Dean Smith

In Parliament

BILLS Wheat Export Marketing Amendment Bill 2012

November 28, 2012

I rise to support the Wheat Export Marketing Amendment Bill 2012, which will bring to fruition in Australia a truly deregulated wheat export marketing regime—a bill that brings to completion a process that was commenced by the Howard government. I support the path to full deregulation of Australia's wheat export marketing arrangements in the time frame first prescribed in the Productivity Commission's inquiry into wheat export marketing arrangements and now contained—with some minor adjustments—in this bill. I believe strongly that the evidence points to the fact that Australia's wheat export marketing arrangements are sufficiently matured and competitive to allow for the abolition of both Wheat Exports Australia and the wheat export charge—a charge, it must be remembered, that is levied on farmers and their families. This charge hits WA farmers and their families the hardest because, of all the wheat produced in Western Australia, around 90 per cent is exported. It is also worth noting that wheat growers in WA are the nation's largest, with over 75 per cent of them amongst the largest 50 per cent of wheat growers nationally. I have travelled around parts of regional Western Australia, talking with farmers at public meetings and one-on-one in places like Katanning, Wagin, Bruce Rock, Quairading and Gnowangerup—amongst others. In WA, these remain challenging times for wheat growers. It is important to remember that this debate is not occurring in a vacuum; we are talking about people's livelihoods and the viability of regional communities.

Some in this debate have said that the wheat export charge is a small thing and continuing to levy it will make little difference. However, I contend that removing the charge sends a powerful signal that we in this place understand that farming is often a difficult task. By removing the charge, we explicitly acknowledge this fact. We are showing that we understand that the last thing growers need is another government impost on their activities, especially for those growers who may not be experiencing the harvest they had hoped for.

It is also my considered judgement, a judgement formed after years in both the insurance and telecommunications industries dealing with competition related issues, that matters such as port access arrangements, transparency regarding stock information and quality standards for wheat exports can be appropriately overseen by existing competition law, by a code of conduct and by the industry themselves. I believe that a core component of maintaining Australia's international competitiveness is to embrace free and open markets, to abandon regulation and red-tape when the opportunity arises and at every step to reduce the tax burden on Australian businesses and families—especially on its agricultural businesses and farming families.

After careful consideration, robust debate and many discussions with wheat growers and their representatives, I can find no defensible justification for not actively supporting the Wheat Export Marketing Amendment Bill 2012. At its core, this bill is an economic one as much as it is an agricultural one. As a coalition senator, I believe that I have a responsibility to stand up for those policies that I consider will lead to smaller government, removing unnecessary bureaucracy and reducing taxes and charges. I do not believe that the path that was agreed to many years ago should be delayed or deviated from.

Long before I came to this place, I did not believe the proposition that Australia's single-desk wheat export regime was a successful mechanism to extract a premium wheat price in global markets for the benefit of Australia's wheat exporters. The very idea runs against every economic and political principle I hold dear. Every monopoly should be treated with suspicion, and I do not believe that there should be any sacred cows in Australia's economic landscape, no matter how cherished the institution or longstanding its contribution to our economic prosperity. The Wheat Export Marketing Amendment Bill 2012 is a simple one: it will transition Australia's wheat export marketing arrangements to a truly, fully deregulated market—a process that was first begun in 2008.

The story is well known but worth briefly recapping: in 2008, Australia's single-desk wheat export marketing arrangements were abolished and a system for regulating the export of bulk wheat through the accreditation of bulk wheat exporters under the Wheat Export Accreditation Scheme was established and administered by the body Wheat Exports Australia.

The new regime was to be funded by the wheat export charge. These were always intended to be transitional arrangements—transitional arrangements which were found by the Productivity Commission in 2010 to be unnecessary for a maturing wheat export market. The editorial of the Australian Financial Reviewof 3 October 2012 was correct in identifying that an accreditation system had some uses in transition to a free market but there was no reason to put off full deregulation.

I agree this bill will bring the bulk wheat export market into line with other agricultural commodity markets. It will promote further competition in the wheat industry and will be a driver for increased productivity and profitability. It will mean more buyers of wheat will be competing for wheat, ensuring growers can attract and get prices that reflect the true market value of their product. We can have every confidence that it will drive further market innovation and improve the services that marketers provide to secure wheat supplies. Importantly, it will remove costs for industry.

I support the bill because it will bring significant economic benefits to WA wheat farmers, their families and their communities. I support the bill because, uniquely, it has the united endorsement of WA farming organisations: the Pastoralists and Graziers Association of WA, the WA Farmers Federation and the Co-operative Bulk Handling Group. Given the enormous sensitivity this issue has traditionally invoked amongst WA's agricultural community, a common position is remarkable.

Western Australia's wheat growers support the bill because they believe in themselves and in their product and have confidence that they are best able to make decisions about their own future. In the words of the PGA, the wheat industry has made 'remarkable progress' since 2008. Of course there are challenges, but the PGA's firm view is that these can be addressed using current means without further direct government interference. The PGA has said, 'Abolishing the scheme will ensure that the benefits to industry provided by accreditation during the transition to full deregulation are not undermined in the longer term by the direct and indirect costs of continuing with a scheme that has served its purpose.' The PGA identified these costs as being 'the WEC and the administrative and regulatory burden of accreditation, as well as the necessary regulation on efficiency and competition in the wheat industry'. This attitude was echoed by WA's CBH Group when it said:

… there is no need to continue with any partial regulation of wheat exports …

…   …   …

The CBH Group incurred costs in excess of $1.2million … These costs are ultimately borne by Western Australian growers with no net benefit to them.

