early 1900s, a study was made of possible storage sites within the area of the Macalister River, which led to the construction of the Glenmaggie Dam. Although that is not a large storage, the Glenmaggie Dam has a capacity of about 190,000 megalitres, which, again, has been reduced following the sediment run-off related to the flood events I have just mentioned. The MID is a gravity irrigation system and relies on the capacity of the system infrastructure to generate sufficient pressure to move the water from Glenmaggie, Cowwarr and Maffra weirs through the channel system to the farmer.

That brings me to the point of my comments here today and the future of the dairy industry in my region, post the deregulation era. Water security is one of the absolutely critical issues facing dairy farmers. We have an ageing infrastructure network which does not come close to meeting current best practice around the world, and I will comment a little further on that in a few moments. But, as I have said, the dairy industry is really big business in Gippsland. In the Wellington shire, a more defined area of my electorate, milk production in 2005-06 was valued at over $181 million, an average of about $480,000 per day. The shire has 477 dairy farms, of which 380 are located in the Macalister Irrigation District. The Murray Goulburn Co-operative is located in Maffra. The Murray Goulburn Co-operative was formed in 1950 and is now the largest processor of milk in Australia, processing over 35 per cent of the nation’s milk.

Post deregulation of the dairy industry, the MID is well placed to continue to be one of our nation’s great food bowls, but it will require further investment, both private and public, particularly in the area of water security. If we accept that our climate is becoming more variable—and the prolonged drought in Gippsland continues to make things very difficult for a lot of my farmers—then we must use water in the most efficient manner possible. As I informed the House this week, large parts of Gippsland remain drought affected, but the irrigated areas of the MID are in better shape than the rest of the electorate. For all intents and purposes, the Glenmaggie Weir is full and our dairy farmers are in good shape to capitalise on the situation this year.

Looking to the future, the dairy industry is faced with ageing infrastructure, as I just mentioned, and an inefficient irrigation system. While the perilous state of the Murray-Darling Basin has quite justifiably made the headlines, when we are talking about our nation’s food security and export opportunities, the irrigation infrastructure in the MID should not be ignored. The plans to provide billions of dollars in assistance for upgrades to irrigation infrastructure in the Murray-Darling Basin have widespread support. But there will also be a need in the future to provide funding for irrigation infrastructure upgrades in the Macalister Irrigation District. I can inform the House that a plan is already well advanced, having been out for about 12 months now. The MID 2030 strategy was released in September last year. I quote from the executive summary by Jan Greig, the Chair of Southern Rural Water:

The strategy takes advantage of the abundant potential of the Macalister Irrigation District (MID). The irrigation area has good soils, good drainage, excellent quality water and substantial water resources—all the fundamentals for sustainable irrigation systems.

The time is right for a review of the MID’s future. The supply system is out of date and inefficient. Drought and the concern of climate change provide a push for improved water efficiency both in the supply system and on-farm. The alignment of Government, a willing Board, along with the ongoing commercial imperatives for irrigators, make this major planning effort timely.

The upgrades to the supply and drain system, contained within the strategy, give confidence about a more certain and productive future of the MID. The major SRW infrastructure upgrades will markedly increase both water delivery efficiency and customer service levels. These improvements will remove long standing system barriers to on-farm investment.

Further, the clear support for ‘closed irrigation’—ensuring no runoff of excess irrigation during the irrigation period—promotes both on-farm improvements and reduces nutrient export from farms into rivers and the Gippsland Lakes.

On that last point, I must emphasise the efforts by the dairy industry in Gippsland to support the broader community efforts to reduce nutrient flows into the Gippsland Lakes. Reports by the CSIRO commissioned by the Gippsland Coastal Board have found that the MID is a major source of nutrients into the Gippsland Lakes system. The high nutrient load entering the lakes system is blamed for algal blooms, which are both unsightly and potentially detrimental to the health of humans and a variety of marine species. Reducing the flow of nutrients from farms in the MID into local streams and further into the Gippsland Lakes is an issue of critical importance to both the dairy industry and the tourism industry.

For those not familiar with the lakes, I will take the time to describe them. They are a vast network of coastal lagoons which feature world recognised wetlands. The lakes and rivers are the tourism icons of Gippsland and they are heavily impacted by activities in the catchment. They are perhaps only second to the coastline represented by the member for Eden-Monaro. Protecting the health of the Gippsland Lakes is critical to the social, cultural, economic and environmental aspirations and lifestyles of Gippslanders. I make that point today because of the strong link between the future of the dairy industry in the MID and the Gippsland Lakes themselves. I admit that that link may not appear obvious to those who do not know the geography of my region that well, but I will attempt to make it clearer.

Reducing the flow of nutrients from both private and public land into the lakes system is the focus of work by the Gippsland Coastal Board. The dairy farmers in the MID have worked in partnership with the board to fund projects like whole-of-farm management plans, effluent re-use and reduction initiatives and better irrigation management, including the adoption of spray systems and re-use initiatives. For every dollar of government investment that we have seen in the MID, the dairy farmers have put their hands in their own pockets and poured a substantial amount of cash into the improvements on-farm because they recognise the environmental imperative, and there are certainly very good economic reasons for running their properties in this very efficient manner.

The future of dairy farming in the MID will involve more partnership projects such as this, efficiently using the water resource and managing the effluent waste products. The state government for its part has contributed to the nutrient reduction projects since 2002, albeit with a reduced commitment from 2006 to 2009. I am hopeful that the funding round from 2009 onwards will be more generous and will recognise the severity of the situation we are facing with nutrient run-off and algal blooms in the Gippsland Lakes. This is one of the most critical issues facing the electorate of Gippsland, and I take the opportunity today to raise it in the context of the future the dairy industry will play in reducing those nutrient run-offs. As I said, some good work has started on farm and in areas of public land, but there is much more to be done.

That brings me to the federal government’s commitments through the announcements made by the Minister for Agriculture, Fisheries and Forestry. I say at the outset that I am grateful for the minister’s visits to the Gippsland electorate during the by-election. I am sure he had other motives in mind, but I am still grateful for his visits and his firsthand inspection of both our fishery industry and our agricultural sector. I certainly take the opportunity to invite him back in the future. But, unfortunately, I believe the federal government is dragging its heels and has failed to deliver any of the promised $3 million in funding for water quality improvements in the Gippsland Lakes and catchment.

On the one hand it is very pleasing that the $3 million has been promised, but on the other hand it is disappointing that work has not started on the ground in Gippsland. The minister has, as I said, visited on several occasions, but unfortunately there have been the same announcements in relation to that $3 million for the Gippsland Lakes nutrient reduction work. There is much to be done in terms of practical environmental projects associated with the dairy industry in the Macalister Irrigation District. The Gippsland Coastal Board has publicly announced in the past week that sections of the Gippsland Lakes are still mildly affected by the algal bloom that had a severe impact on recreational activities last summer, so the need is both urgent and pressing.

