Richard Colbeck (Tasmania, Liberal Party, Shadow Parliamentary Secretary for Fisheries and Forestry) Share this | Link to this | Hansard source

I rise to make a contribution on behalf of the coalition on the Wheat Export Marketing Amendment Bill 2012. I indicate at the outset that the coalition is not supporting this piece of legislation, for very good reasons. I think that if you were to look at the government's history in relation to agriculture over the last couple of years you could understand that we do not trust the government when they ask us to trust them. You only have to look at the agriculture minister's record over the last couple of years in relation to his support for agriculture to see that the government has been a complete and dismal failure. I cite live exports, where the minister succumbed in cabinet—obviously his opinion not carrying any weight—to a decision that was made without even any cabinet documents being presented. If you look at the recent debacle where the minister was overridden by the environment minister in respect of fishing in the south-east small pelagic fishery in Australia, you see we had special legislation presented to this parliament only a few weeks ago to make a political decision to override the systems that exist in our agriculture, fisheries and forestry sectors. They are world renowned, particularly our fisheries management. So the currency of this minister to actually do what he might have promised is very low.

Look at what is happening in my home state of Tasmania right now, where we are looking at the locking up of over 50 per cent of our land mass, making it out of bounds. Again, where is the Minister for Agriculture, Fisheries and Forestry? The one who should be standing up for the forests sector has been completely stood aside by the environment minister yet again. What voice did we hear from the agriculture minister in the current Murray-Darling debate? Silence. So when we are looking at this government's management and handling of the agriculture portfolio, I think, as the coalition believes, we have reason to be very concerned.

Look at what this government did to exporters wanting to get their products into the market. We say we are going to be the food bowl of Asia, yet they made the cost of export more expensive by removing assistance to the export sector, by taking away the 40 per cent rebate for export fees and certification fees and charges and imposing an extra $40 million a year on industry. Had it not been for the opposition, a package would not have been put in place to lighten that load and force the government into a transitional process.

The government boasts about its $127 million package to assist exporters through the reform of the export fees and charges process. But it was because the opposition held out and because the then crossbenchers, Family First and Senator Xenophon, held out with us that we were able to force the government into putting a reasonable package on the table. The government might boast about it, but the reason it is there is that this coalition stood up for the agriculture sector. In the circumstance of the export fees and charges, the Greens were prepared to flip out for $20 million, but the package that we got was $127 million. We have a record of support for the agriculture sector and we are proud of it.

That is what sits at the genesis of this piece of legislation. We are concerned that a number of things have not yet been sorted out in relation to the export of wheat that need to be sorted out. It has been through an extensive process. It has been through Senate inquiries. In fact, a couple of Senate inquiries have looked at issues around exports, access to the belts and to the export facilities, at issues around quality, which I think are quite legitimately a major concern for our export industry in Australia, and at access to information around volumes, materials and wheat in storage. I think it is important that that sort of market information is available. We do not actually have in place the systems to achieve that, so the opposition are saying, 'Let's put those systems in place before we take away what is left of our regulatory process.' We are not opposed to removing the regulatory process, but we are saying, 'Let's have the mechanisms in place to make sure that the information that should be available is readily available to industry so that there is capacity for fair competition in the marketplace.'

This argument is not about the single desk. I need to make clear that that discussion is done and dusted and over. But the opposition remain concerned that there be fair competition in the marketplace. We are aware that this piece of legislation will now pass because the government has the support of the Greens and that the Greens have some amendments they will bring to this debate during the committee stage—we are also aware of some commitments that the government has made to the Greens in relation to those. We will obviously have that conversation during the committee stage.

It is important to note that the government has an abysmal record in relation to its dealings in agriculture, which is clearly visible to the agriculture sector and to the community. It is important that the government are properly held to account, so we want to make sure that they can be held to any commitments they make. We also want to make sure that all of the mechanisms that need to be put in place are there to ensure there is fair competition in the marketplace and that good data about supplies and stocks held is available, and not just to those who hold those stocks. That is an important piece of this overall puzzle.

