Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Link to this | Hansard source

It has come to this. The government pursues the ramming through of the Wheat Marketing Amendment Bill 2007 within a week of its introduction, without adequate consultation with growers or their representatives and without an opportunity for the parliament to examine it through a committee which would have the time to test the various aspects of the legislation and consult with growers and grower organisations, come to a view and make a recommendation to this place to deal with any potential flaws in the legislation and any potential unintended consequences. Usually, when the government rams legislation through the parliament with this haste, we find that we need to come back and revisit it because the government usually gets it wrong in some respect. The drafting usually does not encompass the knowledge that the industry has of itself, because, of necessity, the draftsperson is a specialist in drafting, not a specialist in the industry concerned.

And, as we have seen, not only has the legislation only been introduced a week ago but it has already been amended in the House of Representatives. So much for the control of the subject by the Minister for Agriculture, Fisheries and Forestry. After all of the disputes in the coalition party room, after all of the problems that existed there, one would have thought that the minister—having allegedly, with the assistance of the Prime Minister, thrashed the matter out—could have got it right when he produced the legislation for the House of Representatives. But, no, it had to be amended in the House of Representatives before it came here. Indeed, as far as Labor is concerned, it is still an inadequate legislative approach to the wheat industry.

This is a government that is regularly failing the wheat industry. It is a serial failure with regard to the wheat industry. The first failure was of course—

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

You’ve got to be joking!

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Link to this | Hansard source

No, I am not joking. I will take that interjection from the buffoon from Queensland.

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

Senator Boswell interjecting—

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Link to this | Hansard source

Well, it is very interesting that—

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Mr Acting Deputy President, I raise a point of order. I think the term used to describe Senator Boswell is unparliamentary, and it should be withdrawn.

Grant Chapman (SA, Liberal Party) Share this | Link to this | Hansard source

I would agree. I ask Senator O’Brien to withdraw that term.

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Link to this | Hansard source

I withdraw that term. The fact of the matter is that this government has failed the wheat industry and failed it on a regular basis. It failed when it introduced the current wheat marketing arrangements in 1997-99, when it went through the process of setting up the current model. It set up a flawed single-desk model which, frankly, is the basis of the difficulties that the industry faces today. And, despite many authoritative warnings, time and again, year after year, the Howard government ignored calls for reform. This model, which came into effect on 1 July 1999, converted the Australian Wheat Board from a government owned corporation to a private company—AWB Ltd—which was owned and controlled by growers, and AWB Ltd’s subsidiary, AWB International, was established to manage the export single desk. In doing that, the Howard government legislated a protected monopoly status for a private company.

This government’s second failure was when the Wheat Export Authority provisions were put into legislation. In our view it was designed to fail. When the single-desk model established the Wheat Export Authority it should have given it sufficient powers to oversee AWB and its subsidiaries. The Wheat Export Authority should have been provided with adequate powers to ensure that AWB’s corporate conduct was not only ethical but lawful. The Wheat Export Authority should have been able to act before AWB was allowed to engage in corrupt conduct in relation to the wheat for weapons scandals. The board of the Wheat Export Authority should have been sufficiently independent of industry and the executive, and appointments should have been based on expertise in business and marketing. These were failures inherent in the model that the Howard government established, and they resulted in a lack of transparency, a lack of accountability and major failings in corporate governance. The government ignored warnings about these governance failures from the national competition policy review in 2000 and from a Senate inquiry in 2003. It ignored multiple warnings from the regulator itself as well as repeated calls for reform from grower groups. Despite these warnings, the government failed to introduce any substantial reform for the Wheat Export Authority.

This government’s third failure was not to resolve the conflict of interest between AWB Ltd and AWBI, and many on the government side have been keen to raise that very issue over the last four or five years, so it is not an issue which has been unknown to the government. As I said, the problem was inherent in the model that the government established. It was identified by the national competition policy review in 2000, and that review recommended changes to remove the inherent conflict of interest. But the coalition ignored the recommendations, and the arrangement has persisted to the detriment of wheat growers.

Under the model, one of the key functions of AWB Ltd was to provide services to AWB International to enable it to manage the pool. A total of 77 separate services were provided, and there was no requirement that they be contestable. As a result, returns to growers from the pool have not been maximised because the cost of operating the pool has not been minimised.

The government’s fifth failure was the failure of accountability. It ignored Senate recommendations—unanimous cross-party recommendations—on things such as the regulation of boxed and bagged wheat back in 2003, reforms to governance and the WEA’s oversight of AWB International, and measures to address the conflict of interest. These were unanimous recommendations from the Senate Rural and Regional Affairs and Transport Legislation Committee, which included members of the coalition, and the government and the National Party minister ignored those recommendations. We are now seeing an attempt to remedy another of the failures, which was the regulation of boxed and bagged wheat. Only now, after almost eight years of operation of this scheme, are we seeing that there is a move to deregulate boxed and bagged wheat, which, as I say, was recommended four years ago.

The wheat for weapons scandal and the damage that that has caused Australia as a trading nation is, in every way, a direct responsibility of this government in the way that it has failed to equip the regulator to oversee AWB Ltd and AWB International. Over a period of seven years, between 1998 and 2005, there were dozens of warnings received by the highest level of the Australian government from official agencies, including the Australian UN mission in New York, the Canadian government, the United Nations, Australia’s US trade commissioner, the Department of Foreign Affairs and Trade and the Iraqi Provisional Coalition Authority. But the Howard government failed to take any action and preferred to accept AWB advice that the allegations of corruption were unfounded.

We then saw the Cole commission, which the government successfully corralled so that it could not focus on the government’s failings, but Commissioner Cole did make a critical recommendation in relation to wheat marketing. His report stated:

... that there be a review of the powers, functions and responsibilities of the body charged with controlling and monitoring any Australian monopoly wheat exporter. A strong and vigorous monitor is required to ensure that proper standards of commercial conduct are adhered to.

The government still has not responded in any adequate way to that recommendation. To all intents and purposes it has ignored Commissioner Cole’s recommendation. The Prime Minister has acknowledged the need to address the Wheat Export Authority’s powers to oversee wheat marketing but, in terms of what is in this bill, I would say that the changes are minimal.

Last month the Prime Minister referred to the critical opportunity for the government to take a strategic decision in relation to the AWB and wheat marketing generally. It was an opportunity to prove to Australia’s farming and investment community that he actually had a plan for the wheat industry, but pretty clearly, from this legislation, we see that the government only has a plan for the next election. And, in relation to that, it will be very interesting to see what the industry is going to do with the model that the government puts forward.

Isn’t it interesting that when the government has come forward with a piece of legislation which says, ‘Well, we really aren’t going to be in a position to tell you what we’re going to do until after the election; we’re really not going to be in a position’—

David Johnston (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

That’s what you’re saying!

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Link to this | Hansard source

No, it is not what I am saying; it is what you are saying. The dishonesty of the government’s position in this debate is manifest. The government is putting down a piece of legislation which effectively says, ‘In the event that a yet to be formed body cannot be formed by 1 March to manage a multibillion-dollar export market, with all the arrangements in place to do that, we are going to revert to AWB.’ That is what the bill says.

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

No, it doesn’t.

Judith Adams (WA, Liberal Party) Share this | Link to this | Hansard source

No, it doesn’t.

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Link to this | Hansard source

I think you should tell the truth, because that is what the bill says.

David Johnston (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

No, it doesn’t!

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Link to this | Hansard source

We will test the coalition on that issue during this debate

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

You don’t understand it.

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Link to this | Hansard source

Frankly, there is a bit of a con going on between the National Party and the Liberal Party in relation to this debate.

David Johnston (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

Senator Johnston interjecting—

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Link to this | Hansard source

Clearly, Senator Johnston has been conned, because he does not understand what the legislation says. It is interesting that Senator Johnston has not said a word in these debates. He is a senator from Western Australia—a senator from a state that exports a whole lot of wheat—and he has never said a word in these debates, but he wants to interject because the government are embarrassed about this. They want to rush this thing through the parliament. That is why they did not want an inquiry. The government wanted this thing through the parliament without an inquiry because they did not want growers to have a say. They did not want an inquiry to embarrass them. They did not want the dispute within the party room to go on—which it would have because the inquiry would have showed that there are serious deficiencies in this piece of legislation.