We accept that there are some long-term issues—they are not going to be solved overnight—but we would love to see the money starting to flow in Gippsland. There is no risk to human health with the type of algal bloom that we have experienced over the past summer, lingering on into this winter period and now into spring. The lakes can still be enjoyed, but it is vital that we get on top of the water quality issues that are affecting both the lakes and the catchment itself. I believe the Gippsland Lakes should be regarded as the Great Barrier Reef of the south. They are that important to the economic prosperity of my region. They are world renowned wetlands and they are critical to the social, economic, cultural and environmental life of Gippslanders.

I have also been calling for a locally based research facility to overcome the knowledge gaps that we have in relation to this synechoccus algal bloom which we are experiencing at the moment. We need to investigate these algal blooms and the broader water quality monitoring issues along with increased funding for practical projects to reduce the amount of nutrients entering the lakes from private and public land.

Returning specifically to the dairy industry in the era post deregulation, being seen as good environmental custodians is critical to the future of the industry in Gippsland. It is here where the MID 2030 strategy is a great plan for our region. The strategy involves a total cost of $116 million in infrastructure works and would deliver an estimated water saving of 37,400 megalitres. I quote again from the strategy:

The MID can transform itself from a supply system with one of the lowest industry efficiencies to one with an efficiency of 85% for its channels and 95% efficiency for its pipelines.

Eliminating losses from the supply system and closed irrigation practice on farm means that most of the time, there will be zero flow in the drains. There will be a significant decrease in the export of nutrients and other pollutants from the MID, resulting in improved water quality for the downstream rivers and lakes.

Local rivers will have flow patterns that support their improved condition and the external environmental impacts will be minimised.

This project is a win-win for Gippslanders and the broader Australian community. There are significant environmental benefits to be achieved and increased productivity on offer for our dairy sector. It is estimated that the average annual nutrient export to the Gippsland Lakes can be reduced from over 40 tonnes of phosphorous per year to 10 tonnes per year through this project. Naturally, there are some questions about how the work can be funded and I take the opportunity to invite the Minister for Agriculture, Fisheries and Forestry to return to Gippsland to, once again, get this $3 million of funding flowing and also to discuss the opportunities under the MID 2030 strategy. It is my belief that such a significant investment, in the order of $116 million, will not occur without significant federal government or state government funding support. Indeed, there are many precedents of both state and federal governments investing in water-saving projects of this nature.

I understand that feedback from MID customers indicates that they are interested in exploring the benefits of funding the whole strategy themselves compared to the benefits of a joint funding arrangement with either governments, but I doubt that this will eventuate and believe it is more likely that an arrangement such as the 80-20 model is more appropriate in the prevailing circumstances in Gippsland. Under such a model we would see governments contributing 80 per cent of the investment and customers sharing 20 per cent of the investment through increased supply charges. There would then be a situation of equal sharing of the water savings—again providing environmental benefits to local streams and the Gippsland Lakes, which I have already mentioned.

In closing, I thank the House for the opportunity to raise these important issues in relation to the dairy industry in the era post deregulation. I hope I have not strayed too much from the topic at hand. The dairy industry in Gippsland has adapted to the changing operating environment and has become more productive and more innovative over the years. It certainly would be remiss of me on this occasion to not mention the Macalister Demonstration Farm in the context of innovation and increased productivity in the dairy industry. The demonstration farm seeks to demonstrate best practice management through practical research and projects. The farm is located at Riverslea, near Maffra, and it aims to test and demonstrate improved farming practices in collaboration with a large team of farmers and service providers for the benefit of the entire dairy industry.

If the minister does make it back to Gippsland, I would certainly encourage him to visit the Macalister Demonstration Farm. I will hopefully be on hand with him and we can present the demonstration farm with a cheque for ongoing activities. As we would all appreciate, there is a constant need for funding for these types of research activities. The dairy farmers in the MID have themselves made an enormous contribution to the Macalister Demonstration Farm, and we would certainly appreciate ongoing federal support in the future. Just this week, the farm released details of a subsurface irrigation system that it is trialling at the moment. It is just another way of delivering high-quality water efficiency and a further demonstration of the dairy industry’s willingness in Gippsland to invest with confidence into the future.

I do not oppose the bill before the House. I commend the Gippsland dairy industry for its ongoing contribution to our nation. Once again, I also commend the staff of the authority and all those who have been directly involved in the deregulation process.

Mike Kelly (Eden-Monaro, Australian Labor Party, Parliamentary Secretary for Defence Support) Share this | Link to this | Hansard source

It is an interesting coincidence that I follow the member for Gippsland in this discussion, as we are near neighbours and share many similar issues in relation to the dairy industry. I look forward to discussing with the member the advancement of the interests of our dairy farmers.

The Dairy Adjustment Levy Termination Bill 2008 marks the end of a challenging era for Australia’s dairy farmers—men and women who are used to challenges. Deregulation was a bitter pill to swallow for farmers on the South Coast and Riverina Highlands of New South Wales. They knew it would be tough but they sucked it up and got on with life. They have adapted and innovated in a continual existential battle that most Australians simply cannot appreciate. I am proud to know them, to call them family and to serve them.

In the late 1990s, the dairy industry was facing an uncertain future under the regulations that existed at the time. The dairy package provided assistance to enable farmers to respond to the challenges of deregulation. In opposition, Labor supported the assistance provided under the legislation, although we were critical of some aspects of the program.

Dairy farming, like all sorts of other lives on the land, is always tough going. In the last 30 years the industry has had to adjust to the eternal challenges of drought and disease, as well as seasons when prices forced changes on the industry—changes that led to many people leaving farms which had been in their families for generations. Now dairying must adjust to a new set of challenges that come with the reality of climate change. I am keen to see the dairy men and women of my electorate, Eden-Monaro, learn how to lead the way for the world in making more milk for less gas.

I know that the communities I serve will respond to the need to change in the way they always do, by adjusting to changes they simply cannot ignore. I am keen to do everything I can to help dairy farmers deal with the inevitable environmental challenges we all face, because my connections with dairying in Eden-Monaro are long and strong. My family were pioneers in the region and I am now fortunate to represent this region. It is a great privilege for me to continue in my family’s tradition. Back in the 1850s, my great-great-great-grandfather, Daniel Gowing, was present at the start of settler society on the South Coast of New South Wales. Daniel pioneered much of the early industry, such as building the Tathra wharf, getting shipping going, introducing new technology in milling and other machinery and establishing sawmills. He was a well-known philanthropist as well.

