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

Unlike the previous speaker in this debate, I propose to address a matter of public importance rather than play politics and talk about the blame game. The issue I want to discuss is a serious responsibility of a minister of this government. I think it demonstrates that, far from performing the responsibilities of government, this government is casting around to try to blame others—a la the speech we have just heard—for the problems facing the Australian community rather than accepting the responsibility that falls on it as the government. Last week AWB Ltd confirmed that the demerger of AWB International from AWB Ltd was dead, and earlier this week AWB Ltd announced that it will be abolishing AWB International at the end of 2008. A media report said:

AWB says growers will bear capped costs of $16 million, which will be taken out of any profits from selling this year’s harvest.

And while no wheat has been delivered to the national pool yet, there is speculation that around eight million tonnes is expected to be delivered.

This story appears to have gone largely unnoticed. But I have received legal advice which raises serious concerns about AWB’s conduct in relation to this final pool—the 2007-08 pool—in particular alleging that it is contravening the Wheat Marketing Act by providing for costs for previous pools and the winding-up of AWB International to be incorporated into this final pool. The Minister for Agriculture, Fisheries and Forestry, Mr McGauran, recently effected amendments to the Wheat Marketing Act explicitly providing himself with the power to direct the Export Wheat Commission to investigate a matter where the minister believes it is in the public interest to do so. Specifically, the minister can direct the Export Wheat Commission to investigate a matter relating to any of the following, as set out in section 5DC(2):

(a) the operation of a pool mentioned in section 84;

…            …            …

(d) the provision of services to nominated company B, where those services relate to:

          (i) the operation of a pool mentioned in section 84;

               …            …            …

(e) the provision of services to a person other than nominated company B, where those services relate to the export of wheat;

               …            …            …

(g) an alleged or suspected contravention of this Act.

Any or all of those provisions appear to be relevant in relation to the recently announced AWB Ltd 2007-08 National Pool EPR and Services Agreement. As I said, we have legal advice which suggests potentially serious problems will arise from the heads of agreement for the 2007-08 pool services agreement. There is also a case, based upon the need for transparency and accountability, for the minister to investigate. Certainly growers have a right to know the extent of AWBI’s finalisation costs, if they are to be charged against the 2007-08 pool, before they commit their grain to that pool. Currently, the heads of agreement for the 2007-08 pool services agreement provides scope to incorporate massive costs associated with the winding up of AWB International into the cost structure for the pool and for the activities of AWBI in managing previous pools to be included in the cost structure for that pool.

Let me draw the Senate’s attention to aspects of the heads of agreement document that I am referring to. It requires AWB Services to estimate costs that will be incurred in finalising the 2007-08 pool but it is not required to do so prior to the growers agreeing to supply the pool. It provides for AWB Services to incorporate ‘any residual exposure of AWB Services to third parties in respect of contracts or arrangements entered into for the purpose of the 2007-08 pool or providing services under any previous services agreement’. I will say that again: or providing services under any previous services agreement with AWB International.

The legal advice I have suggests that this means that losses from previous pools can be carried into the 2007-08 pool, and that could include massive hedging losses that occurred late in 2006. This matter in particular needs urgent clarification because, if that is allowed to occur, there is the potential for a significant reduction in grower returns for the pool about to come into effect. It also allows AWB Services to recover the costs incurred in connection with AWBI’s finalisation as a company, including in connection with its winding up. The legal advice suggests that the heads of agreement and the grower contracts are inconsistent with section 84 of the act, which is explicit in requiring costs to be borne by each pool. I refer to the Wheat Marketing Act, section 84(2), which says:

The purchase price must be calculated by reference to the net return for the pool in which the wheat is included.

It appears that the heads of agreement, but not the act, allows costs of winding up AWBI and for the costs of previous pools to be accepted by growers in the matters that they need to take into account.

Others in the industry have detailed their concerns as well. A submission has been put to me which indicates that the new agreement sets out a timetable for the demise of AWB International and the departure of AWB from the management of the wheat monopoly. Section 3.1 of the agreement schedules 30 April 2009 as the final closing date for the 2007-08 national pool. Parties critical of AWB can only hope that the announcement on the structure of the company is accurate—more accurate, indeed, than those which surrounded the ill-fated and aborted AWB International demerger.