The only part of this legislation that has any urgency at all, considering we have waited years in relation to the deregulation of boxed and bagged wheat, is the extension of the veto power to be held by the minister on the basis that it should not refer to AWB. Frankly, in the original bill, that is exactly what would have happened on 1 July. So there has been a concession made to part of the argument in the coalition party room in amendments that have now been made to the original bill—that is, that AWB cannot have the veto power. But it can have the single desk. Indeed, that is what the legislation says. If government members say that that is not the case, they have not read it—they do not know it. All we are depending on is the suggestion that something will happen after the election—something which has not been defined, something which may well be different things in the minds of different members of the coalition party room. It certainly has not been spelt out to wheat growers and it certainly has not been spelt out to the community.

We have given a contingent notice to split this bill so that the issue of the veto power can be dealt with and the rest of this bill can be set aside, because frankly it is not urgent, and we still believe that growers deserve the opportunity to have some proper input into this through the processes of a committee—controlled by the government, I might add—of the Senate that has looked at this and other issues on many occasions and on most occasions has come up with unanimous findings.

So we have question marks about what we consider to be flaws in the quality assurance schemes for boxed and bagged wheat. Although there are claims of grower support for this bill, the strength and number of submissions Labor has received indicate that the government does not have anywhere near a united industry position or grower support for the position it has put forward. We have concerns about that. It is worrying that we are being told that there is some possibility of an entity with grower support developing but there is no test in the legislation to determine whether that is actually the case. There is no proper ministerial accountability and there is no transparency of the reporting process in the legislation. And I say again, despite the PM’s promises, AWB can resume control of the single desk as the single seller—albeit without the veto power but still with the single desk—if there is no exercise of a determination under new provisions of the act to determine that there is another organisation that can take control of it. So all a National Party minister, if the coalition were to win the next election, after the election needs to do is nothing. What will happen? AWB—‘nominated company B’—will be the entity which controls marketing.

Judith Adams (WA, Liberal Party) Share this | Link to this | Hansard source

No, it can’t—you haven’t read it.

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Link to this | Hansard source

I have read it. If Senator Adams does not believe that then Senator Adams is being conned.

David Johnston (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

Rubbish; you just can’t understand it!

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Link to this | Hansard source

I am very happy, because it is not me that is saying that; it is grower organisations around the country—who have had a limited chance to look at it—who are saying that. Frankly, if you think they are going to be conned by this sort of bluster in the chamber, you are absolutely wrong, Senator Johnston. Let’s be absolutely honest about this: this process is all about getting this legislation out of the way to resolve disputes in the Liberal Party and the National Party in party rooms to get through to the next election. That is all this is about. There is nothing in the government’s proposal which has any real support from growers. They have not been given a chance to give it support because they have not been given a chance to understand it. What did the Prime Minister say? In the House of Representatives on 22 May he said:

... only a small minority of that 70 per cent favoured the single desk remaining in the hands of AWB. That is a conclusion that the government completely shares and endorses.

Then they put this piece of legislation up that will achieve just that. Despite the Tuckey amendment in the House of Representatives, which prevents the AWB regaining the veto power, the key point is: AWB can still be the single-desk holder. It can still be the company which has the exemption from export controls conferred upon it by section 57(1A). The only difference is that it will not have the veto power.

But of course it is possible that some other company may take control of the single desk. This legislation also indicates that that company would have the veto power. This legislation provides no guarantees or protections to ensure that the new entity, the designated company, would not simply behave in the same corrupt manner as AWB did. Talk about slipshod legislation! Here we have a government that allowed the wheat industry—and I am not blaming growers or their representatives for this—to get into a situation where it became the focus of Australia’s greatest trade scandal, and the first piece of legislation that the government puts through fails the test of proper accountability, scrutiny and transparency. It sets up a model which can visit upon this country similar or the same arrangements for the future, and it does that by ramming the legislation through the parliament, denying a Senate committee the opportunity to look at it and guaranteeing that it will be passed today—and then, hopefully, the focus will go off the government.

We will be moving amendments to this legislation. I want to make sure that the Acting Deputy President is aware that we require this debate to go into committee. I also have a contingent notice of motion, which needs to be dealt with during the second reading debate on this matter, which goes to the question of splitting the bill. As I said, we are quite happy to pass legislation which deals with a provision preventing the veto power reverting to AWB. We have been prepared to give that expedited passage. We are not happy with the rest of this legislation and, therefore, we believe that it ought to be split. In any case, because we have been denied a committee reference on this matter, we will be taking time to obtain absolute clarification on the meaning of the bill and any provisions that we have concerns about.

In terms of other contributions, during the committee stage of this debate we will be taking the time to elaborate on some of the matters that I have raised in my second reading contribution. The fact is that this is an appalling piece of legislation in the way that it has been drafted, it has been handled appalling by the government and it is a travesty being foisted upon wheat growers and the Australian community.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

The Wheat Marketing Amendment Bill 2007 seeks to amend the Wheat Marketing Act. In real terms it gives effect to three things: the Liberal Prime Minister’s promise to members of the National Party to keep alive their desire to return to a single desk; to provide time to work out a longer term solution to competing interests and philosophies concerning wheat exports; and to temporarily maintain a modicum of choice by letting the Minister for Agriculture, Fisheries and Forestry temporarily allow more than one entity to export wheat.

I note that the minister said in his second reading speech that it is the wish of Australian farmers to retain the single desk for wheat exports, but I am far from convinced that it is the wish of the majority of wheat farmers in Western Australia. Domestic producers of wheat predominate in the eastern states. The odd thing is that, although domestic wheat is sold in an open, deregulated, competitive market, it is claimed that a possible majority of wheat farmers in the eastern states want a single-desk export market. It is WA farmers who constitute the great bulk of wheat exporters, and they are of a different mind. A minority want total deregulation with an open, competitive market. Another larger minority want the retention of the single desk. My impression is that the rest, a somewhat silent majority, want a regulated market with a choice of a few licensed exporters.

According to the government, the majority of Australian wheat farmers spoken to by the Ralph consultation commission do want retention of the single desk. That interpretation is highly questionable. In any case, Australia is a modern, open-market, competitive economy. As a matter of public policy, monopolies are not desirable and need to carry strong public interest arguments for their imposition or retention. In my opinion, that argument has not been made for export wheat, particularly when all other grains and all other rural products are happily exported with a choice of exporters in normal open-market arrangements. If a single desk is not needed for all other agricultural products and all other trade products, why is it in the public interest for it to be retained for wheat?

This bill does the following. Schedule 1 provides a statutory Wheat Export Authority with wider information-gathering powers and provides the Minister for Agriculture, Fisheries and Forestry with the power to direct the Wheat Export Authority to undertake investigations that the minister considers to be in the public interest.

Schedule 2 extends the temporary transfer of the veto power over bulk wheat export applications from AWB International to the minister. The power sunsets on 30 June 2007 but will now be extended to 30 June 2008. This prevents the veto from reverting to AWBI while industry manages the 2007-08 harvest and comes up with an alternative single-desk body to deal with future harvests.

Schedule 3 commences on 1 March 2008 and amends the act to give the minister the power to designate a company as the holder of the single-desk export privilege under the act. This is achieved by inserting a new section in the act which will allow the minister to rescind the previous declaration and make new declarations.

Schedule 4 amends the bill to deregulate wheat exports in bags and containers. This removes the requirement for wheat exports in bags and containers to first have consent from the Wheat Export Authority. In its place, the exporters are required to comply with conditions of a quality assurance scheme being developed by the Wheat Export Authority. Penalties apply for noncompliance with that scheme. The deregulation of exports in bags and containers and the quality assurance scheme will commence as soon as details of the scheme are settled.

Schedule 5 commences on 1 October 2007 and is designed to change the governance arrangements of the Wheat Export Authority. It will become an agency under the Financial Management and Accountability Act 1997 and be renamed the Export Wheat Commission. Staff of the new commission will be engaged under the Public Service Act 1999. It will have a skills based commission of between four and six members, with all members appointed by the minister. At least one but no more than two commissioners must be appointed based on their expertise in grain production. These changes are part of the Uhrig reforms for the governance of Commonwealth agencies.

Schedule 6, which also commences on 1 October 2007, is to facilitate the transition of the WEA into the EWC, regarding administrative matters.

Several of the schedules raise significant issues for the Australian Democrats. Schedule 1 gives the Wheat Export Authority, now the EWC, and the minister better information-gathering powers. That would appear on its face to be a good idea. It is one of those amendments which the government can point to and say, ‘See, we have taken note of what the Cole commission recommended and we have expanded the minister’s information-gathering powers.’