Daniel and his family were also among the early dairy farmers, and his son Benjamin, and his son-in-law, my great-great-grandfather, Thomas Joseph Kelly, founded the Bega Cheese Co-op, with TJ becoming its first chairman. I am proud to say that TJ’s original land in Tanja is still dairy farmed today by Dennis and Michael Kelly. The various branches of the family—Kellys, Russells, Rheinbergers, Gowings, Batemans and others—became dairy farmers and members of the Bega Cheese Co-op. Many of them still are today, with farms in Jellatt Jellatt, Candelo and Tanja. So I can proudly claim not only to descend from men and women who were present at the creation of dairying in the south-east corner of New South Wales but also to represent today’s dairy farmers and manufacturers, people who are doing today what Daniel, TJ and their families did: succeed against the odds.

Dairy farmers across Eden-Monaro should be proud of what they have accomplished. To understand their achievement, you only have to look at the role dairying has played in the electorate’s development. It is certainly a shame that Tilba Cheese is no longer made in Central Tilba, but the memory of the cooperative that was established in 1891 lives on in the shop on the original site. And I was sad to see the end of Kameruka stud dairy herd, which was directly descended from Australia’s first jersey herd, sold off last month after 150 years of farming. The Bodalla Cheese factory closed down in 1987. At the time the Bodalla Cooperative ceased operation, the thirteen farms supplying Bodalla transferred their supply to Bega Cheese. Bodalla Cheese is now a brand associated with Fonterra Brands (Australia) Pty Ltd, formerly Bonland Dairies. Fonterra is a New Zealand owned dairy company.

But the local tradition of entrepreneurs who are game to have a go at adding value to the high-quality dairy products the region produces is being carried on by farmers such as Erica and Nick Dibden, who use milk from their own herd of 350 jersey cows for their South Coast Cheese company. Of course, there is our very own big cheese, Bega, which continues to generate a reasonable living for dairy farmers and 540 jobs for workers of the Bega Valley. Bega Cheese processes 165 million litres of milk a year and exports 30 per cent of its output. Like the advertisement says, ‘Bega is famous for Bega.’

But while there is a great deal to celebrate about everything that dairying has done for Eden-Monaro, there is no doubting that the industry has done it hard over the last 20 years. This bill marks the end of a period of change that may have been unavoidable but still meant the end of many family farms across the country. There is no doubt that the last 20 years have been challenging for everybody involved in dairying, as the states and Commonwealth followed Victoria’s lead and combined to deregulate the industry. There is no doubt that the abolition of production quotas was very unpopular with many dairy farmers in Eden-Monaro. But there is also no doubt that, once the large and efficient Victorian industry abolished the tied market in the 1990s, a national approach to dairy reform was as necessary as it was unavoidable.

The bill we are considering winds up legislation that assisted many dairy farmers to leave the industry through an 11c a litre consumer levy which raised $1.8 billion. In the eight-year life of the levy, some 6,000 farmers were helped out of the industry. It is good that this assistance is no longer needed and good that consumers will now see a drop in the retail price of milk that reflects the end of this impost. I reiterate the Minister for Agriculture, Fisheries and Forestry’s statement that the government is expecting retailers to lower the price of milk in line with the removal of the levy and that any anticompetitive conduct will be a matter for the Australian Competition and Consumer Commission.

But for all the undoubted anger and anguish the reform process brought to dairy farming families, there is no doubt that the industry as a whole is fitter and more flexible and that it is infinitely more able to compete in the global market than it was a generation ago. In the 2006-07 financial year, Australian dairy accounted for 12 per cent of the world’s dairy trade. Some 50 per cent of our milk production is exported and overall dairy exports are worth around $2.5 billion. Some new research from the Australian Bureau of Agricultural and Resource Economics, ABARE, demonstrates the industry’s changed circumstances. There is no doubting the drought has hit hard and its effects are still biting in Eden-Monaro. Increased input costs for fodder and feed grains, fertiliser and fuel have eaten into farm incomes. However, ABARE also reports some very good news: while production is down, farm-gate milk prices in the last financial year were up 48 per cent over 2006-2007.

But beyond prices and the cycle of the seasons there is another reason for the state of dairying today: farms have got bigger. Less obvious but just as important, according to ABARE, is that the industry’s productivity has improved by an average of 1.2 per cent every year since 1998. Specific areas of improvement identified by ABARE include dairy cattle genetics, herd health, shed management, supplementary feeding and pasture management. These improvements in labour output and milk yields may not sound spectacular, but they demonstrate how dairy farmers probably have more control of their destiny now than when their production was tied to quotas and they milked for a local market. And it is the obvious ability of the industry to innovate that I want to address today, because the challenges dairy farmers now face are entirely different to those the levy was intended to address.

We have to learn how we can keep on producing the world’s best milk and cheese for markets at home and abroad while reducing the greenhouse gases we emit in the process. I am keen to see Eden-Monaro’s dairy farmers lead the way for the world in making more milk for less methane emissions. Under current proposals for the Carbon Pollution Reduction Scheme the agricultural sector would be included from 2015 onwards. This is inevitable as methane is one of the more damaging of our emissions. It is therefore imperative that we start work as soon as possible in planning for the reduction of methane emissions.

The last few weeks have not been good ones in the struggle against global warming. The dire situation of European and American banks and stock markets has focused everybody’s attention on a passing crisis at the expense of the permanent one. I was sorry to see Professor Garnaut’s major report on what Australia can do to reduce greenhouse emissions get lost in a fog of finance stories. Of course I understand why so many people are worried and wondering what the state of the world’s finances will lead to and I certainly do not want to suggest that the situation is anything other than serious, but I am also confident that sooner or later this man-made crisis will pass. Yes, the coming months will be difficult. We are working to ensure they are less so in Australia than overseas, but it is still harder than any of us would want. But I know the financial crisis will pass. The environmental challenge is a man-made crisis on a far larger scale, one that will take decades to address, one that will not go away unless we change the way the world works. We cannot begin to manage global warming unless we bring the same level of effort and attention to it that is now being focused on the world’s finances. We must maintain that focus for not weeks or months or even years but for the next few decades.

There is no doubt in my mind that Australia can and must play a major role in coming up with ways to reduce climate change effects. There is no doubt in my mind that the Rudd government, thanks to the hard work of Minister Penny Wong and other relevant portfolio colleagues, will stay focused on the importance of producing a response to climate change which is responsible and realistic in meeting the needs of Australians now living and the generations to come. It has always been part of my belief—and I know this is the view of the majority of my community—that we can act to address global warming by thinking globally and acting locally. And for me that means working with all aspects of society and the economy across my electorate.

