Dean Smith (WA, Liberal Party) Share this | Link to this | Hansard source

As a Liberal senator for Western Australia, one of my primary roles has been to support a regulatory structure that best guarantees strong competitive markets for WA's wheat growers, which is why I have taken a keen interest in the committee's report and specifically in the bulk wheat port access code of conduct.

The crops of Western Australian wheat growers are grown in some of the harshest conditions in the world, constantly facing the threats of drought, hail, frost and bushfires. Yet, despite these hardships, Western Australian wheat growers continue to produce the largest wheat crops in Australia, with over 90 per cent exported throughout the world. They are also unique because, prior to 2008, Western Australian wheat growers were compelled by legislation to sell their wheat through the single desk. For over 70 years the monopoly control of the Australian Wheat Board limited the ability of Western Australian wheat growers to obtain fair, competitive prices for their wheat.

In 2012, the wheat farmers of Western Australia stood united in support of the repeal of the Wheat Export Marketing Act to allow the full deregulation of their market. However, as is mentioned in the report, there remain concerns from many parties over two issues–the endorsement of a mandatory port access code that does not contain a sunset provision and the introduction of an exemption for cooperatives. Firstly, the concern amongst WA wheat growers is that the decision to abandon the sunset clause increases the risks of a future reversal of the repeal legislation. Any future reversal would jeopardise the tremendous gains achieved in Western Australia by its wheat growers, who fought long and hard for the deregulation of their industry.

Secondly, the cooperative exemption could have a dampening effect on competitor investment in my home state of Western Australia and on the Western Australian grains industry, especially for terminal and up-country infrastructure. Critical to this point is the impact of the exemption on the efficiency of any future investment in the Western Australian grains network. This is an issue I raised directly with the Chair of the Australian Consumer and Competition Commission at the Senate Rural and Regional Affairs and Transport References Committee inquiry into Australian grain networks on 15 February 2015.

In Western Australia, 90 to 95 per cent of grain is handled by Co-operative Bulk Handling, or CBH, which also happens to be the only grain cooperative in Australia. CBH controls 100 per cent of the port throughput and 48 percent of WA bulk exports. CBH has a monopoly on both upstream and port-side storage and handling, including WA's four main export terminals.

During the inquiry, CBH CEO Dr Andy Crane stated that CBH creates value for growers by lowering freight costs throughout the supply chain. Dr Crane stated that the CBH system allows growers the option to grow and run CBH as a centralised storage and handling network and obtain prices from a large selection of marketers rather than utilising supply chains owned by individual owners who will offer only a single price. Dr Crane also stated that deregulation of bulk handling cooperatives in South Australia, and the fragmentation of the supply chains of the eastern states, have driven up freight costs in other states compared to freight costs in Western Australia.

While the committee may be persuaded of the unique nature of cooperatives, I have reservations over the decision to grant an exemption to the code of conduct on the basis of cooperative structures and in particular the performance of cooperatives and their impact on innovation, growth and competition within agricultural markets generally and specifically in the case of the grains industry. That said, my concerns and reservations over cooperatives should not be taken as a criticism of CBH or its grower members, who have done an outstanding job in fighting for the deregulation of the wheat industry.