Those are the issues that we are concerned about and that need to be sorted out as part of the development of this piece of legislation. So we will be looking very closely at the amendments that will be brought through the chamber by the Greens and by Senator Xenophon. We will be looking very closely at the commitments that have been made in relation to those. We want to make sure that commitments that are made are kept. I think it is important that we do that as part of this overall process so that we maintain our well-earned and hard-fought for reputation as a quality, reliable wheat supplier into global export markets. That is absolutely fundamental for us.

In recent visits to some of those markets, I have seen the value that is placed on the quality and safety of product that comes out of Australia. It is part of our reputation. It is a hard-earned reputation and, unless it is properly managed and protected, it will not be that an individual supplier has caused a problem but that there is a problem with Australian wheat. That is an issue that we in the coalition want to ensure is properly managed. So there needs to be a proper process for establishing and certifying wheat standards. There needs to be a mechanism to ensure that market information is freely available. Those are the things that the coalition want to see put in place as part of this process, and we will work with the chamber through both the debate and the committee process of this piece of legislation to ensure that those things are achieved. We trust that those commitments can be made and can be achieved through the chamber, and we are in a position to be able to support those.

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

Firstly, I want to indicate that, with the amendments that we have circulated—and I will be seeking leave to table some additional correspondence—we will be supporting the Wheat Export Marketing Amendment Bill 2012. I have given this bill very serious thought and consideration. I want to acknowledge the process that has brought us to this point. I participated in the Senate inquiry and have consulted extensively with the industry, and at this point I would like to acknowledge all the people and the organisations that have very constructively engaged with me, with the Senate committee and with the process in general in this debate.

This bill has been on the Notice Paper for a significant period of time and yet up until very recently we have continued to seek assurances and amendments to ensure that we do find a way forward that meets the interests and needs of growers around Australia. As we have said previously in this place during the iterative debates on deregulation of the wheat market: the Greens are cautiously supportive. I can remember standing in this chamber last time saying, 'We are cautiously supportive', and that we were supporting the bill to move from the single desk to the process that we are using at the moment. We have always stated that we would watch this process carefully and continue to be engaged, which is what we have done.

This bill has clearly been a source of significant tension for all the people involved in this debate. Unfortunately, I suspect it has been sport for some, which I do not think shines a good light on such a serious issue for the sector. As a Western Australian, I am deeply aware of how this bill has brought out quite a serious tension between the east and the west on many substantive points. It is a tension that has been there all along, but this has highlighted it. Western Australians export nearly their entire crop. Western Australians have a different set-up and so it plays out very differently for them compared to growers in the east. However, that is not to diminish the very valid concerns of the growers in the east. We have seen growers in the west very strongly supporting this bill—I can show you any number of emails and letters I have had on it—and growers in the east expressing some very serious concerns, which we have taken very seriously.

As I have articulated, we will be supporting this bill with amendments. I really want to take some time to go through the issues that we have considered and why we have come to the conclusions that we have. The reason I made that point about the difference between growers in the west and the east is there are very significant differences of opinion, which I am sure the coalition will acknowledge, in the sector. We have tried to reach some sort of way forward for all those involved. If we just did not support this bill it would mean disadvantaging a significant number of growers in the west, and if we just support it without amendments it would mean disadvantaging some growers in east—and we would also miss the very important opportunity to start dealing with some of the ongoing issues that are still to be resolved.

As I said at the outset, we have consulted very long and very hard on these amendments and on this bill. With this bill, and in moving the Greens amendments that I understand have the support of government—I know that the coalition has been seriously considering them—hopefully we will reach a point where we can move on and finally resolve some of these ongoing issues. It is precisely because the Greens are concerned that the industry is not ready to absolutely, fully deregulate—and there are some ongoing issues which I will articulate in a minute—that we have seriously considered and questioned the effectiveness of a voluntary industry code. We do not believe we are ready for that yet. That is why, and I will discuss it a bit later, we are moving amendments to require that the access code be mandatory. That is why we oppose the bill in its original form and also why we contributed to the dissenting comments through the committee inquiry process.