I do not want to be cynical, but one of the things that were glaringly obvious from the Cole commission was not that ministers and their bureaucrats lacked the power to ask questions of the AWB but that they were unwilling to ask the questions and gather the information necessary. Having the power and actually using it to ask the hard questions are two entirely different things. It was again clear from the Cole inquiry that, for all intents and purposes, Westminster ministerial responsibility no longer has relevance. Foreign Minister Downer and Trade Minister Vaile both gave evidence to the inquiry, which made it clear that, although these matters stood squarely within their portfolio responsibilities, they considered themselves not even indirectly responsible for the failure to discover and expose the AWB’s crooked culture and actions. Where written evidence or suspicions of controversial matters made it to their offices, they—and by extension their personal and departmental advisers—argued that they were mostly not even made aware of it. If they were made aware of it, they did precious little about it.

In a bygone era, when the Westminster system of ministerial responsibility applied, they would have been for the high jump. This is not going to happen now, but at least AWB’s senior management and directors should be for the high jump. However, we were told in estimates by Commissioner Keelty from the AFP that ‘at the moment’ there was no indication that charges would be laid against any individuals involved in the scandal. As for the company, in light of what has happened the very last people who get the single desk back should be the AWB. By all means, let the company try to remake itself, but it should realise that it is on probation. If they can withstand the deluge of litigation that we have been told to expect, let them make their way in a market economy, not as a corrupt monopolist.

Before I leave this topic, I remind the Senate that the Democrats have campaigned long and hard for a code of conduct for ministerial staff so that there will be open and accountable channels of communication which are properly documented. The Cole inquiry provides further evidence that the need for such a code, also recommended by the Senate Finance and Public Administration References Committee, is even more pressing.

Schedule 2 extends the temporary transfer of the veto power, which was due to sunset on 30 June 2007, to 30 June 2008. This prevents the veto from reverting to AWBI while it manages the 2007-08 harvest. The problem is that this is a stopgap measure while the coalition work out a solution to two opposing views. In general, The Nationals consistently—but wrongly in my view—want to retain the single desk, preferably under the AWB, and the Liberals—rightly in my view—want a more competitive market with a choice of exporters under a licensed and regulated export system. There is no doubt that the AWB’s hold on the single desk should end.

As for the WEA, it does indeed need a shake-up. They have proved to be a malfunctioning statutory body. As a Liberal senator pointed out months ago, it is a model which is weak, unwieldy and confused in the face of corrupt corporate power like AWB’s. It has also just gone along with a sloppy DFAT governance attitude instead of doing the digging and questioning that was necessary. The WEA, with the AWB, bear the principal responsibility for the way Australia’s reputation—now as a supporter of corruption instead of an opponent of it—was trashed.

Schedule 3 amends the act to give the minister the power to designate a company as the holder of the single-desk export privilege under the act. This implies the long-term retention of the single desk or the ability to overturn a situation where there is more than one exporter and replace it with a single exporter, which is undesirable. I refer to the revised explanatory memorandum which has been tabled in this chamber. It says, with respect to schedule 3:

This schedule also provides that should, for any reason, AWBI or a related company still be the holder of the single desk privilege when the Minister’s power sunsets then the veto power will be permanently removed from it ...

If that is the consequence, it is to be applauded.

By the way, one big well-respected WA farmer complained to my office this week that AWB was not only a corrupt monopolist but incompetent too. He had not even been paid for the 2005-06 harvest yet. What is going on there? Have they got solvency problems as well?

The question will be: if legal and other claims that have been announced or foreshadowed put AWB under pressure, will they have enough money to pay all their farmer suppliers? The question will also be: could the possibility of litigation in the United States and Australia put AWB under solvency stress? If that ever happens farmers forced by the government—and, by extension, by the National Party—to export their crop through AWB, after this is known, would surely have a case for compensation from the government if things go really sour.

I welcome schedule 4 because, as opposed to bulk wheat, it introduces an open, competitive market for exports of bags and containers of wheat. So in a minute area of the wheat export market there is going to be an open market. However, in the whole scheme of things it is of little significance because bulk wheat probably constitutes about 99 per cent of wheat exports.

In May there was a positive Australian government response to Mr Cole’s 2006 bribery and corruption inquiry recommendations, but I complained about yet another example of a slow response to issues of integrity and accountability. The federal coalition government have earned themselves a reputation for poor accountability because of their slow responses to integrity matters. The official response came six months after Mr Cole tabled his report. With respect to their proposed changes to foreign bribery and tax deductions the response came a full 16 months after the OECD review of Australia’s implementation of the anti-bribery convention recommended such changes. The response to the OECD on a corruption matter was far too slow and was symptomatic of a tired government that looked dismissive of concerns that we needed to urgently improve our laws on bribery and corruption to improve our now tarnished international image.

I should remind you that this is a government that can write legislation curtailing civil liberties in 24 hours and which farcically recalled parliament solely for the purpose of changing ‘a’ to ‘the’ in a piece of legislation, but, when it comes to necessary bribery and corruption law changes, just meanders along. Fortunately things are now moving along and there is some progress.

I have not yet had a good look at the legislation, but the International Trade Integrity Bill 2007, introduced last week, creates new offences for breaching United Nations sanctions and for giving false or misleading information about imports or exports affected by United Nations sanctions. It creates new penalties of up to 10 years in jail for individuals. It imposes on individuals and companies severe fines that can be set by the value of the offending transaction. It gives government agencies the power to obtain information about suspected evasion of sanctions so they can be referred to law enforcement agencies. It strengthens laws on bribery of foreign officials, it makes tax laws consistent with foreign bribery laws and it narrows tax deductions for payments to foreign officials. To me, that sounds like useful progress.

If I understand correctly, it appears the government will not be amending the Criminal Code to insert an offence recommended by Commissioner Cole as ‘acting contrary to United Nations sanctions that Australia has agreed to uphold’. Instead, they will amend the Charter of the United Nations Act. Apparently, the government do not consider it ‘fair or useful to subject individuals to 10 years imprisonment for unintended actions or unforeseen consequences, unless these resulted from recklessness’. Whether that is right or wrong, it was not too fair or useful for AWB executives and management to bring Australia, all its exporting companies, Australians generally and Australian farmers into disrepute internationally, either.

Under the government’s plan, there still seems every possibility that AWB resources and people will be used to motivate a new single desk. In my opinion, not one director who was on the board at the time of these calumnies should still be there. They should all be got rid of. The argument is that the single desk guarantees farmers, collectively, getting the best price, but that is patently wrong and defies the benefits which open markets bring to every other sector and product. The single desk is an anachronism whose time is up. For instance, in Western Australia, CBH can and will do a good job and can and will get a good or better return for farmers in that state than AWB has. Competition between grain bulk handlers will be good for business, will be good for farmers and will be good for the economy. When Mr Howard made his AWB announcement to the coalition party room, I sent this message to Australian Associated Press:

I understand the Prime Minister told his Party Room that: “If the industry does not have its plan together by March 1 next year, the government will reserve its right to have alternative arrangements. The decision means the Agriculture Minister Peter McGauran retains the veto on wheat exports out of Australia.”

This is a holding position that keeps the veto out of AWB hands but does not resolve the position in the longer term.

I believe the Prime Minister has enough support in the Senate to change the present wheat export single-desk system. His real difficulty lies with a divided Coalition Party Room.

On fiduciary, legal, commercial, prudential, competitive, efficiency and other grounds AWB must not be allowed to retain or regain the veto. Nor must a single-desk continue.

The temporary system that resulted in the recent grant of two extra licences to export wheat (44 other applicants were unsuccessful) showed that multiple exporters of wheat is a plus not a minus. Two successful applicants out of 46 was too few, and too low a tonnage, but it was at least a start to a more competitive market.

The single desk must go. Forcing those who don’t want to sell to AWB to do so, defies the basics of a free market—freedom of choice and open competition.

The claim is that most farmers only want to export through AWB. I have had extensive feedback on WA farmer—

that is, Western Australian Farmers—

views, and attended two WA farmers meetings chaired by Mr Ralph, and made an effort to assess the views of many hundreds of wheat farmers, not just those who spoke.

In my view only a minority of all WA wheat farmers want to retain AWB as the single desk for bulk wheat exports, and only a minority want total deregulation. All farmers would be happy to see the small bagged and container wheat export market completely opened up to multiple exporters. The vast majority of WA farmers (who are the vast majority of all Australian wheat exporters) want a regulated licenced wheat export market with more competitors they can sell to. AWB can be one of those (if they can survive fore-shadowed litigation).