I certainly want to have a go, which is why I am especially interested in the potential for reducing greenhouse gas emissions in Eden-Monaro using two of the electorate’s most important resources: dairy cattle and the energy and enthusiasm of our community for fresh ideas. There is no way that dairy farmers are going to be sacrificed in the struggle against climate change. And it is worth remembering that Professor Garnaut estimates dairying is a relatively low greenhouse gas emitter, with cows producing less than one-twelfth of the emissions that are attributable to beef cattle. Dairy cattle, he says, only account for 11.6 per cent of Australia’s agricultural emissions, but, having said that, I also note that it is impossible to argue against the obvious: dairy cows pump out a lot of methane, which contributes to global warming.

Where possible, implementing herd homing in facilities designed to harvest methane waste can make a significant difference to the amount of methane going into the atmosphere. The facilities are covered feeding and holding areas for cattle with slotted floor and manure collection bunkers. The product from the facility is loaded into an anaerobic digester, which generates electricity, heat and nutrient-rich, chemical-free stabilised digestate, or fertiliser. Stabilised, nutrient-rich digestate fertiliser substitutes for chemical fertiliser and provides soil amelioration and water retention benefits. This process results in significantly reduced pasture damage and surface nutrient run-off and significantly increased pasture and milk yields. Another by-product is substantial improvement in herd health and welfare and reduced incidence of lameness and disease. The use and efficiency of recycled energy from herd home facilities is an issue we need to explore because capturing and re-using methane is a quick and cost-effective way of reducing Australia’s output of greenhouse gas. Burning methane turns the gas into carbon dioxide, which the Rural Industries Research and Development Corporation says is 23 times less potent in terms of its greenhouse effect than releasing it into the atmosphere.

In the United States, big 1,000-cow feedlot dairies are already supplying electricity generated by what I can only call moo poo power to the grid. In Germany an 845-kilowatt biogas plant runs on cow manure and maize waste at Reichenbach in Saxony. Last year Israeli dairy farmers combined to create a power scheme based on methane emissions from 12,000 cows which pumps up to 2.4 megawatts into the national grid. That is barely half of one per cent of the national capacity, but it is an obvious improvement on electricity generated by fossil fuels, and the future of our energy needs will depend on a range of methods and efficiency measures. I am in discussions to establish links between Israeli dairy farmers and the farmers in my area so that they can compare notes on this and other matters such as water efficiencies.

At home, experimental work is underway in Victoria, where the Department of Primary Industries is running an experiment at Ellinbank in West Gippsland which shows that a 500-cow dairy can produce enough power to meet its own water-heating and milk-cooling needs. I very much want to see dairy farmers in Eden-Monaro have the chance to participate in this part-solution to climate change. That is why I am working with people who share my commitment to ensuring that Eden-Monaro’s dairy industry can meet the environmental realities of the 21st century.

On 20 August this year I convened a meeting involving the Szencorp renewable energy technology company, Bega Cheese, the Bega Valley Shire Council and our local community organisation Clean Energy for Eternity to discuss a proposal I am pursuing that involves the establishment of a pilot project for demonstrating the merits for our region of the herd home and methane-harvesting concept. There is a great deal of work to be done before it will be possible to make an accurate assessment of what sorts of economies of scale we need to make biogas from dairying viable, and we are in the data-gathering phase with the co-op and council at the moment.

Another major challenge for our dairy farmers in Eden-Monaro is fireweed, which is a toxic plant introduced from southern Africa that is spreading alarmingly. It seeds at a rate of over 20,000 per plant and has made accelerated progress as a consequence of the drier conditions we have experienced in recent years. The plant is more insidious than most weeds in that it is toxic to both animals and people. Over time it will cause liver failure in a beast, and along the way it results in lowered milk production. My family and dairy farmers in the numerous fireweed associations on the coast are fighting a hell of a battle, often down on hands and knees, to keep this challenge at bay. Farmers are spending between 30 and 50 per cent of their income in the struggle. Now the weed is threatening to spread over the ranges, with potentially disastrous effects for our wheat belt.

Fireweed, along with other weed threats, was being researched by the former Cooperative Research Centre for Australian Weed Management, which the Howard government intended to close down by mid-2008. The fact is that invasive noxious weeds costs our agricultural sector billions of dollars a year, so it should be no surprise that I and many in our community were angered by this short-sightedness. Fortunately, I was able to convince my colleagues to adopt a replacement measure for the CRC in the establishment of the National Weeds and Productivity Research Program, with $15 million in funding to ensure the work of the CRC could be carried on. Additionally, I obtained a commitment of $300,000 specifically for biocontrol research for fireweed. I emphasise that this funding is for research. Actual eradication measures that follow on from the research could be funded from the Caring for Our Country program, which has been allocated $2.25 billion.

There are worrying signs that our rainfall will decrease, and we need to prepare for that now. As a consequence, the government has established the Australia’s Farming Future fund, with $130 million available to support farmers to adapt and respond to climate change. I was delighted in July when we were able to award a $250,000 research grant to the Bega Cooperative Society to address the impact of climate change on South Coast dairy farmers and to reduce their dependency on imported fodder and grain. Just as importantly, the government has also allocated $480,000 to help Tuross dairy farmers better manage their effluent run-off.

The passage of this bill marks the end of an era, and I am pleased that the circumstances that led to the dairy levy have passed. It is time now, though, for dairying and indeed for everybody in Eden-Monaro and the nation to step up to the much bigger challenge of climate change.

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

For those of you who do not know, I am one of those dairy farmers and I was directly involved at all levels during the deregulation of the dairy industry in the south-west of Western Australia. I rise to speak on the Dairy Adjustment Levy Termination Bill 2008. The Australian dairy industry was deregulated on 1 July 2000. There was no doubt that there would be significant impacts on farmers and local dairy communities, as well as significant social and health costs.

The Dairy Industry Adjustment Program was designed to be cost neutral to the Commonwealth as well as to provide an orderly transition during deregulation and the subsequent restructure of the dairy industry in response to huge change. The then federal government made available an industry adjustment package worth $1.94 billion for rural adjustment, funded through a Commonwealth levy of 11c per litre on retail sales of drinking milk, called the Australian dairy adjustment levy. It was actually assumed that the consumer was likely to benefit most from the lower cost of fresh milk and greater choice.

The Australian dairy industry is now worth nearly $2.5 billion in exports alone. But tonight I want to focus on the impact on and costs to regional communities. In my area, immediately after deregulation occurred, the dairy farming community lost a third, 30 per cent or so, of their income—and that was overnight. Upon deregulation and in the subsequent years, numbers of farmers were forced by circumstance to exit the industry, and they and their families often had to leave their rural community. This put significant pressure on local small businesses, schools, community service organisations and sporting clubs.