There are still a number of long-term, ongoing issues which have been identified, particularly through the committee inquiry process, that this bill does not address. If it had gone through without addressing those, then those issues potentially would never be addressed. It would also bring up issues around the effectiveness and efficiency of the market and a failure in the market process, but we would not get an opportunity to address these issues again.

There has been, as I said, a very wide-ranging community debate on these issues and they have long been recognised. It is because of the lack of progress in addressing these issues that the Greens also sought to look at a mechanism to address these particular issues. These issues were articulated in the dissenting report, which goes to issues around access to stocks information—still an unresolved issue—and the quality of our wheat. People raised suggestions around what Canada and America do, where they have a board that looks at issues around the quality of the wheat exported—long, ongoing issues. There are also the issues that have subsequently been raised, or touched on, around failures and monopolies in the market and, as I said, the access code. We sought to look at a way to deal with those issues and it was suggested in the committee report—particularly the dissenting report—that WEA would be a body that is already in place that could take on these functions.

When we wrote the dissenting report, we thought at first that the WEA would be a body that could do that. However, we have subsequently conducted more consultation and we do not believe that mechanism is necessarily the right mechanism; we do not believe it is flexible enough. There is general agreement that the current undertakings and work of WEA has done that job and people do not seem to have any concerns around moving on from that particular role; but we have continued to identify these ongoing issues.

What was foremost in our minds was dealing with issues of not entrenching monopolies and not having faith in a voluntary code. I will come back to that in a second. We were also very strongly concerned about the ongoing issues around wheat quality and access to stocks information. The inquiry into the bill demonstrated that there are still significant concerns, particularly from growers, that relate to timely access to wheat data and stocks information, port access arrangements and cargo integrity which have not satisfactorily been addressed by the legislation as it stands without amendments. Submitters such as Grain Producers Australia and ASX reiterated concerns they first raised during the 2008 inquiry, in particular pointing to the fact that individual growers are unable to access market information, thereby allowing integrated grain handling companies a significant advantage over other participants in the supply chain.

Furthermore, the committee inquiry demonstrated that the voluntary code had the potential to be a toothless tiger as there was nothing to force bulk handlers, other than some complicated things they were trying to work out through existing processes, which the Greens had absolutely no confidence would deliver appropriate outcomes and therefore raised our serious concerns. It is evident from the inquiry and from conversations with stakeholders across Australia that maintaining the status quo would only defer the necessary changes, with significant cost to growers in the form of a 22c per tonne wheat export charge, which would continue if we did not deal with some form of regulatory approach. We came to the conclusion that WEMA was not the best organisation to deal with issues such as wheat quality assurances and stocks information and there could potentially be other bodies that would be more appropriate to look at that—for example, Wheat Quality Australia—and at other mechanisms to deal with wheat stocks information.

Again, there is not common agreement among the growers around access to stocks information. There is regarding some elements of stocks information. But, for example, in regard to up-country stocks information, I have had numerous organisations telling me they do not want to do it, they do want to do it and they want access to certain information. In other words, while there is agreement that stocks information needs to be addressed, there is not an agreement yet about how much. That is why we have been trying to come up with a mechanism to resolve these issues.

Since the report was delivered in October there have been some significant opportunities to take a constructive approach. Rather than simply just saying, 'No,' we believe these issues need to be addressed. As I have said, in my home state of Western Australia there is very, very strong support for these issues being addressed. However, there are growers, in the eastern states in particular—and still some in my home state of Western Australia—who have these ongoing concerns. So we know there are issues that need to be addressed. We have chosen to try to find a path for a way forward that would put in place mechanisms to address access issues and then those ongoing issues I have articulated.

I would like to very quickly take the opportunity to explain our thinking behind the amendments and also table some correspondence between the Minister for Agriculture, Fisheries and Forestry and me that will explain in a bit more detail some of the nuancing behind some of the amendments. Those have been circulated to the whips, as I understand it. I seek leave to table those three letters now.

Leave granted.