That is the end of the message I sent to AAP at that time. Our whole market economy is based on competition. Why are all other markets in Australia open to competition, but not this one? Why are all other agricultural markets in Australia open to competition, but not this one? Why are all other grain markets in Australia open to competition, but not this one?

I have been sympathetic to the view of the shadow minister, and to Labor’s view, that a further inquiry is necessary in this area. The problem with the Ralph consultation committee —and they had some very able people on it—is that they were not able to conduct an inquiry. It was a listening exercise. In my view, the Senate and the parliament should be required to review public policy issues that surround this matter. In the meantime, it is up to political parties to make their position clear. I am here making the Democrats position clear. I understand The Nationals position. The Liberal Party’s policy is unclear to me—although I know what individual members of the Liberal Party feel—and the Labor Party’s position is also unclear. If it is the case they have not made up their mind then I think they should be clear that that is the case. However, if it is the case that they are enjoying the division in the coalition, they have to step aside from that and come to a decision as to whether they want a single desk, a partially deregulated market or a fully open market. I hope the shadow minister will be able to make Labor’s position a little clearer to me than it currently is.

In conclusion, the Democrats will support this bill in full, but we regard it as a temporary measure. The veto on exporters should not be returned to the AWB or any commercial body, whether or not the government in future decides on a single desk. It must not go back to the AWB or any commercial body. The Democrats welcome measures to introduce an open, competitive market for wheat exporters of bags and containers of wheat, and that must remain. With respect to bulk exports, we urge the government to introduce a regulated market with a choice of a number of licensed exporters.

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

I am pleased to hear that the Democrats will be supporting the Wheat Marketing Amendment Bill 2007. Before I get into my speech, I want to answer Senator Murray’s question on where the Labor Party are on this issue.

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Link to this | Hansard source

You wouldn’t know.

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

I do know, because your leader, Mr Rudd, has put out a press release and—unless this position has changed—his position on the single desk is that it will go to the Productivity Commission, which is the kiss of death for any single desk. Senator O’Brien, when you get up to speak at least be honest with the wheat growers of Australia and tell them that the single desk will be examined by the Productivity Commission. They know what that is code for: it is dead in the water. Be honest with them. Tell them when you are addressing this very important legislation.

The Senate is debating the Wheat Marketing Amendment Bill. This bill is the culmination of a lengthy consultation process with wheat growers from all parts of Australia. The measure it contains has the support of the overwhelming majority of wheat growers—whether they are from Western Australia, Queensland, Victoria or New South Wales. At all times, the majority of growers have been consistent in calling for their right to control the marketing of their product. This principle has also been The Nationals guiding light on this issue, an issue which at times has been very controversial. The deplorable conduct of the AWB in Iraq let down Australia and, more significantly, let down wheat growers. The oil for food scandal was used as a political tool not only in an attempt to divide growers themselves but also, crucially, to separate them from the single desk.

The single desk delivers, in the long term, premiums to Australia wheat growers over what they would receive without a single desk. They are not picked off one by one by multinational traders seeking to lower the price paid for wheat. We do not want to see the wheat industry become dominated, like retailing, by Coles and Woolworths. This bill is essentially a vehicle for delivering the control of wheat marketing to growers themselves—provided they establish a grower owned entity capable of doing the job by March 30 next year. The Nationals aim has been to ensure that profits in the industry stay with the growers and do not go to multinational traders. Australia’s wheat industry can be confident of a prosperous and certain future. This bill also highlights the effective and healthy coalition partnership between the Liberal and National parties.

The Wheat Marketing Amendment Bill has six key features. First, it provides the Wheat Export Authority, the WEA, with broad information-gathering powers. Second, it provides the Minister for Agriculture, Fisheries and Forestry with the power to direct the WEA to undertake certain investigations. Third, it extends the temporary transfer of the power of veto over bulk wheat from AWBI to the minister from the current expiry date of 30 June 2007 to 30 June 2008. Fourth, it empowers the minister to designate a company other than AWBI as the holder of the single desk export privilege. Fifth, it regulates the export of wheat in bags and containers and non-bulk wheat, provided exporters comply with a quality assurance scheme. I must say that that has the support of the farming groups. Sixth, it replaces the WEA with the Export Wheat Commission and changes the relevant governance arrangements in accordance with the Uhrig reforms for the governance of Commonwealth agencies.

I register my admiration for the wheat grower groups, who stepped up to the plate and took on the challenge of leading the growers in talks with government about how to resolve the complexities and controversies of the issue of wheat marketing. In particular, I acknowledge the contribution of the Western Australian Farmers Federation, specifically their grains division; the Wheat Growers Association; the New South Wales Farmers Federation; the Victorian Farmers Federation; and AgForce Queensland. The wheat industry can be thankful that there were leaders equipped for the task who negotiated strongly on the growers behalf. The bill before us is a sign that the Australian government does not hold wheat growers responsible for the oil for food scandal. That is very significant because many growers were demoralised by the actions of AWB and bore the brunt of the public’s displeasure about AWB’s actions. Growers do not deserve to be penalised by legislators.

The bill is an important step in the history of wheat marketing in Australia and reflects the primacy of the growers in the political philosophy of the Liberal-National Party coalition government. In March this year the Queensland National Party unanimously called for a grower owned and controlled single desk for wheat export marketing, as supported by the overwhelming majority of wheat growers. In a key address to the Queensland Rural Press Club earlier this year, I described the very serious situation for the 2007 national wheat crop and the investment put into the industry over generations. I said:

There is an urgent need to put strength and confidence back into the wheat industry. To dismantle the pillars on which it was built is to invite disaster.

There really doesn’t seem to be a viable alternative to a grower owned single desk.

The single desk is the only way that Australian growers as a whole can maximise returns. Policymakers have looked, wisely, to secure the single desk infrastructure of wheat marketing because it benefits the whole. The bill allows the AWB to market this year’s harvest. This is a pragmatic solution. There is simply no time left to put in an alternative arrangement for this year’s crop. The top priority is to get wheat marketing actually happening again in Australia as soon as possible. The pre Cole inquiry AWB is no longer in existence. It is unfortunate that there is little recognition that wheat marketing has moved on already from the old status quo. Functional separation has created a new design for wheat export marketing. The functional separation of AWB Ltd and AWB International was announced on 27 July 2006. It was the first step towards greater separation and the creation of a separate AWB International board and a separate audit and risk committee. A separate management team was appointed to AWB International. AWB Ltd appointed a new managing director.

Critics should also note that over 90 per cent of pool services provided by AWB Ltd are currently subject to contestable tenders by third-party service providers. The board of directors of AWB are seeking shareholders’ approval for the legal separation of AWB Ltd and AWB International. The proposed split would establish AWB International as a wholly grower owned manager of the national pool. AWB International would also retain the obligation to ensure security of payments and maximise returns to wheat growers. Note that the demerger proposal would ultimately change the board appointments process for both companies. All A class directors would be required to retire. The AWB International board would then be decided by the grains industry and wheat growers themselves.

It is argued that a demerger would enable AWB Ltd to become more efficient and commercially focused with a standard commercial constitution to facilitate the transition to a more competitive environment. I ask those who oppose this solution, like the Labor Party: where is their viable alternative? They do not have one—other than to send it to the Productivity Commission.

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Link to this | Hansard source

Senator O’Brien interjecting—

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

You should be ashamed to criticise what the coalition is doing when your decision was to send it to the Productivity Commission. The alternative, as stated in the ITS Global report, is:

Market share in valuable markets could be easily lost and would be difficult to regain once lost. Sudden removal of the Single Desk would expose growers to greater volatility in prices than they currently face and they would effectively be competing at the same level as major international competitors whose trading terms are strongly supported by significant government assistance.

That is, subsidies. The report goes on:

Unless changes to the market system are carefully managed, some Australian wheat producers may be exposed to some degree of market failure.

Those are not my words. One of the features of the government’s wheat export marketing plan is that the Minister for Agriculture, Fisheries and Forestry will retain a tight and powerful veto on wheat export licences until June 2008. This is a power that will continue to be exercised in the public interest on a case-by-case basis, but there is no intention of it being used to undermine the intent of the single desk. Importantly, the interests of growers who deliver to the national pool, and the impact on them from allowing other bulk export consents, will be part of the public interest consideration. By 1 March, growers have to choose between two options for a grower owned and controlled not-for-profit single desk: either a demerged AWB or a totally new identity. The new body could be a new company or a completely demerged AWBI, and it would take over the management of the single desk. The holder of the single desk will have to have complete legal separation from AWB Ltd.