In Western Australia, we have lost over half our dairy farmers, and many of those were young current and future farmers. As those in the dairy industry know, potentially one of the best places to develop your farming skills is on the family farm, more or less at your father’s boot, with your very experienced parents. Of course, young, innovative farmers bring an additional positive dimension to family farming businesses and are one of its greatest strengths. The loss of this intellectual property and experience to the dairy industry is very difficult to quantify. When the family farms were sold we often lost the families, sometimes two generations, from the small local community. We lost their combined spending in that community as well. In the initial stages of deregulation, in a small town called Brunswick in my electorate, I had one store say to me they lost $10,000 in the first week. We had business closures in that same small town, and I would have liked to have seen Brunswick developed as a case study for the effects of deregulation.

We lost two wonderful local families in Brunswick, people who, in spite of the additional cost, chose to support their local supermarket, their local supplier of dairy goods and dairy service equipment and their local school. One family had no option but to leave the district. That was a significant financial and social cost to the community of Brunswick, one that is very difficult to quantify to the likes of the Productivity Commission and the ACCC. The father of that same family was the man who used to take the young children at the local school to basketball, and he was their coach. He used to take them to hockey. He was always ready to be the taxi for that local community school. We also lost another family that, in the same way, contributed to all the small local businesses. These are the types of costs that were overlooked in this process. We lost really good community families, and that has had an enormous impact.

My own shire of Harvey lost millions overnight: with dairy one of the highest value-adding industries, the flow-on impact of those dairy dollar losses was severe. One of our local sporting clubs lost $30,000 a year in fundraising capacity due to the losses in the dairy industry. We saw a similar effect on service clubs, and they also lost their volunteers. In one very small community in the south, they were very concerned that they would not be able to run their fire service or their emergency ambulance service because these services were provided by farmers and also their labour and equipment were used to raise funds to keep these particular services operating.

Farmers themselves faced massive change. We did and still have depression, and we did have suicide. A lot of farmers whom I dealt with on a daily basis developed a bunker mentality. They had lost control of what was happening around them and they basically pulled up the drawbridge, looked at what they could control and stayed behind their farm gate. They felt huge loss. They lost control and they lost opportunity, and this came at a great cost. There was less money for their families, and their capacity to make good decisions was compromised in that early period. I was part of several groups that involved women, and I noticed the increased pressure on the women in those family businesses. The majority of those businesses are family owned and run. We found that the majority of the accounts within those businesses were managed by the women. They had to cope with having less money for the family and less money for the business, and they had to manage the family relationship breakdown that went with the pressures that accompanied dairy deregulation. They had the additional pressures of their sons leaving the farm, and often these same women were the ones who went out and took on work outside the farm to subsidise the farm during that process of change.

I spoke to local doctors over an extended period of time. Over two years there was a significant increase of stress related illness that went back to the trauma that people were feeling. I spoke to the local police as well. There was an increase in domestic violence. There were declines in employment in all dairy regions. Direct employment wages fell from $60,000 at farm and manufacturing level in 1999 to $37,450 in 2005—a 38 per cent reduction. There were 21,550 at a dairy farmer level and 15,900 at a dairy-processing level. I had people trying to support them through grief processes. Until about three years ago, one woman, if she came across me in a supermarket or a shopping centre, would put her arms around me and cry for the loss that they felt in having to sell their small family farm. I was involved in a number of groups, including the Women in Dairy, a national group, and the Milk Industry Liaison Committee, which, amongst a range of other things and involvement at all levels of the dairy industry, offered a huge amount of support and pastoral care for both our members and all of those families—women and men—who were going through such trauma.

In WA we have only 200 dairy farmers left. We have lost nearly half of our farmers and we now have milk shortages, particularly over summer. In spite of the issues faced by this industry, I am particularly proud of all of those in Western Australia who have come through this. In fact, I am proud of all Australian dairy farmers. I am proud of those who have aggressively pursued innovation and those who will continue to do so. But we have lost more since, particularly in the south-west—those who took on major expansions and huge debts and those who were told to get big or get out overnight. Dairy farmers in Australia are some of the most efficient farmers in the world. We are the second lowest cost producers in the world and we produce some of the best quality milk and innovative products. We compete internationally with highly subsidised markets.

I was interested in hearing earlier one of the members say that consumers come first. Essentially, that may be right, but I would say that consumers have to eat. Milk is a staple food. The dairy industry and dairy products are critical to Australia’s food security. I believe very, very strongly that Australians should have access to quality, fresh, locally produced food. The challenge for the government is to ensure that the industry has access to its essential needs. We know about the water needs, we know about the land and the industry necessary for ongoing commercial returns and we know about the challenges of ETS and sustainable practices. Farmers have been faced with huge increases in input costs—of fertiliser and feed. They have seen a tax on their water. There are drought issues, and diesel and maintenance costs. We need to ensure access to capacity building and health policies to meet those specific rural and regional needs.

The economic support of the dairy adjustment package has been a very important management tool for Australian dairy farmers. I am particularly keen, however, to ensure that the 11c a litre does actually come off the price of milk at the supermarket level and stays off. I believe that dairy deregulation simply increased corporate market power and profitability. We even see the majority of dairy processing now, in Australia, in foreign ownership.

I would like to acknowledge in this place farmers in Western Australia, including Matt and Sue Daubney and their innovative efforts with their Bannister Downs dairy, the Sorgiovanni family with Harvey Fresh, and those involved in the Challenge Dairy Co-operative. The dairy industry provides the economic and social backbone of many regional communities in Australia; that is often overlooked and undervalued. It is a major agricultural exporter. I acknowledge the hard work and the commitment of dairy farmers to their families, their businesses, their industry and their communities, and I thank all those who have committed endless hours and resources to helping their fellow farmers through the deregulation process.

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Dairy Adjustment Levy Termination Bill 2008, and I am aware that I am one of the few city members of parliament to do so. I suspect that most people in my electorate of Parramatta do not even know that they have been paying a levy on milk of 11c a litre for some eight years. In fact, I confess quite openly that I myself did not know until quite recently. One of my locals, Robert from Lalor Park, found me down at a mobile office at the Lalor Park shopping centre and asked me quite bluntly when we were going to get rid of it. I confess that I nodded wisely and then went back to the office to find out all about it. Lo and behold, before I could even call Robert back, I found that we were getting rid of it. I let the House know that I did not claim credit for that with my constituent Robert from Lalor Park. And here we are today discussing the final removal of the dairy levy.

There are no dairy farms in the electorate of Parramatta, although there were, some 100 years ago. Even 20 years ago, there were dairy farms in the area. But I do know quite a few people who have been through the painful process of deregulation over the last decade. We in the cities know this pain mainly as just stories; we have not experienced it ourselves. However, it is quite right that, through the dairy levy, we have contributed in some way to the process that farmers have been through over the last decade.

