Chapter 4 - Committee conclusions and recommendations
Introduction
4.1
Chapter 3 of this report details the major issues examined by the committee
as part of this inquiry. Chapter 2 also sets out a range of issues which fall
outside the committee's terms of reference, but which the committee considers
are pertinent to its consideration of the bills.
4.2
Issues regarding this legislation were raised with the committee by a
wide range of active commercial participants in the Australian wheat market,
including individual wheat growers, growers' representatives and by a number of
commercial groups which have an interest in the changes proposed in the bills.
The committee's conclusions on the key matters considered during this inquiry
are set out below.
Status of current single-desk export arrangement for Australian wheat
4.3
From evidence heard during this inquiry, the committee notes that
grower's views on the proposed reforms to the marketing of wheat fall into
three distinct categories: supporters of the single desk; supporters of a regulated
but competitive market and supporters of a de-regulated market.
4.4
The committee notes that many growers consider that the 'single desk'
marketing model has offered growers a number of benefits including a degree of
security and certainty in the marketing of their wheat. However, the committee
also notes that many growers consider that the 'single desk' has presented
obstacles to a competitive open market.
4.5
The committee also recognises that the marketing environment for wheat
has evolved to include other options for growers to market their wheat. In
particular, the deregulated domestic market in the eastern states, and the
deregulated container market have offered important alternatives to growers,
particularly in poor production years. The committee notes that many growers
have embraced these alternatives in recent years in preference to the 'single
desk'.
4.6
The committee notes that under the current legislation governing wheat
exports the absence of a veto power from 1 July would inevitably result in an
increase in the number of bulk exporters.
4.7
The committee also notes the pragmatic and proactive attitude of the
industry in developing commercial responses to the changes proposed in these bills.
Industry good services being addressed by WIEG
4.8
The committee notes the significant concerns raised in evidence to it
regarding the importance of access to detailed, accurate and timely information
regarding the industry. The committee also notes the apparent need for
education and training and other assistance to growers with regard to changed
market conditions, new opportunities and products and services available in a
more openly competitive market.
4.9
The committee notes that these concerns have been dealt with in detail
by the Wheat Industry Expert Group (WIEG). However, the committee suggests that
evidence received during this inquiry in relation to industry good services be
considered in concurrence with the recommendations of WIEG.
4.10
The committee notes the strength of feeling amongst some growers about
what has been perceived as a lack of consultation. The committee is very
mindful of the need for appropriate consultation on issues that will ultimately
have an impact on producers' livelihoods.
4.11
At the same time, the committee's attention has been drawn to the
challenges involved in consulting with, and gauging the views of the grower
community. The committee received evidence that suggests a need for caution in
relying solely on grower organisations. However, the committee accepts the logistical
difficulties associated with surveys, polls and public forums.
4.12
With regard to its own inquiry, the committee is particularly
appreciative of those in the grower community who took advantage of the avenue
for consultation offered by this inquiry. In particular, the committee owes a
debt of gratitude to those growers and grower organisations who took the time
to make specific comments on the draft bills and to offer suggestions on how
the proposed legislation might be amended or improved to better address their
specific concerns.
Committee conclusions
4.13
The committee has heard strong arguments for and against the passage of
the proposed bills. The committee received evidence which suggested that there
were a range of opinions on the bill which fell into three broad groups –
support for the bill with some amendments, pragmatic acceptance of what
continues to be an unwelcome or inadequate change, and those who totally reject
the changes and continue to support some form of single desk. From the
evidence presented to this inquiry, the committee believes that it is important
that this process of reform does not stall at this point. The committee
considers that maintaining the status quo is untenable. However, the committee
also notes that some significant issues have been raised in relation to the
regulatory processes contained in the bills. The committee considers that
careful consideration must be given to these issues, and appropriate amendments
made, before the bills are introduced into the Parliament.
Accreditation process
4.14
A number of issues were raised with the committee in relation to the
proposed accreditation process, including whether non-corporate entities should
be eligible for accreditation, the degree of discretion afforded to Wheat
Exports Australia (WEA) in formulating and administering the accreditation
scheme and the rigour of the proposed scheme.
4.15
The committee notes the concerns of many witnesses that accreditation
under the proposed scheme is limited to registered companies. The committee
acknowledges that companies can be formed with relative ease. However, the
committee believes that further consideration should be given to allowing
cooperatives to apply for accreditation.
4.16
The committee considers that the role of WEA is critical to the
successful implementation of the accreditation scheme. The committee notes the
degree of discretion afforded to WEA in its administration of the accreditation
process. The committee supports calls for that discretion to be guided by clear
objectives within the legislation.
4.17
The committee is concerned to ensure that WEA does not suffer from the
same limitations in terms of access to power that beset the former Wheat Export
Authority and, to an extent, its successor the Export Wheat Commission.