Section 3.3 indicates that the agreement will be in place until 30 September 2008 and that there is a specific cost to the pool of either $35.5 million or $4 a tonne, whichever is the higher, plus $1 a tonne for contracts made prior to 31 October 2007 for wheat supplied to AWB—and we could see six to eight million tonnes in that arrangement. However, it has been pointed out to me that the sting for growers will be delivered after 30 September 2008. An additional $3.5 million will be paid for AWBI’s management costs and a range of unquantified liabilities due to AWB Services for ‘costs incurred to third parties’, ‘residual exposure for contracts, including services provided under any previous service agreement’ and ‘a pool finalisation fee that includes costs related to AWB Services ceasing to be the services provider and the cost of winding up AWBI’. All of those matters will be additional to the $35.5 million quoted pool management fee, which is the minimum fee that will be charged for that period up to 30 September 2008. So from October 2007 to April 2008 pool participants will be slugged with a monthly invoice, for which I understand AWB International will tender for additional and unquantified costs.

This service agreement is supposed to have done away with the previous break fee arrangement. However, the effect of section 3.5 of this document is the same as having a break fee, only this time there is no specified amount for the break fee. It is an open-ended fee. So growers are entitled to ask—and indeed they are—the cost that they will face as a result of closing down AWB’s management of the export monopoly and they are wondering whether and fearful that the fee that they will face will be additional or higher than the break fee that the agreement purports to do away with.

It is good that AWB has released some detail, but there is still a lot about the national pool services agreement that is not transparent and I am certain that growers and other pool participants will want to know this information before they can confidently commit any grain that they have in this very varied season. Some growers will have grain to sell, and perhaps in the western side of the country there will be an amount of some significance going to export, although I doubt that there will be too much in eastern Australia going to export. But I think the growers are entitled to have more information than they now have before they are required to make a decision about committing their grain, and that is why I have continued to call upon the minister, Mr McGauran, to exercise his powers under the act and to direct the Export Wheat Commission to inquire into this matter, to report expeditiously and to make that information available to growers. Until that happens, there must be massive uncertainty about the fees that growers will face.

While I am on my feet, I want to ask a couple of other questions about this government’s administration of export wheat marketing, particularly in relation to the Cole inquiry. What has happened to the task force? The Attorney-General announced in December last year the establishment of a task force to implement Commissioner Cole’s recommendations. He said at the time that that indicated the government’s ‘continued commitment to get to the bottom of the matters’ raised by the Cole inquiry in relation to misbehaviour by individuals and companies in our trade with Iraq. What has happened? When will we hear about that? This government is about to call an election sometime over the next couple of weeks. It has now been more than nine months, approaching 10 months, since that announcement was made. When are we going to hear about it? Or were those just empty words by the Attorney-General?

The other matter which I think growers are entitled to be made aware of is the contents of the very secretive Ralph report. Mr Ralph was commissioned to consult with growers about export wheat marketing arrangements and report to government. The report was provided to the government many months ago. The report is supposed to be the basis of the government’s amendments to the Wheat Marketing Act but the government has refused to reveal it to growers or the community. What is in the report that requires the government to conceal it from the general public? If indeed it supports the actions that the government has taken so far in relation to wheat marketing, then why is it concerned about revealing it? What has this government got to hide in relation to this?

We know the government has created massive uncertainty for growers by the measures that it has put in place, and we hear now that the Wheat Export Marketing Alliance is saying that even the measures that the government has put in place will not be sufficient to allow it to do what it wants to do. It is proposing to the government that there be further amendments to the legislation. I must say, the growers were given an Everest-like challenge in bringing into effect a new body by 1 March. But at least we should all see what Mr Ralph reported to the government before we make a final determination, before growers are required to make a decision about this government’s performance in relation to wheat marketing. At the moment, you would have to say it is a failure. Growers are facing massive uncertainty. There are massive problems being faced and the government has provided no meaningful assistance on this issue to Australians. (Time expired)