There are of course lots of people in my electorate who buy milk. They want fresh milk and they want it to be available. Perhaps in their daily lives they do not consider the many people who work such hard lives to make that fresh milk available. We are reminded in discussing this bill that, when we need to, we impose levies, but we also remove those burdens as soon as we can and whenever we can. We need to be slow to put our hands in the pockets of our constituents but very quick to take them out again. I am pleased to rise to speak to this bill, which does just that: it removes the levy as soon as possible, in an efficient way. It looks ahead and sees that, while we are not quite ready to bring an end to the adjustment package, we will be ready very soon, and it puts a process in place to effect an efficient wind-up.

For those who are, as I was, scratching their heads and asking what the milk levy is, I will give a very short explanation. I think Robert of Lalor Park is probably the only one in my electorate who really understands it! The dairy industry was of course highly regulated, and deregulation became the subject of debate and inquiries over several years. Finally, a report called Deregulation of the Australian dairy industry, which came out of a Senate committee inquiry, indicated that the market would force deregulation and that a soft, managed landing was preferable to commercially driven carnage, particularly among the many small producers.

The adjustment package came into being in 2000, a $1.8 billion package over a target period of eight years. There were four main components of the package: the Dairy Structural Adjustment Program, which allocated $1.63 billion in payments for eligible dairy producers; the Supplementary Dairy Assistance program, which allocated an additional $139 million in payments; the Dairy Exit Program, which provided an optional, tax-free exit payment of up to $45,000 for eligible dairy producers wishing to leave the industry; and the Dairy Regional Assistance Program, which provided $65 million to assist regional communities to adjust to dairy deregulation.

The adjustment package was funded through a levy of 11c per litre for liquid milk products. That is a levy on consumers of 11c per litre, calculated to cover the total cost of payments to producers and for administration. The levy generated around $20 million per month, and it also covered interest costs. In the early years, the outgoings to the industry exceeded the revenue from the levy and the government of the day decided to fund the shortfall with commercial loan arrangements rather than budget funding. The target period of eight years for the adjustment package has now passed and, while the last payments have been made to farmers, the levy continues in order to pay off loan debts. As of July 2008, the Dairy Structural Adjustment Fund had a deficit of approximately $205 million, but with revenue of $20 million a month it is expected to be in balance in the first quarter of 2009.

This bill is about the process of winding up the fund and removing the levy as soon as possible, while terminating it in a way that minimises the possibility of surplus funds. In other words, we will not be taking any more money from consumers than we absolutely need to wind up the fund. Currently, the Dairy Adjustment Levy generates around $20 million per month from the 11c per litre paid by consumers in shopping centres and corner shops, but that money takes around 60 days to get from the cash registers to the adjustment fund.

The act as it stands prior to these amendments requires the minister to give 28 days notice before removing the levy and, significantly, only allows the minister to give notice against receipted revenue. If winding up the adjustment fund under the current legislation, the minister would have to wait until the fund was in surplus and then give 28 days notice. That would mean that, after the minister had given notice, money would continue to flow into the fund at a rate of $20 million a month, meaning some $50 million would be collected in excess of what is needed to wind up the fund. The amendments in this bill allow the minister to consider the levies paid but not yet receipted into the adjustment fund when declaring the levy termination date and to give termination notice of seven days rather than the current 28 days.

We are also acting to ensure that the benefits from the removal of the milk levy are passed on to consumers. Any complaints or suggestion of anticompetitive conduct in relation to removal of the levy will be dealt with by the Australian Competition and Consumer Commission. I am also pleased to see that the winding up of the Dairy Adjustment Authority will not cause major dislocation to staff. It was always expected to operate for around eight years. At the peak of its operations in 2000, the authority had 83 contracted staff and a number of consultants. Reflecting the fact that it has substantially completed its functions, it now has four part-time staff.

I am very pleased to speak in support of this bill. The removal of the Dairy Adjustment Levy will mean the government will collect $20 million per month less from ordinary, everyday Australians, including those in my electorate.

Darren Cheeseman (Corangamite, Australian Labor Party) Share this | Link to this | Hansard source

The Dairy Adjustment Levy Termination Bill 2008 will amend schedule 2 of the Dairy Produce Act 1986 to enable the dairy industry adjustment program to be wound up. Coming from Corangamite in western Victoria, I stand here representing one of the heartlands of the Australian dairy industry. There are approximately 295 dairy farms in the Colac area of my electorate, according to the 2005-06 farm census. These dairy farms contribute significantly to the local economy, to the Victorian economy and to the national economy.

A road trip through the unfortunately not-so-green landscape of my electorate at the moment reveals patches of forest, hectares of pasture and mixed farms. In a lot of places around the electorate you can see where old dairies used to be. The cement block buildings by the roadside are a reminder of a time when we used to produce a lot of milk—the effect of maintaining heavily supported state and federal government schemes. Now there is greater diversification. Not only is this evident in the visual cues; historically you can see the dairy industry has gone through a number of large-scale changes within my electorate over the years.

Importantly to the matter before us, eight years ago the industry underwent deregulation. As part of the deregulation, an 11c per litre tax was placed on retail milk, to pay for the deregulation. This revenue was appropriated to the Dairy Structural Adjustment Fund, which is managed by the privatised Dairy Australia Limited. The Dairy Adjustment Levy has been in place now for eight years and it has served its purpose well. As was the original intent, it is now time to wind it up. The modern Australian dairy industry is a large-scale, intensive operation using the latest technology to produce whole milk. Rotary dairies have replaced the cement block sheds and cattle are milked in large dairies which can milk up to 800 cattle per hour, with some operating 24 hours a day with three equally spaced milkings every 24 hours.

In recent years the Australian dairy sector has faced a number of significant challenges. These challenges include widespread drought, reduced availability of irrigation water and rising input costs, such as fuel, feed and fertiliser costs. Let’s face it, Australian dairy farmers have a very tough job. They are out there putting in the hard slog, day in, day out, year in, year out. Around this nation there is an immensely dedicated group of men and women who get up before the sun and go to bed after it sets. They are the people who get up in the middle of winter at 5 am, whether it is blowing a gale, pouring with rain, or freezing cold; they will leave the comfort of their warm beds and go out and bring the cows in for milking. That’s just the start of the scene which is played out all around this nation every day. There’s the popular expression that a particular person ‘could talk until the cows come home.’ Well, that is quite a long time. In between milking cycles, dairy farmers are not idle: there is always something to be done on the land, and maintaining a farm is extremely physical. It is a constant assault on the mind as well.

The thing that is weighing on everyone’s mind at the moment is the increased attention on water availability, the unreliable seasonal conditions and the legacy of ongoing drought. These place significant stress on farming families. I doubt many Australians would give much thought each morning, as they reach into the fridge to grab the milk, to where that milk has come from. When you do think about it, it’s amazing how much effort has gone into producing that litre of milk.