One is the original letter from the Minister for Agriculture, Fisheries and Forestry, Senator Ludwig, when we first announced that we would be making some amendments, which articulates the sorts of things the industry task force would establish—which one of our amendments addresses. There is a letter from me to the minister articulating some concerns and seeking reassurances around the amendments, and a letter back from the minister explaining and giving commitments around some of this detail. They have been circulated to the whips. I will now table those letters.

Our amendments firstly go to making the access code mandatory. I know that Senator Xenophon has circulated amendments about requiring a review of the process for the access code. Under ACCC rules— the mandatory code—there is a review after five years. We think this process, because it is new, is too long. The minister has agreed to put in place a review after two years. While this process of the bill being debated has been going on over the last couple of months, a committee has been set up to discuss the voluntary code. That committee, I understand, had made some significant progress and they had reached agreement about level of access to stocks information at port by grade. We have had assurances from the minister in that correspondence that in fact that process will still be included in the mandatory code, because there was some concern expressed by growers that discussions for the access code were going backwards. But the minister has now made a commitment that that information will be included via either that mechanism or another mechanism that is workable.

The other amendment that we are circulating and will be moving shortly is to establish a national wheat industry advisory task force. This task force will be tasked to look at these ongoing issues that are yet to be resolved, such as the issues around continuing stocks information access, quality issues, and also around failures in the market. We have also in that correspondence sought commitments from the government about independence. I will seek in this debate further commitments from the government around the independence of this committee. We have sought assurances about the selection process and the terms of reference. We have specifically not included that in the bill because we wanted a mechanism that was flexible enough that, if other issues came up, they could be referred to the task force. In the correspondence you also see that the minister has undertaken to have a regular reporting mechanism so that the considerations of this task force are transparent and accountable.

We have a strong belief that we need to get some experts around the table that can actually sit down, look at these issues and come up with a way forward. We have an industry divided over many of these issues. If we can get a task force of experts looking at these issues, providing advice and finding ways forward, I think we will be significantly helping the wheat industry in this country. That is the approach we have been taking the whole time: how can we ensure the future of our industry?

We understand that there are concerns about the further deregulation process. We do not think that we were fully ready for it. We understand there are concerns about potential failures in the market and the efficiency and effectiveness of the market mechanism, and we do believe that that needs to be addressed. We have very strongly heard the concerns from the growers around the need for a mandatory code for access. We have strongly heard about the need for a commitment, and we have a commitment from the government that that access code will in fact include stock by port zone by grade weekly during harvest and monthly thereafter.

These are very important issues to the sector. We know that because we have talked to them. We do not believe it is an option to do nothing here. We do not believe it is an option to sit on our hands for two years under the current process. We have genuinely sat down and talked to people to see how we can balance the needs of all in the sector and the industry, and we desperately hope that the task force mechanism will find us a way forward, where all the industry can engage and try to move forward, so that we have these ongoing issues resolved—because they do need to be resolved, we absolutely agree. We absolutely agree that there is the potential for monopolies to have undue influence, and we are concerned about denying access or making port access difficult. We are concerned that they have an unfair advantage in access to information. We are concerned about the reputation of our industry and the issues around wheat quality. We are not convinced that the old WEMA was the body to do that with. We are convinced that we need to look at it, find a way forward and find a mechanism once that task force has looked at and researched the issues to recommend mechanisms for the way forward. That information will be publicly available, it will be reported, it will be transparent and it will be able to engage with the broader community.

I would urge the opposition to very seriously consider our amendments. I understand to a certain extent where they are coming from, because there is strong concern in the eastern states, but the eastern states are not the growers in Western Australia. We are trying to find a way forward that meets the needs of the growers in my home state as well as meeting the ongoing concerns for the industry in the east, which has different circumstances. I very clearly acknowledge that it has different circumstances in the eastern states from what we have in Western Australia, which means that those needs need to be accommodated. We think we have found a way forward. It certainly is better than doing nothing, because these issues cannot sit on the table any longer; they need to be addressed. I commend our amendments to the chamber, and I am happy to discuss them further during the committee stage.

