Ron Boswell (Queensland, National Party) Share this | Hansard source

I would like to join the address-in-reply to make a contribution on a very important issue, which is the wheat industry. ‘Working families’ was the mantra used by this Labor government to get elected. Now that it is in office, it emerges that families who work on the land are not included. I refer specifically to the thousands of wheat growers across Australia, who face the most radical overhaul of their structure in its history. They face the dismantling of over 60 years of marketing systems that were built around them and for them. Wheat growers who sow their crops today do not know what tomorrow will bring.

They will no longer have a buyer of last resort to purchase their wheat. They will no longer have a national pool or an estimated pool return which their bankers rely on to fund cropping and harvesting operations. They will not know whether they will get paid for their wheat when they do sell. They will not know whether or not to build storage facilities. They will not know whether their buyers will be able to transport their wheat to a port or whether there will be a ship to take it to its market.

They will not know how to be players in an international market characterised by foreign subsidies and sophisticated financial instruments. They no longer have any say in a market dominated by international multinational corporations responsible to their shareholders. Australian wheat growers no longer face a market where they command a guaranteed quality premium. They will be picked off by large grain traders and will experience larger price fluctuations and lower returns than they have experienced for generations.

The impact of this will be a marked increase in instability in the wheat industry in Australia. That means thousands of growers and their families, suppliers and local communities face a future of uncertainty and greatly increased risk to their livelihoods. This issue has not gained a lot of attention in the day-to-day world of politics. Believe me, there is nothing more serious to hundreds of thousands of Australians reliant on the wheat industry than the impending extinction of the single desk marketing arrangements for wheat exports.

These changes are going to be implemented without the government doing its homework on what will happen as a result. If the government does not know what is going to happen, how on earth can wheat growers be expected to judge their position? We know that the government has done nothing in this regard because we were told so in the estimates committee. In the Senate Standing Committee on Rural and Regional Affairs and Transport estimates, I specifically asked whether the department had done any work, research studies or modelling on the effects of all this wheat hitting the market at one time. The answer came straight back from the department representative, who said, ‘No, we haven’t.’ I made the point that there is a great concern out there that if the wheat comes off quickly and all goes to the ports at one time there will be total confusion and chaos. I was told that I had identified a serious issue and that the minister is aware in broad terms of the issues around grain transport.

Growers are also concerned about whether their premium price for quality wheat would be maintained in the absence of a single desk for exports. People were prepared to buy Australian wheat at a premium because the quality standards were high and they were prepared to go that little extra way. So I asked at estimates: who will now be in charge of guaranteeing the high standards of Australian wheat if three, four or 10 people have licences to sell? Who is going to be responsible for guaranteeing the high standard of wheat exports? The answer to that was that part of the government’s policy commitment on wheat marketing is to establish an industry expert group to advise on a range of issues around the implementation of the new policy. I think that it would be a good thing to get the answers from that committee before we implemented this brave new world.

That is all very well, but it is too late. That sort of information analysis should have been done before the government committed to a policy that they obviously have not thought through. They should know what the policy is before inflicting general mayhem on such an important national industry. The government does not even know how wheat quality will be tested under the new regime. As a department official told me in estimates,

... we do not know what the details of that will be at this point, but the minister has established an industry expert group to give him advice ...

I also asked a question on the handling infrastructure of the wharves. There will be increased pressure on those as everyone tries to get the wheat out at the highest possible price and at the earliest possible time. I asked whether there had been any modelling done on that. ‘Not that I am aware of,’ was the answer from the department. I pushed further. There will be increased cost with the pressure on port facilities. I asked whether the minister had been advised of those likely increased costs. I was told:

It is not at all clear what might be the outcome for bulk handlers, in terms of costs or otherwise, of the new wheat marketing arrangements. At this stage, we are keeping a watch on that issue ...

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We cannot say anything definitive about what might be put in place at this stage because no decisions have been taken. It is an issue that we are aware of and we are certainly keeping under scrutiny the development of the new arrangements.

I tried to make it clearer for the people charged with inflicting this policy on wheat growers. I asked:

Has the department advised the minister that there will be considerable problems when a grower rocks up to the bank manager and says, ‘I want $200,000 to put the crop in,’ and the bank manager says, ‘Well, how much are you going to get?’ He says, ‘Well, I don’t know, because there’s no export pool returns.’ Is the minister aware of that?

In return, I was given a lecture on how:

... all growers have access to all the information that is necessary for them to make a reasonable estimate of the price. They have access over the internet to the Chicago and Kansas boards of trade figures on a daily basis and they can work back through the freight and other issues to work out a price.

So the government expects every wheat grower to do for himself what the Australian Wheat Board has been doing with an army of experts for him over 60 years.

The obvious question for the government is: if the department does not know what the effect of deregulation will be on the price, transport costs and availability, how on earth does it expect the wheat grower and his local bank manager to figure it out? I asked this question:

... is the minister aware of the problems of not having estimated pool returns? You say that a farmer may be skilled and he may even be able to employ someone, if he has a huge farm, to advise him. But the average guy that has 4,000, 5,000 or 6,000 acres is not going to be able to estimate what the price will be—and even if he does, it will be a wild guess. The bank manager is not going to be interested in his estimations. He wants to know what price he—

the farmer—

is going to get. If he does not know what price he is going to get, he will not lend him money. I ask you whether you have advised—as you should have—the problems of not having a pool will cause?