The regulated dairy industry was quite different prior to the introduction of the Dairy Adjustment Levy. There was the regulated market access to the fresh milk sector and the non-regulated manufactured milk sector. There were six separate dairy industries, one in each state, and there were high levels of Australian government assistance and complex state government regulatory intervention. There was Australian government support of the manufactured milk sector, and state government support of the market fresh milk sector. State marketing authorities such as the Victorian Dairy Industry Authority and the New South Wales Dairy Corporation were set up to administer this complex regulation.

Up until deregulation, dairy farmers selling their milk as market milk received a substantially higher farm gate price than the average price paid for manufactured milk, even though there was little distinction between the two products. Across Australia under this regulated market, a number of different schemes existed which allocated the large guaranteed price premium proportionally to all dairy farmers. State governments also engaged in establishing legislation that regulated interstate access to their market milk sectors.

The manufactured milk sector, on the other hand, was characterised by open access, with products from the sector being traded freely within and between states. Although the manufactured milk sector was characterised by open access, it was not totally devoid of the policies that distorted the market for dairy products. After much political lobbying by the dairy industry, the Australian government promised substantial adjustment payments to dairy farmers on the condition that state governments agreed to deregulate those industries.

The dairy adjustment levy was implemented in 2000 to lessen the impact of deregulation on dairy farmers and communities with a heavy dairy industry base, like those within Corangamite. This program has since run its course, with eligible farmers receiving 32 quarterly payments over eight years, the last of these payments being in August. Australian dairy producers are in a good position, due to increased capital investment over the past few years. The investment has been integral to improving their business viability. Over the past few years, farm gate milk prices have risen substantially. This is also a reflection of the strong global demand for dairy products and dairy related products from the major exporting countries.

Despite the Australian Bureau of Agricultural and Resource Economics report that income for Australian dairy farmers declined markedly in 2006-07, there was strong growth in milk prices in 2007-08, with the average farm cash income estimated to have increased significantly at the national level. In 2007-08 there were further reductions in the average size of milking herds, but, with improved seasonal conditions in some regions, average milk yield per cow is estimated to have risen. The Australian Bureau of Agricultural and Resource Economics stated in their media release on 2 September this year:

Farm cash incomes for dairy producers in Australia are estimated to have more than tripled to average more than $110,000 in 2007-08, while average farm business profit increased to nearly $24,000, up from a loss of $39,400 in 2006-07.

These results are welcome. Given that the adjustment program has fulfilled its purpose, and given the recent positive results from the industry, it is timely to terminate the 11c per litre consumption levy on fresh milk sales which has funded the program.

In winding up the dairy adjustment levy, it is also prudent to take into account and to amend a number of other acts which make reference to components of the levy. The bill will amend schedule 2 of the Dairy Produce Act 1986. These amendments enable the statutory authority, which was established as a part of the administration arrangements of the Dairy Structural Adjustment Program, also to be wound up. Any surplus levy funds will be returned to the Consolidated Revenue Fund, and this will enable closure of the Dairy Structural Adjustment Fund. Consequential amendments provided for under this bill will amend a number of other acts to remove references to the Dairy Structural Adjustment Program.

Outstanding business that needs to be tied up includes the initial outlays related to the adjustment program which exceeded the income from the levy. The Liberal government previously decided to use commercial loan arrangements to cover the initial outlays rather than budget funding to meet these initial costs. While final payments have been made to farmers, the levy continues in order to pay off those loan debts. Once the levy has generated enough revenue to bring the adjustment fund into balance, the minister can remove the levy, under provisions in schedule 2 of the Dairy Produce Act 1986. The Dairy Produce Act 1986 does not provide for winding up the Dairy Adjustment Authority. This bill allows the Minister for Agriculture, Fisheries and Forestry to make a declaration that the authority ceases to exist.

Today the rural sector has adjusted to the new rules of the dairy industry. Many properties have diversified in how their land is used, resulting in mixed farms rather than straight dairy farms. This is just one sign that dairy farmers have adjusted to the new sales environment and, accordingly, the 11c per litre on milk sold to consumers should be scrapped. The dairy adjustment levy has served its purpose. The fund has operated to assist farmers to adjust to the removal of state and Commonwealth government structures and price support measures.

In wrapping up the levy it is convenient also to wrap up the administrative arrangements that are connected to the levy. This is a levy that has been borne by Australian consumers and it is in the best interests of those consumers that the levy should be wound up as soon as possible. The dairy industry in my electorate provides significant income not only to the communities which my electorate supports but also of course to state and federal trade balances. I commend the bill to the House.

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

I too rise to speak briefly on the Dairy Adjustment Levy Termination Bill 2008, which brings to an end the collection of the 11c per litre levy that has been applied since the year 2000. At the time, the levy was introduced to fund an adjustment package for the dairy industry as it moved through deregulation. Over eight years around $240 million a year has been collected through the levy and used to provide payments to around 13,000 dairy businesses. The levy may have been well intended and I have no doubt that it did provide necessary financial assistance to dairy farmers during the transition period. Sadly, however, there were also cases where the funds were paid inappropriately, with one report from the Australian National Audit Office identifying some $200,000 which had been overpaid to farmers. It appears that the Dairy Adjustment Authority, which managed the levy that was collected and distributed the funds, did not have adequate controls or accountability standards in place in its administration of the levy.

There have also been reports that deregulation of the dairy industry has not led to lower milk prices, as expected. I have noted a number of reports, including one in particular that referred to milk prices in WA having in fact increased since the levy was introduced. Yet consumers paid $240 million a year because deregulation was expected to make the industry more efficient and therefore bring down the price of milk.

The important point I make about this bill, however, and the removal of the 11c levy is that it should lead to lower prices. I say ‘should’ because we are yet to see whether the full 11c will be passed on to consumers. I understand that the ACCC will be monitoring this situation, but as with all of these issues absolute control as to what the price should be will be near impossible to determine. The ACCC investigation into grocery prices highlighted just how difficult it can be to monitor food prices. When it comes to the dairy industry, I am also aware from reports in my home state of South Australia that dairy farmers get nowhere near the money that milk sells for in supermarkets and that there is a huge gap between the farm gate price and the retail price.

I note that in recent months, as a result of increased exports overseas, those prices have increased substantially and certainly to a point where it makes the production of milk much more viable for those farmers. But there is nevertheless still a very substantial gap between the farm gate price and the retail price that consumers pay at the supermarkets. Again, that has been the cause of both angst and concern amongst the industry and amongst consumers for some time. As a result of that low farm gate price for many years in my home state of South Australia, not surprisingly, what once was a very viable dairy industry has largely been wiped out in recent years. In 1980 there were some 1,780 dairy operators in South Australia. In 2007 that figure had reduced to 354. Certainly the levy and the adjustment scheme did not save the dairy industry in South Australia. In fact, if you look at the statistics relating to the dairy industry, it has been in decline across Australia since 1980. I quote from ‘Farm facts’ in a publication by Dairy Australia entitled Australian dairy industry in focus 2007:

The number of dairy farms has more than halved over the past two and half decades, from 22,000 in 1980 to just over 8,000 in 2007.