…   …   …

The CBH Group supports the view that the role of Government is to provide necessary services and safeguards to support industry without distorting the economic environment.

…   …   …

It is now time to allow Australia’s wheat export industry the flexibility to take advantage of the opportunities that await it, free from any additional layers of regulation.

I should also note for the record that both the PGA and the CBH Group have advised me that, although they do not believe the mandatory industry code proposed in amendments to the bill are necessary, they are nonetheless satisfied that the amendments put forward by the Greens will not disadvantage WA growers. The CBH Group advises, 'This outcome remains favourable for WA growers and the industry more generally.' The WA Farmers Federation has also added its voice, saying: 'WA Farmers position in respect to the deregulation issue is that we do not see value for growers in WEA and hence agree with the proposed wind up and call on all WA federal politicians to support the proposed Wheat Export Marketing Amendment Bill 2012. However, great caution should be exercised over other amendments that specifically seek to address stocks information and quality issues. These will have a disproportionately adverse on WA growers. In practice, they would be unworkable and add costs to growers.'

The bill is also strongly supported by the Premier of Western Australia, the WA Liberal Party's state council and the many, many people living and working across WA's farming communities. The view of many West Australians has been best expressed by the West Australian newspaper. It said, 'Wheat Exports Australia is the last vestige of centralised marketing bureaucracies in Australia' and pointed to the fact that 'Pointless delay will cost wheat growers money and traps the industry in an early-20th-century mindset of protectionism and closed-shop marketing.'

This bill deserves the support of the Senate because the facts speak for themselves. The facts are most accurately presented in the ACIL Tasman report Continuing the reforms of the Australian export wheat market: why the WEMA Amendment Bill 2012 should be passed into law. It was released in July this year. The ACIL Tasman report makes the case that significant investment has occurred in Australia's wheat export market both as a result of the 2008 reforms and, more importantly, in anticipation of their conclusion in 2014. The report makes it clear. It states: 'Since 2008 a number of large mergers have occurred together with significant levels of infrastructure investment, to unlock scale and scope economies in bulk handling, marketing and grain transport. Grain is now exported to more countries than was previously the case under the single desk operator. Growers have been the main beneficiaries of these reforms through improved services and more competition for their grain. Export dependent WA grain growers in particular have in recent seasons experienced improved prices for their wheat exports when compared with Australian east coast growers. These recommendations, which have little if any apparent industry support in WA, Australia's largest wheat export state, will, if implemented, be a significant departure from the industry's current and generally accepted course and would reverse many of the reforms already implemented.'

I am conscious that as a result of the government's guillotine there are restricted times available to us. I will not go through the entirety of my speech—as much as I would like to—out of courtesy for those other coalition senators who I know have a different point of view, and I do believe that their view should be recorded in this debate. Out of respect for their positions, I will keep my last remaining comments brief.

This place, in deliberating on this issue should not be ignorant to the sovereign risk and disincentive to invest that arises from delaying—even stalling—the passage of these final deregulation initiatives.

Deviation and delay from our publicly stated intentions acts as a powerful disincentive to invest and diminishes the confidence of exporters and international buyers in our wheat export arrangements. This point was echoed and has been made very clear by CBH Group and GrainCorp in their presentations to the Senate inquiry. The clear intention of Wheat Exports Australia was always to act as a transition mechanism. Its role is to merely accredit exporters to give growers confidence that new exporters were 'fit and proper' and would reduce the business risk to wheat growers. This legislation is supported by a long and impressive list of organisations and people, many of whom I have referred to in the course of my contribution and many of whom, I might say, I trust.

Having weighed the evidence, I have concluded there is no rational reason to delay the abolition of Wheat Exports Australia and the wheat export charge. The national interest and the interest of wheat growers and exporters across Australia is best served by supporting this legislation. I am aware that others in my party have reached a different conclusion, giving weight to other considerations and evidence. I respect the difference of view. However, in preparing for this debate, I have been deeply conscious of my responsibilities to Western Australia—to the united position of WA's farming groups, the position of the WA Liberal Party and, most significantly, the regional people of WA, who have taken time to share their strong opinion with regard to this important and meaningful step in our agricultural policies.

I celebrate the fact that my own political party, unlike the one opposite, permits me to faithfully represent my constituents in this place. In explaining my decision to the Senate to support this bill, I return to the words of my first speech, which I made in this place six months ago:

I regard the Senate as the first child of Federation and the most significant of our democratic institutions, and I challenge the view that its creation was a compromise. In prescribing how Australia's representative government would operate, our founding fathers took a deliberate and conscious step—our democratic style would consist of two separate and distinct mandates: one representing the people as a whole and one representing the people voting by their states. In every deliberation I will sanctify this historic fact.

In supporting this bill, I have chosen to remain faithful to that promise to stand up for WA and its wheat growers, their families and communities, and to be an active champion for the benefits of free enterprise and competition in our country.