The government acknowledges that the challenge it has set the industry is a significant one that requires strong leadership and unity within the industry. Under recent amendments to the bill, the proposed power of the minister to change the designated company that commences in March would have a sunset date of 30 June 2008. The government needs to be satisfied as to the financial viability and capacity of any new entity to be the single desk holder.

The industry supports beefing up the Wheat Export Authority. The bill makes a number of changes to the operation of the WEA. It will be given additional auditing and reporting powers to increase its ability to ensure transparency and compliance with international and domestic law by the single desk operator. The Wheat Export Authority’s increased powers include the power to issue an export permit to an organisation other than the single desk holder—but only in exceptional circumstances, including situations where the single desk operator has been precluded from a market for legal reasons and where the single desk operator has failed to develop a specialty market. But that is no open go. The authority will be provided with a power to request information from parties other than AWBI where it believes this relates to the performance of its functions. This is a significant broadening of the scope of the authority’s existing information-gathering powers. It reflects the government’s clear intention that efforts to undermine the interests of Australian wheat growers and to damage Australia’s international trading reputation will not be tolerated.

Further, the bill provides the minister with the power to direct the authority to investigate a broad range of issues relevant to its functions where he considers it is in the public interest to do so. The authority will also be provided with the ability to pass information to relevant law enforcement and regulatory bodies where it has received or uncovered information that warrants further investigation.

The export of wheat in bags and containers will no longer require consent from the Wheat Export Authority. However, the quality of each shipment will need to be certified in order to protect the international reputation of Australia’s wheat. Exports in bags and containers are likely to remain a small part of the market in comparison to the bulk export share of the market. Growers have raised concerns that wheat exports outside the current arrangements could allow the potential for rogue traders to undermine the good reputation of Australian wheat. That is why this bill makes it a requirement that all wheat exports in bags and boxes have to comply with a quality assurance scheme which will be developed by the WEA in consultation with industry. Under new amendments, the deregulation of exports in bags and containers will come into effect 60 days from the date of royal assent.

As the Minister for Agriculture, Fisheries and Forestry, The Nationals Peter McGauran, said in his second reading speech:

It has been an immensely difficult 18 months for Australia’s wheat growers. Last year they faced a devastating growing season as winter and spring rains failed and the drought continued to tighten its grip across the country.

Growers have also had to deal with continued pressure to dismantle their wheat single desk due to strong, but justified, criticism of the corporate behaviour of AWB Ltd stemming from the findings of the Cole commission of inquiry.

In spite of these difficulties and challenges of an almost unprecedented kind, growers continue to voice their desire to take control of their industry. This bill is a direct response to that call.

The Wheat Marketing Amendment Bill 2007 retains Australia’s single desk for export wheat.

With that sentence, the minister delivered the future of the wheat industry back into the hands of the growers themselves. That is why The Nationals exist. That is why we have a past, a present and a future. I put that very comprehensive statement down on behalf of the coalition and challenge the Labor Party to come up with their comprehensive plan, other than a one-page press release saying, ‘We are going to put this back; the single desk will be reviewed by the Productivity Commission.’

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Link to this | Hansard source

No, it didn’t say that. Why don’t you tell the truth for a change!

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

What a cop-out by your leader. That just shows how much you think of Australian wheat growers.

Sandy Macdonald (NSW, National Party) Share this | Link to this | Hansard source

I have no wish to delay the Senate, as Senator Boswell has properly covered The Nationals and government’s position on this legislation. I seek leave to incorporate my speech on the Wheat Marketing Amendment Bill 2007.

Leave granted.

The incorporated speech read as follows—

The Wheat Marketing Amendment Bill 2007 contains six proposals that will enable the transfer of Australia’s wheat exports from an AWB controlled single desk to a true grower controlled entity which will facilitate the continuation of Australia’s highly successful single desk export marketing tradition.

Firstly, it provides for the extension of the Minister for Agricultures temporary veto power over AWBI’s bulk exports until 30 June 2008. The Minister has had this power since the Cole Enquiry reported. Now this power has been extended for a further 12 months and allows the Minister to direct the industry regulator, presently the WEA, to approve or reject bulk wheat export applications.

This is a power that the Minister has exercised in the public interest and on a case by case basis—always with the knowledge of the importance of the single desk to the vast majority of Australian wheat growers who support it presently, and also into the future in a new form which is to be determined by the Australian wheat industry over the next 9 months.

Importantly, this extension will make sure that the power of veto over bulk wheat exports does not revert to AWBI on 30 June this year. The Government however understands the reality that AWBI is currently the only entity that can realistically manage the 2007-08 harvest but without the power of veto over bulk exports which it held before the Cole Enquiry reported.

Secondly, the Bill gives the Minister the power to select the corporate entity that manages the single desk in the future.

We will require that the new entity is registered under the Corporations Act 2001 and is completely separate from AWB Ltd. This new company will be required to have a developed strategy to successfully take over management of the single desk before the 2008-09 harvest. Industry players and the Government are aware that there is no time to waste.

The commencement date for the Minister’s power to select is set at 1 March 2008. Therefore, the power to replace the designated company is not required until 1 March 2008 at the earliest. This delay, which is commonsense, provides AWBI and growers with certainty over the export arrangements for the current harvest which I hope will be a record, and a chance for many wheat farmers to recover from disastrous drought.

When the power is exercised after 1 March 2008 will depend on a number of factors, including the progress growers make in the creation of a new company, the transition arrangements involved in a handover to the new entity, the need for AWB to finalise sales from the 2007-08 harvest and just simple commercial commonsense.

The wheat industry must be sure that the Minister will exercise his power at some stage and that the wheat industry must get on and prepare a suitable entity which they own and control. The weights, for all good reasons are on the wheat industry to agree on a suitable single desk entity.

Thirdly, the WEA is to be provided with further teeth in terms of its investigative capacity. These powers of investigation will enable the WEA to delve into transactions that in someway may be a repetition of transactions like the “oil for food/AWB” fiasco. More teeth for the WEA in a governance sense, are clearly warranted.

Fourthly, and in conjunction with the above, the Minister will be empowered to direct the WEA to investigate a broad range of issues relevant to its functions. This capacity addresses problems the WEA has in progressing possible breaches of the law under the current Act.

Fifthly, the Bill allows for a range of structural and governance reforms based on the Uhrig recommendations—the WEA will be changed from an agency of Government with an Independent Board to a Statutory Commission with no Government representative on the new Commission. The new body, the Export Wheat Commission will come into effect on 1 October 2007.

Finally, this Bill confirms the export of wheat bags and containers will be deregulated. This will allow immediate and greater certainty to those seeking to develop niche and new market opportunities for special products and markets.

Remind the Senate that containers and bag exports only make up a small proportion of wheat exports—probably around 3% to 5%.

While bags and boxes will be exportable without AWC approval the AWC will maintain quality assurance to ensure that the product meets contract specifications—this is to protect the integrity of the Australian wheat industry.

Growers clearly regard exports in bags and containers differently to bulk exports and this change is not regarded as an undermining of our commitment to the single desk.

Overall, this is a historic opportunity for the wheat industry. Wheat is a vital export earner and a vital part of rural production for the communities that form the great sheep/wheat zones of rural and regional Australia.

And it is also vital to secure Australia’s position in the world’s wheat agriculture commodity trade, where markets are corrupted by subsidies and lack of market access.

A new single desk entity and the other changes involved in this legislation is good government and I support it wholeheartedly.

Judith Adams (WA, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak to the Wheat Marketing Amendment Bill 2007. I state first up that, as most people know, I am a Western Australian farmer and a wheat grower. I think it is very important that you know that. I do have a lot of practical experience within this realm. Western Australia is one of the largest wheat exporting states, as is South Australia. Therefore, I have had a very keen interest in this. Before I start talking about the bill and the amendments, I would like to thank the members and senators and all those who assisted me with my private member’s bill, which was withdrawn during the week. The reason I did that is that, through consultation and a lot of hard work on behalf of a number of people, most of the issues that I raised in that bill are able to be contained within the amendments in this bill. So I thank sincerely all those people who made it possible for me to support this bill.