What is interesting about those figures is that the trend downwards in the number of dairy farms that we have seen since 1980 has hardly changed at all since 2000 when the levy was introduced. The gradual decline occurred regardless of the fact that we had in fact introduced the levy. So one has to question how effective the levy was in ensuring a sustainable dairy industry in this country.

My concern, however, is that, apart from the economic loss to my home state of South Australia from the decline of the dairy industry, there is an even greater concern—that Australia will see an increase in imports of overseas produced milk and milk products. Milk and milk products are used in so many foods we consume. Knowing where and how the milk is produced is important to me and I am sure it is important to every other Australian, particularly when one considers the effects of the milk product contamination scare we recently saw in China—and which we are seeing still. If the 11c reduction is passed on in full to consumers, it will bring a welcome reduction in the price of milk to consumers.

Right now, when the cost-of-living increases and grocery price increases are regular topics of discussion and debate, reducing the price of milk will make a difference. Milk is one of those essential, everyday needs of families—and even more so if there are children in the family. If $20 million a month is collected from this levy then that will mean that there will be $20 million a month that will go back into Australian households, and that is not insignificant. For those reasons, I commend this bill to the House.

Mr Tony Burke (Watson, Australian Labor Party, Minister for Agriculture, Fisheries and Forestry) Share this | Link to this | Hansard source

in reply—I want to thank all honourable members who have participated in the debate on this bill. Some have spoken from the perspective of concern for producers and some have talked about their hope of seeing better prices out there for consumers. There has also been a general discussion on some of the issues relating to deregulation itself as well as some of the mental health challenges. Both the member for Forrest and the member for Kennedy in their contributions referred to the suicide rates and serious depression that still plagues large parts of rural Australia.

There were some specific issues raised by the shadow minister which I should respond to. He indicated his support for the legislation, for which I am grateful. He said that we needed to have a plan for water use. As the shadow minister knows full well, the Minister for Climate Change and Water has that plan. We have the water for our future program focusing on efficiency, planning and information; the water buybacks from willing sellers; the irrigation industry’s workshop program, which is providing further information for irrigators; and the irrigation management grants, implementing water management strategies for the Murray-Darling Basin irrigators. I am not providing any information there that the shadow minister does not know. I think his issue is quite simply that he would prefer the neglect that occurred under the previous government, and that is something that this government will not be a party to.

There have also been some curious comments for which I was not in the chamber, but I was able to listen to part of the contribution from the member for Gippsland. He called on the government to implement the promise of $3 million to support nutrient management in the Gippsland lakes. I am very glad that he is supporting us delivering on that election commitment. I would be astonished if the member for Gippsland were asking us to send out the money prior to contracts being formalised. That is something that, from time to time, the National Party have been reasonably relaxed about, but I am sure that they would appreciate that it is best to have the contracts in place before you pass the money over. It is interesting that the member for Gippsland was showing such support for that project on the same day that his colleagues in Senate estimates were being critical of the government wanting to provide that money.

I understand that the member for Gippsland also said—I did not hear this bit but I am advised that he said it—that the minister for agriculture should visit the Macalister Demonstration Farm. He is right—and I have. I am grateful for his advice that I go there, but I have gone there. Like him, I am very impressed by it. They have been able to do some extraordinary work on natural pasture on that demonstration farm, and I share his admiration for the facility. But I am curious about his demand that I need to visit there, given that I have visited, have been impressed and have made comments about that publicly.

The Dairy Adjustment Levy Termination Bill 2008 amends the Dairy Produce Act 1986 to close the $1.92 billion Dairy Industry Adjustment Program. Specifically, the bill before the House provides for the termination of the dairy adjustment levy, the wind-up of the Dairy Adjustment Authority and the closure of the Dairy Structural Adjustment Fund. The bill will provide for surplus levy funds to be returned to consolidated revenue, and it clarifies our understanding that costs of terminating the adjustment program can be considered costs of the program itself. Consequential amendments will remove references to the adjustment program in other acts and repeal acts that were originally there to establish the dairy adjustment levy.

Importantly, the bill makes arrangements to minimise collection of the consumer levy surplus to program needs. The Dairy Produce Act 1986 does have some shortcomings—none more serious than the projected $50 million in surplus dairy adjustment levy funds that will be collected unless the act is amended. The bill will allow the government to terminate the levy in a way that minimises levy collections above the needs of the program. This will be achieved in two ways: firstly, by cutting the levy termination notice period from 28 days down to seven and, secondly, by allowing the government to consider levies paid by consumers but not yet receipted into the Dairy Structural Adjustment Fund when declaring a levy termination date.

The government expects to remove the dairy adjustment levy in the first quarter of next year. The benefits of removing the consumer levy should be passed on to consumers. Any complaints or suggestions of anticompetitive conduct in relation to removal of the levy will be dealt with by the ACCC. Amendments will also allow the government to close the Dairy Structural Adjustment Fund, after which the adjustment program will also be considered closed.

Australia’s dairy industry has undergone a process of significant transformation in the last decade. In the late 1990s, Australia’s dairy industry was not confident that it could compete with its efficient New Zealand counterpart within the then regulated environment. Today, the industry is competitive and export oriented.

While this legislation brings to a close a program that supported dairy producers to make that transition, the government recognises that the industry still faces challenges. Strong global demand for dairy products has contributed to increased farm-gate prices. But water dependency and climate change represent particular challenges. The government will support the dairy industry to better prepare itself for these challenges. Dairy farmers, particularly in the Murray-Darling Basin, will also benefit from better information about climate and water availability, improved water trading arrangements being developed by the ACCC, and more appropriate allocation arrangements under water programs being administered by my colleague from the other place Minister Wong.

Of course, the government continues to provide income support, business advice and a range of other measures to all eligible farmers who are doing it tough because of drought. Assistance to farmers also includes exit assistance for eligible farmers who do not see a future for themselves in the sector. The Rudd government will do everything it can to ensure the Australian dairy industry makes its contribution to global food security in the face of a changing climate. This bill will allow the government to finalise the Dairy Industry Adjustment Program. It provides for good governance. It has been welcomed by Australian Dairy Farmers Ltd. And, when passed, it will deliver modest savings to consumers at the grocery checkout. I welcome the bipartisan support for the bill and I commend it to the House.

Question agreed to.

Bill read a second time.

Ordered that the bill be reported to the House without amendment.