As everyone in the industry knows, if the pool goes, it will undermine the domestic return. Once the pool goes, the domestic market will probably go down with it. But no-one from the government could give me an answer. Once again, if the industry basically operates from a widely accepted yardstick, which is the estimated pool return, how does the market work without it? How does the bank manager know what to lend? How does the grower work out how much he needs to plant and to borrow for the planting? How does he know the transport costs or when he will get paid? How does he know if there is a ship waiting to take his wheat or a truck ready to deliver it to the port? All of these things have been in place for 60 years. All of a sudden, he has to face a scorched earth policy when it comes to getting his wheat to market. And the government that has put him in that position cannot give him any advice as to what will happen.

At estimates, I asked:

What is going to happen if we get a bumper crop, say 24 million tonnes or 25 million tonnes, and we do not have the capacity to get that wheat out, we do not have the infrastructure? In previous terms, that wheat was sent out over 12 or 18 months. Have you advised the minister what would happen in a situation of oversupply with no buyer of last resort?

I was merely told that the minister was aware of the issue. So I tried again. I said:

Let me put this to you: you have a 25 million tonne crop and facilities to get rid of 12 million tonnes or 18 million tonnes, and quite a lot of it is under canvas, under cover—who is going to buy it? You cannot sell it because you cannot get it out. The domestic market is full. It is sitting there under canvas. Who goes out and buys that wheat?

I was told:

... growers do not necessarily have to sell or price their wheat at the price that is pertaining at harvest time. They can store the wheat.

So I asked the obvious follow-up question:

How do they store it if all the facilities are full and it is under canvas? ... A lot of them do not have a lot of storage facilities; most of them do not.

I explained:

In the event of a bumper crop ... no-one is going to wait for a better price when every silo is full, every railway carriage is full and every wharf is under strain. No-one is going to be able to sell it for a reasonable price, because the price will go down. ... Surely, as a competent department, you would have done modelling to show the best possible scenario and the worst possible scenario. ... I imagine that some modelling would have been done.

But the response was:

I will not make any comment on that; it would be improper for me to do so. All I will say is that the department is simply implementing the government’s policy commitments consistent with that.

This dialogue reveals what little thought has been invested in Labor’s policy, what little professional analysis has gone into it as well as the lack of input from the growers. It is alarming that this industry has been subject to a major upheaval with so many key questions unanswered.

The government has thrown the industry up in the air like a pack of cards and no-one knows where they will land, least of all the poor wheat grower who has to make decisions now about how much to plant. This is a major industry whose future is at stake.

After the dismal performance of the government at estimates hearings, I placed further questions on notice, which of course have yet to be answered. They provide a good summary of the unknowns afflicting the growers as they prepare to sow this next season’s crop, which I believe is being planted at the moment. My questions on notice were:

Can the department advise whether the minister will be in a position to inform Australian wheat growers how the new export wheat marketing arrangements will affect them?

Has the department provided advice to the minister on how growers will be affected if the government-accredited exporter fails to pay growers?

What safeguards or protections for growers has the department investigated, should government-accredited exporters fail to pay or delay to pay their wheat suppliers?

What measures are being considered to provide assistance for the comprehensive education of wheat growers in the world of international trading, hedging, futures contracts and associated financial dealings to prepare growers faced for the first time with these decisions under new marketing arrangements?

Has the department considered and provided advice to the minister of the ramifications of growers not having a guaranteed buyer for the wheat crop for the first time in over 60 years?

Has the department taken steps to advise the minister of the great uncertainty for, and marketing vulnerability of, growers as they sow the 2008 crop without any explanation about the proposed new marketing program that will apply for the sale of that crop?

Has the department evaluated the government’s proposed wheat marketing policy in terms of its impact on working family growers?

Has the department investigated whether Australia’s wheat growers will be forced into absorbing added biosecurity risk management costs with the introduction of multiple sellers likely to lead to a breakdown in current grain hygiene controls and established systems of grain handling and transport?

Has the department advised the minister of the financial and moral impact on working family growers of the present two to six years of drought?

Has the department assessed the impact on farm family income in a deregulated wheat export market dominated by international corporations seeking to maximise returns to foreign shareholders rather than Australian working family growers?

Has the department assessed the advantages and disadvantages of removing the strict controls over the AWB group that is set out in the Wheat Marketing Act?

Has the department sought to consult the Australian Bankers Association on the financial implications for Australian wheat growers under the government’s proposal to repeal the current Wheat Marketing Act?

Has the department sought input from the Minister for Infrastructure and Transport and/or his department on wheat growers’ concerns that under the government’s proposed wheat marketing arrangements there would be serious issues of road safety, more rail closures, greater port congestion and higher transport carbon emissions?

Has the department done any work to assess how a majority of export growers will receive cash flow when their grain is no longer taken up by the national pool? Is it true that traditionally some 30 per cent of the export remains unsold on the international market 12 to 18 months after harvest with the unsold wheat being rolled into the succeeding pool and growers always assured of receiving cash flow by way of pool distributions or by entering into harvest loans based on their tonnage delivery and the estimated pool return? How is this matter being addressed in the government’s wheat policy?

Unfortunately, all we have are questions, questions and more questions. The government has no answers. This is a very unhealthy climate in which to implement radical structural change to a market where Australia has historically performed well. This is not the way to help working families in wheat districts; this is the way to chaos in a major market with ramifications not only for the nation’s wheat growers but also for the nation’s transport infrastructure and export performance sectors. I urge the Rudd Labor government to pull back from implementing such widespread change without getting some, at least some, of these answers in place.

I conclude by quoting the words of wheat growers themselves through the Wheat Export Marketing Alliance:

The government has no marketing plan or understanding of how to deal with the inequities and problems that will arise from its legislation. ... Managing this rushed transition will be immensely difficult, particularly for wheat growers who are being forced into planning for their future in an information vacuum at the grower level.