At the moment, unfortunately, Western Australian farmers are going through somewhat of a drought. A lot of crops have not been planted. So, once again, it is going to be a very difficult year for Western Australian wheat growers. We will not be able to provide the amount of grain that we would have hoped to provide. There is a lot of angst in the farming community at present as they are very uncertain as to whether they are once again going to warehouse their grain or send it to AWB. As most people know, AWB will be controlling the 2007-08 harvest. There is a reason for this and I accept that reason, which I will explain later. But it is very difficult for those farmers. A number of them are owed a lot of money from the 2005-06 season. This is possibly one of the reasons why AWBI should manage the 2007-08 crop; hopefully, they will be able to sell the remainder of that grain and repay the farmers.

I will explain the grain seasons. The grain seasons do not end on 30 June each year. They carry over for a number of years because the grain that is stored may not be sold within the year that it is harvested. That is another reason why AWBI should be controlling the crop this year. I look for choice for our farmers, and this bill has a veto power which will be extended to the minister again this year, going through to 30 June 2008.

A number of farmers have contacted me, as you can imagine, asking why I withdrew my private member’s bill, why I have done this and why I have not done that. It is really hard. They are all saying, ‘We are not going through what we went through last year; we are going to warehouse our wheat and that is it.’ So there is a lot of uncertainty. I just want to put on the record that I am representing those interests in Western Australia in the best possible way that I can. I am very confident about the amendments. They are probably not all that I wanted, but we are making progress and we are going forward, and I think that is very important in this very difficult debate.

There has been criticism of the government for not consulting. I would like to go back a bit and say how the government set up the independent body, the Wheat Export Marketing Consultation Committee, to go out and consult growers right around Australia. They held 26 meetings. I congratulate those people on the committee: the chair, Mr John Ralph, Mr Roger Corbett, Mr Peter Corish and Mr Mike Carroll. They did an excellent job. I attended five of those meetings. The farmers had every opportunity to get up and say what they wanted to say. As has been said, a number of them wanted the single desk. It is quite amazing how things have changed since those consultation committee meetings and how much farmers, in Western Australia especially, are aware of what has really gone on with the single desk and how it did not serve them the way that they hoped it would. The government opened up that consultation phase by sending these four gentlemen out around Australia. It was a very arduous time for them; it took us a fair bit of time to keep up with two meetings every day, with probably 100 to 120 farmers, on average, attending every meeting.

The retention of the single desk was a major issue, but unfortunately a number of them had the AWB hymn sheet, from which we would have heard probably 30 or 40 times throughout the consultation process. But that was fine, and they had their say. When they were asked questions, a lot of them were rather horrified that they had to answer as to what they had said. But it did not matter. What has happened is that we have had a huge amount of community consultation right throughout, and the government had to come back with the Ralph report, which none of us has seen; it is a government document and there were not to be any recommendations. That report gave the government the opportunity to have a compilation of all the comments and all the remarks—everything that was said—so that they could work out where to go next.

I do not need to remind you that we are dealing here with a multibillion-dollar industry, and I know a lot of my colleagues are probably sick of this wheat debate and of hearing me talk about it, but it is very important. It is important to Australia and it is very important to my own state of Western Australia. The Australian government’s principal concern is the wellbeing of Australian wheat growers, including maximising returns to growers.

I would like to now go on to the bill and the amendments. Senator O’Brien, you possibly did not get the second reading speech which was tabled in the Senate. A number of amendments have been made by the House of Representatives, and when I have finished you might be a bit happier with what has happened with this bill. The first schedule relates to the information gathering and investigative powers which will commence on royal assent of the bill. This gives the Wheat Export Authority—as it is known at the moment but which later, with another amendment to the act, will be known as the Export Wheat Commission—broader information-gathering powers. It also provides the Minister for Agriculture, Fisheries and Forestry with the power to direct the Wheat Export Authority to undertake investigations that the minister considers to be in the public interest. This, to me, is a very important clause: the power to request information and documents, the power to request a report and the power of the minister to direct the investigations. It addresses problems the Wheat Export Authority has had in progressing possible breaches of the law under the current act, where it was restricted from sharing confidential information.

For too long growers have been kept in the dark on the operation of the industry in which they participate and on which their future is decided. I found this very obvious, because each time I went to an estimates committee hearing and questioned witnesses from the Wheat Export Authority they could not answer the questions because the legislation constrained them from doing so. So, in that schedule, things change a great deal for the Export Wheat Authority as it is now, and then for the newly formed Wheat Export Commission, which will come into being on 1 October. The reason for this is that the Wheat Export Authority’s financial reports go from 1 October to 30 September; therefore, when they put in their financial statements the new authority should be taking place.

Schedule 2 relates to the veto power. It is the extension of a temporary veto that was granted for six months to the minister in 2006, and it expires on 30 June 2007. This is one of the reasons it is very important that this legislation is passed today. The important item in this is the fact that the minister has a temporary veto power over non-AWB (International) Ltd bulk exports, but the power is due to sunset on 30 June 2007 and will be extended to 2008. That will prevent the veto going back to AWB for the 2007-08 harvest. I quote from the second reading speech, which says:

The Government has stated publicly that while the veto power resides in the hands of the Minister it will continue to be exercised in the public interest and in a way that treats any application for a consent on its merits.

I think that is a very important part of this bill.

I move on to schedule 3, the replacement of nominated company B. This amends the act to give the minister the power to designate a company as the holder of the single desk export privilege under the act. The government has given growers what they asked for. They have been given a chance to set up their own company to run a single desk. The deadline for growers to establish a new entity to manage the single desk is 1 March 2008, and it will not be extended. I now quote from the Prime Minister’s reply to a question from the member for Grey, Mr Wakelin, in the House on 22 May. The Prime Minister said:

If growers are not able to establish the new entity by 1 March next year, the government will propose other marketing arrangements for wheat exports. Let me make this clear to the House. The options available would include further deregulation of the wheat export market. The government believes that the new arrangements will maximise the returns to growers …

This is what this debate is all about. It is just so important that growers are the important people at the end of this activity.

The power of the minister to designate the new entity to assume the rights and powers of single desk management, which, I repeat, commences on 1 March 2008, has a sunset date of 30 June 2008. This was open-ended. It now has a sunset clause—that is, four months—and gives the minister the opportunity to designate the new company with the powers that it should have. If it fails to do that, this is one new company. It is not another company; he cannot do that. It is a company that is being formed by the growers—only that company. That is the understanding we have with this bill, and it is very important. Further to that, if the minister does not designate this new entity in the period 1 March to 30 June 2008, the veto power will not revert to AWBI, which is very important. This effectively removes any possibility that the bulk veto power could revert to AWBI once the minister’s temporary veto powers sunset after 30 June 2008.

To clarify what I have said I turn to the second reading speech which was tabled with the bill today, which said:

Naturally, before the Minister designates a new entity to take over as the operator of the single desk it will have to demonstrate that it is financially viable and has the capacity to undertake the task. The single desk privilege will not be granted to just any entity.

The fourth schedule is about the non-bulk export of wheat, which relates to the deregulation of containers and bags and the introduction of a quality assurance scheme. As you have heard, bag and container exports make up only a small proportion of wheat exports from Australia—roughly between three and five per cent. They are attractive to growers, however, because of their higher return than the bulk export market. Growers who wish to export their wheat in bags and containers will not have to apply to the Export Wheat Authority and the wheat commission; however, they will be required to comply with the conditions of a quality assurance scheme which will be developed by the Export Wheat Commission.

The quality assurance scheme is needed to ensure exporters are delivering what they promised they would and protect the good reputation of the wheat. This is another new amendment. The deregulation of exports in bags and containers and the QA scheme will come into effect 60 days from the royal assent of this bill, and penalties will apply for noncompliance with the QA scheme. It is important to note that at the moment the National Agricultural Commodities Marketing Association, NACMA, have that scheme in place and that is what is used by the Wheat Export Authority at the present time. This is also a very robust process and is well supported by the Wheat Export Authority and AQIS. We do not have a problem with that, because it is already there. That measure comes into effect in 60 days after the royal assent.

We move on then to schedule 5, which will cover the change to the governance arrangements to the Wheat Export Authority. This new commission—it will be renamed the Export Wheat Commission—will come under the Financial Management and Accountability Act 1997, which is very important as well. The new commission will be a skills based commission of between four and six members. All members will be appointed by the minister. At least one but no more than two members of the Export Wheat Commission must have substantial experience in grain production and be known to the industry. And one but no more than two members must have experience or knowledge of export wheat marketing and be known to the industry. This is very important. It also ensures that the Export Wheat Commission has a strong understanding of the industry and that growers’ interests will be well represented by the commission. The Export Wheat Commission will consult regularly with the industry on important operational matters. Then we move to transitional provisions, which cover changing from the Wheat Export Authority to the Export Wheat Commission.