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak on the Wheat Export Marketing Amendment Bill 2012, and I commend Senator Siewert's involvement in this process. I must say that I concur with her comments about the collegial work that has been done in the interests of trying to get a reasonable result between us, right up to the point where we came into the chamber today.

I have taken particular interest in the progress of this bill and the profound impacts that it could have on the grain industry across Australia. My interest is twofold. As a South Australian I know just how important this industry is. South Australia is a major exporter of grain—the second largest exporting state after Western Australia—and accounts for approximately 30 per cent of Australia's grain exports. We export, on average, 4.3 million tonnes, with a value this year of around $1.3 billion. Secondly, as a member of the Senate Rural and Regional Affairs and Transport Committee, I have fully participated in two recent inquiries—the first into operational issues in export grain networks and the second into the bill before us today.

Deregulation has been good for the wheat industry. On that I think we all agree. Wheat Exports Australia has done a good job in monitoring the transition to deregulation. It issued licences that allowed growers to export directly to markets abroad. In 2008-09, 14.5 million tonnes of wheat was exported, and three years later it rose to 18.7 million tonnes. Wheat Exports Australia has helped to facilitate this.

While I will outline a need for some retained oversight, I am not advocating the preservation of Wheat Exports Australia in its current form, nor am I advocating that there needs to be regulation forever. What I am advocating is that, for the next period of deregulation, we need some light-touch regulation and oversight in place so that growers are not disadvantaged. In doing this, we can have the most open, fair and competitive grains market possible.

I say this in the context of a maturing wheat market but one which I believe requires a bit more settling before we throw the gates wide open to the forces of the global commodity market without our domestic operating environment being functional and fair. The majority of wheat growers still want to pay for ongoing oversight. Let me make it clear to anyone who is listening outside this chamber that wheat growers have always paid 100 per cent for their oversight since deregulation began, after the abolition of the single desk, in 2008. Wheat Exports Australia has always been funded 100 per cent by growers.

I now turn the chamber's attention to what it is the wheat industry needs during the next phase of deregulation. The industry still needs national oversight on information, transport and the quality of wheat exported from Australia. This bill does not tell us who is going to ensure grain quality standards for wheat. Wheat needs to have its quality certified as accurately as practicable to facilitate trade and certainty for buyers. Buyers need the best possible information about the quality, type and standard of wheat that they are purchasing. They also need certainty that the wheat they order is the wheat they receive. The industry needs oversight of shipping slot allocations and auctions to ensure equitable and fair access for all. The industry needs timely and accurate grain stocks information to facilitate an open, well-informed, competitive market.

During the first inquiry we heard evidence from the Australian Securities Exchange:

ASX believes the current grain stock reporting framework is inadequate and, if not revised, will result in a sub-optimal outcome for Australia’s grain industry. An opportunity to truly maximise the benefits available from the deregulation process will be lost.

That is from the ASX's representative at that inquiry. This bill in its original form offered none of these things.

The bill only contemplates dealing with one aspect of the industry—marketing—without consideration of grain classification, access to storage facilities or access to efficient transport infrastructure. All of these elements need to be considered as part of the deregulation. It just throws growers to the wolves in its current form. The subsequent amendments proposed by the Greens that Senator Siewert refers to now go some way to addressing these issues by including a mandatory code of conduct.

The United States is often held up as the bastion of free trade and open markets, but even they have the Federal Grain Inspection Service, which is responsible for grain classification and inspection of grain-handling facilities. In Canada, the Canadian Grain Commission regulates grain handling through grain quality and quantity assurance programs and carries out scientific research on grain quality and grain safety to support the grain-grading system.

I would also like to address the attacks that the coalition have sustained over not supporting this bill and the apparent hypocrisy of being the party of free enterprise but not supporting further deregulation at this time. We do support the full deregulation of the wheat market. We are the party of individual freedom and free enterprise and we still believe that an efficient private sector, rather than government, unlocks opportunity and generates incentive. Our opposition to this bill is not inconsistent with our core values. You cannot have a competitive market if it is an evolving monopoly.