To summarise, the key elements of bill include: the extension of the Minister for Agriculture, Fisheries and Forestry’s temporary veto power over non-AWB (International) Ltd bulk exports until 30 June 2008; the inclusion of the power for the minister to change the entity that operates the single desk to operate from 1 March 2008 until 30 June 2008; improved powers for the regulator to obtain information particularly from wheat exporters other than AWB International; the inclusion of the power for the minister to direct the regulator to investigate matters relating to its functions and pass this information on to other law enforcement and regulatory bodies as necessary; a range of structural and governance reforms to the Wheat Export Authority in line with the principles advocated by the Uhrig review; and the deregulation of wheat exports in bags and containers but with the addition of a quality assurance requirement to safeguard the reputation of Australian wheat.

In conclusion, I think that the wheat-marketing arrangements have had a long history and they have evolved over many years to meet the challenges facing growers. This bill clearly explains where we go from here and the fact that the veto power will never return to AWBI. It is very important. Once again, I would like to hope that we are moving forward. I have said that we are making progress with this and I therefore support the bill.

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

Mr Acting Deputy President, I seek leave to make a correction to my speech.

Leave granted.

I would like to correct a figure that I put in my speech. I did say that it was 30 March when the farmers had to put their identity forward. It is 1 March, and I would like that corrected.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

After one of the biggest scandals in recent Australian history the government has presented this parliament with its solution to wheat exporting into the future. The difficulty we have is determining whether the government’s solution is adequate. At the moment our view is that it is not. One of our reasons for doubting the government’s solution with this bill—apart from some of specific concerns with its provisions, which I will go into later—is the way that this particular piece of legislation is being driven through this place without the opportunity for appropriate scrutiny. We believe that the government is showing unnecessary and worrying urgency to have this bill passed. What we are seeing again from this government is a quick fix to get the issue out of the way before the election. Because of the government’s failure to adequately deal with the wheat for weapons scandal, it continues to do damage and it wants to get this issue off the agenda.

They also want a quick fix to shut down debate within the coalition. It is very clear that this is a divisive issue still within their ranks. The only part of the bill that is actually urgent is the extension of the veto, which the Greens support. The rest of the bill, we believe very strongly, should and could wait for proper scrutiny. After the complete disaster of the previous arrangements you would think the government would want to ensure that they got it right this time around. Yet the government are deliberately avoiding adequate scrutiny of this bill.

The bill will have major ramifications for growers and farmers and the way we sell our wheat, and it is vitally important for the future of wheat exports in this country that we get this right. Why is the government, which says it is so concerned about the future of our wheat marketing, afraid to have a Senate committee look at this bill to ensure that it puts in place arrangements that are satisfactory and sufficient to ensure no repeat of the bribery scandal and no repeat of history? It was the lack of proper process that got Australia into this mess in the first place, and rather than learning from this hubris the government seems to be repeating its mistakes. By not allowing this bill to go to a Senate committee and by ramming it through this place, the government is treating the concerns of growers, farmers and the rest of the Australian community with contempt. The issues facing the wheat growers and the broader community in light of the AWB scandal, when you put aside the government’s role in that scandal, include: whether or not to continue with an export monopoly, the appropriate body to hold such a monopoly if we do continue with the monopoly, and the adequacy of the oversight measures.

There is still some disquiet, particularly within my home state of Western Australia, about the issue of the export monopoly. It is important to understand that in Western Australia wheat growers are one of the largest, if not the largest, exporters of wheat in Australia and the vast majority of their wheat is exported, whereas a lot of growers in the eastern states put a lot of their wheat into the domestic market and often exports are seen as a top-up.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

And it is completely deregulated in the domestic market.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

Exactly. The Greens support in principle the continuation of a single desk. The main issues now concern the operation of the export monopoly, how to ensure the best outcomes for our wheat growers and how to avoid another disaster like the AWB bribery scandal. The Greens have some specific concerns about the bill. The Greens support the extending of ministerial veto; we see that as necessary. It is of course essential that arrangements for the sale of wheat are in place for the immediate future and that AWB International is prevented from exercising its existing export monopoly powers. We supported the ministerial veto before as a measure to enable a discussion about the long-term future of our wheat marketing when quite clearly there were very serious issues that needed to be discussed and reviewed before reaching a decision on the long-term future and the way we market our wheat in Australia. Such a process was intended to give all stakeholders the time to give proper consideration to the best way to market Australian wheat into the 21st century so that we got the best deal and protected the interests of all wheat growers in Australia, not just large wheat growers but also smaller ones. We need a system that is transparent and accountable to ensure that the good name of Australia in the wheat market is restored, the good reputation of our agriculture is protected and we never again see corrupt and shoddy deals being done in our name. Unfortunately, we do not think that this bill presents the best way forward. It does not provide a comprehensive response to the issues raised in the aftermath of the AWB scandal.

The provisions in the bill that provide the minister with the power to declare a specified company a designated company raise some issues. That designated company then controls the single desk and has the power of veto over other bodies wishing to export wheat. The minister could then designate a company from 1 March 2008. The government says this is to allow time for growers to establish a grower owned and operated company, or that AWB or AWBI could in the future be demerged. We believe that the amendments in the bill are very light on detail. There is nothing to indicate what happens if there is no appropriate company to become the designated company. Commentary has suggested that it will be difficult for growers to form a company in time, and equally difficult for AWB to put in place its adequate demerging and restructuring process. The minister even acknowledged in his second reading speech that it will be a significant challenge for the industry. In these circumstances we have been told that the power will not revert to AWB automatically; they will not automatically regain the power of veto.

So what is going to happen? That is not clear from the legislation. Alternatively, the government could keep extending the ministerial veto until an appropriate company has been established. However, we have been told that this is not going to happen either; there is only a limited time for that. So what is going to happen? We believe we need to have this sorted now, rather than sometime in the future. Perhaps we will learn it in the committee stage this afternoon. To my mind it would have been a lot better to have those details in the legislation or to at least have a Senate committee process—the Rural and Regional Affairs and Transport Committee for that matter—where we could learn and discuss these details through the revision process. We believe this is an unsatisfactory situation. We believe there needs to be certainty into the future.

Furthermore, there are no criteria for a company to become a designated company. It is merely at the discretion of the minister. There is nothing in the legislation indicating what would constitute an appropriate company to be the designated company. This is surprising, given that the company is being given monopoly powers. Surely not just any company should get these sorts of powers, and the minister should be completely satisfied that the company structure is appropriate to hold monopoly powers before declaring a company a designated company. There has been comment that the complex share structure of AWB as a private company led to a lack of clarity in accountability within the board that particularly contributed to its failings. We question whether there should be some legislative requirements for the designated company to meet. For example, there could be a consideration of its share structure to ensure good governance structures are in place. We are not convinced that corporate regulation alone is necessarily sufficient and believe there should be some legislative standards a company should meet before being able to exercise such a significant power. We also note that there is no requirement for the designated company to be grower owned and operated. Companies that hold monopoly powers must have robust and independent oversight regulation. Without such oversight, abuse and corruption will potentially follow.

This leads me to the issue of the amendments proposed for the Wheat Export Authority, or WEA. The WEA is to be renamed the Export Wheat Commission and provided with some additional powers. There are also provisions for transitional arrangements for the move from the Wheat Export Authority to the Export Wheat Commission. The failure of oversight is one of the biggest lessons to be learnt from the wheat for weapons bribery scandal, and we should have had the opportunity to scrutinise these measures much more closely to ensure that this bill does in fact provide adequate safeguards and accountability. Otherwise, we run the risk of future failures.

When the Australian Wheat Board was privatised in 1999, a system was supposedly put in place to oversee that privatisation. The agency with that responsibility was the Wheat Export Authority, which had responsibilities under the Wheat Marketing Act 1989 to, amongst other things, monitor, examine and report on the performance of AWB. The Wheat Export Authority has a role in monitoring compliance with the conditions of export consents that have been issued, including price performance, the supply chain and the operating environment. It is clear that the WEA did not carry out its functions adequately. It is also clear that it had a very narrow interpretation of its functions. This narrow interpretation of its functions resulted in its failure to pick up the failings of AWB. Quite clearly, changes are needed in the long term.