The wheat industry is dominated by a few large players who, without appropriate oversight, may act in a way that disadvantages growers so that in the long term we may not have a viable wheat industry. Now that is market failure. We see it in other sectors. Some would argue we see it in the retail sector now. There is no value in market failure. We can have further deregulation when the industry is ready. We have come a long way since the abolition of the single desk in 2008 but to completely abandon oversight now, at some arbitrary date that was set five years ago, would be like removing the training wheels from your child's bike for the first time without equipping them with a helmet.

When deregulation began in 2008 the government promised to do a few things. They promised to ensure effective competition, establish a market regulator with some teeth and provide fair and reasonable port access for other exporters to prevent the development of three regional monopolies. What we've seen during this first period of deregulation is a partial transition to that goal. The growers of Australia have said to me that Wheat Exports Australia has served its purpose and we need to move on, but we need some form of oversight in the short term to ensure the momentum is not lost or indeed that we go down a low road. And, while some will run around claiming we need to deregulate for deregulation's sake, how many markets are truly free markets? Most markets like banking and communications contain some kind of oversight, while bodies like ASIC and the ACCC work to ensure that markets are as open and fair as they can be. Why should one of this country's largest industries and biggest agricultural exports be any different?

We have heard a lot about Western Australian representative organisations that support this bill and further deregulation now. Let's just make sure we all understand the unique position Western Australian grain farmers are in. CBH receives and stores more than 90 per cent of grain produced in Western Australia. It is a co-operative which includes roughly 4,500 growers, so the growers own CBH. It has facilities able to store 20 million tonnes of grain and, as well, port capacity of more than three million tonnes. This is quite different from the markets in South Australia and the eastern states, where the storage, transport and port facilities are owned by a small handful of large multinationals whose sole interest, quite rightly, is to provide a return to their shareholders. A quick glance at the history of the grains industry in those states shows that they too started off with grower co-operatives which were eventually corporatised and sold off. You would have to be off with the fairies not to think that, at some point, the growers in Western Australia would not do or contemplate the same--particularly when some estimates put CBH's worth at $7.93 billion. In fact, in early November, when Archer Daniels Midland Co. initially looked at purchasing GrainCorp, Corporate Agriculture Australia managing director Gordon Verrall came out and said that the interest might spark Western Australian growers to sell up. Mr Verrall said:

Once farmers in Western Australia understand just how much their co-operative is worth, it will definitely put pressure on CBH to reassess the corporatisation process. That'll become more apparent in the next few years, driven by those exiting the industry and those undergoing succession issues, who would appreciate a cash lump sum.

That is the growers taking the cash off the table.

CBH director Vernon Dempster reportedly told an industry conference that the foreign takeover of GrainCorp would have serious implications for grain growers on the eastern seaboard. He went on to add that ADM's loyalties would never be aligned to Australia. He is reported to have said:

Their loyalties are going to be to their shareholders. The worry would be whether ADM are going to be more hungry and more exploitative than the current owners, and there would be a suspicion that perhaps they would be.

So clearly some sandgropers are cognisant of the implications for growers in a completely deregulated market with no oversight. It is only a matter of time before growers in Western Australia are grappling with the same issues as growers in South Australia and the eastern states—unless, of course, we do something about it now. During a hearing into this bill I asked GrainCorp about voluntary codes of conduct and whether they knew of any successful voluntary codes of conduct in the agriculture sector. I got the following response: 'No, not that we're aware of.' This view was later confirmed by the ACCC at the same hearing. The voluntary code of conduct was only looking at those things which are relevant to the operation of port terminal facilities. Under the terms of reference of that voluntary code of conduct, development committee up-country stock information is not directly relevant to the operation of the port facility and therefore would not come out. This code would be voluntary. After 2014, a party may simply opt out and not be bound by either access undertakings or the code—that is, if they actually get anybody to sign up to it. My experience with these voluntary codes of conduct is that it takes a long time, if ever, for parties to actually put their signature on the bottom line.

Debate interrupted.