In cross-examining the WEA chair at the time, Tim Besley, in Senate estimates, it seemed to me that WEA verged on being wilfully narrow in its interpretation of its role and also that it was dominated by a boys club culture where you looked someone in the eye, shook their hand and took their word when you were told that nothing dodgy went on. I remind this place of a quote from estimates. I asked:

Weren’t you concerned ... that you had heard rumours separately, as I understand it, about that Jordanian trucking company and that you had heard rumours of kickbacks? Wouldn’t that have prompted you?

I was obviously talking about the scandal. Mr Besley said:

There is nothing sinister in this. We did our job. We went down there, we looked them in the eye, they came back, looked us in the eye and said: ‘Look, we’ve done no wrong. Here is our code of conduct. Here is our agency facilitation thing.’ We looked at that. What more do you do? We trusted them, and you have to ask the question: were we unwise to do so? I do not know the answer to that. I would reserve my judgment on that until I see what Cole comes out with.

That is not what I consider to be an appropriate attitude to take on such a serious responsibility. The Cole report showed quite clearly that WEA was not carrying out its functions. Paragraph 29.60 of volume 4 of the report states:

In relation to exports to Iraq, the Wheat Export Authority did not display the necessary strength or vigour.

Mr Cole in his report goes on to recommend that:

... there be a review of the powers, functions and responsibilities of the body charged with controlling and monitoring any Australian monopoly wheat exporter. A strong and vigorous monitor is required to ensure that proper standards of commercial conduct are adhered to.

The question we have to ask is whether the bill establishes a sufficiently strong and vigorous oversight body.

The change of name from the Wheat Export Authority to the Export Wheat Commission really is neither here nor there if the powers are not appropriately given to it. What is important is its structure, its powers and the exercise of those responsibilities. In regard to the new structure of the commission, we welcome the changes as a step in the right direction. A measure of independence is provided by turning the authority into a statutory body, with commissioners to be appointed on the basis of relevant skills. The structure of WEA contained inherent conflict of interest, with some members appointed by the Grains Council of Australia and one being a departmental nominee answerable to the minister. A change of structure was necessary. We also welcome the provisions broadening the scope of the information-gathering powers of the commission. However, these seem to be the only changes made with respect to the powers of the commission.

While the amendments broadening the scope of information powers are very important and implement a recommendation by Commissioner Cole, these amendments do not go far enough in providing the necessary oversight. Commissioner Cole recommended a review of the powers, functions and responsibilities of WEA, the Wheat Export Authority, and all the government has come up with is limited additional powers to obtain information. This is why we need an inquiry into this bill: to identify its shortcomings in these areas of vital importance.

The other key element of the failure of oversight, as I mentioned earlier, was the boys club culture of the oversight body. Even with the powers it had, the WEA did not use them effectively to monitor AWB. It is no use giving extra powers if they are not actually going to be used. Could we hope that the changes made to the structure of the WEA will result in a more accountable culture? I do not know. I think that we needed further time to review that to ensure that we have an effective oversight body.

The other key element in ensuring adequate oversight is the role of the minister. In the AWB scandal, the Greens believe there was a failure of ministerial oversight. Of course, this is not something that can be legislated, but strong ministerial oversight is a key part of a ministerial Westminster system of government, and its failure can be a disaster. It is important to remember, given the decision of the government to retain the single desk and vast monopoly power of what will be a commercial private company, that we are giving a private company significant power over an important export commodity and also enormous responsibility. We have our doubts about the appropriateness of a private commercial company holding such powers. But if this is going to happen then there must be the highest standards of oversight, and this is where we believe the bill is currently insufficient.

The Australian Greens will support and have indicated before that we support the splitting of this bill to deal with the power of veto and to deal with the issues and concepts around the single desk and the broadening of the powers of the new commission, so that we can adequately review those and make sure that they are the best governance structures. At the moment, we simply do not know whether this legislation will deliver better markets and prices for growers. While we acknowledge—and I take on board what Senator Adams says—that this is a step in the right direction, we are beyond steps in the right direction. We need to get it right. It is essential that we get it right. I do not think our markets can bear another scandal of the like that we saw before.

We do not believe that this legislation is right yet. We need the time to look at it. We do not have that time. We are negotiating and talking about this legislation at the very end of the last sitting before the winter break. Not only have we not had a Senate committee review of this legislation but we are sitting here on the last day talking about this amendment bill, and the pressure is on. We still have a long list of legislation that we need to deal with before we rise for the winter break, so the pressure is on to hurry this legislation through. Is it a coincidence that this legislation was brought on at this time, in this week, just before the end of the sitting, so that we had no time to adequately debate, no time to review it, and no time to review the next lot of amendments to this legislation that the government has brought out?

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Link to this | Hansard source

He tried to con his own, let alone us.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

Yes. This is not the appropriate way to debate and to determine the future of wheat marketing in Australia. The Greens support, in principle, the concept of a single desk and grower owned control but we need to make sure that those structures are properly in place, that the oversight structures are properly in place, and that we get the transparency and accountability right. The Greens are not convinced that we have that, so we cannot support this bill in its entirety. We will support it being split, we will support the veto and we will support it being sent to committee for review, and for it to then come back in August to look at whether further amendments need to be put in place. But this is not the way to do business and it is not the way to treat wheat marketing in this country. We are very disappointed that the government is rushing this through. This is the government’s response to the Cole inquiry and the government’s response to how we market our wheat into the 21st century. You would think the government would give this place, and the community, a little more time to deal with this adequately and make sure we have got it right this time because I do not think there will be an opportunity to get it right at another time before we expend our credibility completely in the international sphere.

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

I thank senators for their contributions to this debate. Despite all the issues impacting on wheat producers over the last few years, growers have never wavered from their calls for the wheat single desk to be retained. The Wheat Marketing Amendment Bill 2007 delivers changes that provide growers with greater control of their industry and greater certainty for the future.

The extension of the temporary veto power for the minister to approve or reject bulk export applications until 30 June 2008 recognises the reality that only AWBI is in a position to manage the 2007-08 harvest. However, the government has put in place a system which will prevent the veto ever returning to AWBI or any other AWB Ltd company.

The bill also provides the minister with the power to change the operator of the single desk between 1 March 2008 and 30 June 2008. This limited time frame will allow the transfer of the single desk to another entity while, at the same time, providing the industry with certainty about the future long-term operator of the single desk.

The government is giving growers until 1 March 2008 to establish a new company to take over management of the single desk. They will have to demonstrate that the new company is completely legally separate from AWBI. They will also have to demonstrate that the new company has the necessary financial and managerial capabilities to assume control of the single desk before the minister could consider designating it as the new single desk holder. There will be no extension beyond 1 March 2008. As the Prime Minister said on 22 May:

If growers are not able to establish a new entity by 1 March 2008 the government will propose other wheat marketing arrangements.

The government has also decided to regulate the export of wheat in bags and containers. This will provide growers with the ability to search out niche and new markets, and to further develop those markets that provide high-value returns. By making it a requirement for exporters to comply with a quality assurance scheme, the government is also securing the reputation of Australia as a reliable supplier of quality wheat.

The government has also considered the other side of the wheat export equation by addressing concerns with the industry regulator. By providing the Wheat Export Authority with strength and powers to request information, it has reduced any possible impediment to the authority fulfilling its monitoring and reporting functions.

The bill also provides the minister with the power to direct the authority to investigate and report on matters relating to the operation of the Wheat Marketing Act. Any information uncovered that requires further investigation can be provided to the appropriate authorities. Further changes to the authority have also been made to implement the government’s broader policy on governance arrangements in response to the Uhrig review. However, the interests of growers will be protected in these changes, as it will be a requirement for the minister to appoint at least one commissioner of the new Export Wheat Commission based on their skills in export wheat production and at least one other based on their skills in grain production. The amendments contained in the bill are measured and have been made in the best interests of growers. Most importantly they deliver on the key message the government has repeatedly heard from growers: ‘Keep our single desk in place.’

There has been some comment as to why the urgency for this particular legislation. As honourable senators would know—and I am sure we are all thankful—rain has been falling in parts of Australia and, as we speak in this chamber, I understand people are actually undertaking the planting of wheat. We, as a government, believe it is important that growers and exporters are provided certainty in relation to these changes well in advance of the upcoming harvest. This will allow growers to make decisions for their own planting and growing considerations. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.