4.18
The committee expects that WEA will have at its disposal appropriate
legislative, financial and physical/human resources to undertake its role as
regulator and will have the preparedness to deploy them appropriately. In
particular, the committee expects that WEA will have the ability to effectively
monitor the operation of the accreditation scheme. The committee considers the
intellectual capital available through the WEA board as part of the resources
available to WEA. The committee trusts that in making appointments to the WEA
board, the minister will ensure an appropriately broad range of expertise and
experience is available to the WEA from this quarter.
4.19
The committee notes the strong arguments advanced regarding the level of
regulation that should be applied through the accreditation scheme. Some
witnesses would like to see more of the detail provided for in the legislation
itself, together with clear guidance to WEA to administer the scheme in a
'light touch' manner. Other witnesses emphasised the significance of the
accreditation scheme in providing a level of protection and confidence to
growers and the broader industry.
4.20
The committee notes concerns about the potential for duplication in the
proposed scheme. The committee would not like to see WEA duplicating activities
currently undertaken by the Australian Prudential Regulatory Authority, the Australian
Securities and Investments Commission and the Australian Competition and Consumer
Commission (ACCC). The committee supports consideration being given to avenues
for consultation and exchange of information between WEA and other relevant
regulatory agencies.
4.21
The committee considers that further consideration should be given to framing
the accreditation scheme to ensure that an appropriate balance is achieved
between providing sufficient certainty for companies and their clients and
appropriate confidence for growers.
Access to storage, handling and
rail freight
4.22
The committee has heard serious concerns from all sides of the debate in
relation to the proposed access provisions in the bill. The committee notes in
particular the concerns raised regarding the potential for the formation of
regional based bulk handling monopolies and vertically integrated supply chains
and the risks associated with this.
4.23
As currently drafted, the bill provides that owners of port
infrastructure must enter into an access undertaking approved by the ACCC.
There is no similar requirement for owners of bulk handling and storage
facilities at the point of receival. The bill relies on the existing provisions
in the Trade Practices Act 1974 ( the TPA) to address any instances of
uncompetitive behaviour such as the denial of access.
4.24
The committee notes that regulation of access to infrastructure at the
point of delivery is at least as significant to growers and potential exporters
as access to port infrastructure. The committee considers that all bulk
handling and storage facilities owned by an accredited exporter should be
subject to the same access requirements.
4.25
The committee heard concern from all quarters regarding the reliance on
the TPA. The committee received evidence from the major bulk handling companies
which suggested that the proposed access test imposes a potentially higher and
more costly form of regulation than is warranted. The committee also received
evidence expressing confidence in the TPA as a source of remedy for
anticompetitive behaviour, as well as evidence expressing concern that the
existing measures provided by the TPA are ineffective and largely out of the
reach of smaller companies and individual growers.
4.26
The committee favours the application of a consistent set of access
arrangements and considers that further consideration must be given to the
specific issues raised during this inquiry regarding access to 'up-country'
facilities. The committee notes the role of the TPA in addressing anticompetitive
practices, but believes that careful consideration needs to be given to the
concerns raised in this inquiry regarding the appropriateness of these
provisions.
4.27
The three major bulk handling companies submitted a Supply Chain Code of
Conduct as part of this inquiry. The committee welcomes this initiative. In
particular, the committee considers that suggestions for providing a
legislative link to the code via the accreditation conditions have merit. However,
the committee has concerns regarding the level of protection provided under the
code and the extent to which a code developed by the bulk handling companies
could attract widespread agreement across all sectors of the industry. Without industry
consensus, the committee is concerned that the code would merely serve as a
catalyst for ongoing litigation.
4.28
Despite these concerns, the committee encourages the Government to
consider this and other potential options closely in the interests of
identifying a regulatory approach capable of taking account of the competing
concerns expressed during this inquiry. In particular, the committee
emphasises the need for an approach which provides for non-discriminatory
access but does not provide a disincentive to potential exporters or to future
infrastructure investment. The committee also considers that an accessible
dispute resolution process is critical to the effectiveness of such regulation.
4.29
The committee notes the concerns raised about current protocols in place
at port facilities regarding the receipt, accumulation, movement and loading of
wheat. The committee considers that the collection and dissemination of data on
wheat movements should reduce the risk of discriminatory practices considerably
and facilitate equitable access to facilities and services.
4.30
Finally, the committee considers that it is critically important that
accurate, timely and appropriately detailed data on wheat stocks throughout the
wheat chain generally should be available to enable the successful functioning
of the proposed changes. There were different views about the frequency
required for reporting of information and it is possible that as the
information is commercially valuable, a market may develop to cater to
different requirements. However, the committee considers that in the transition
period there should be independent collection and dissemination of monthly
aggregated data on wheat stocks including the tonnage, quality and location,
together with the shipping stem.
4.31
The committee has received a clear message that the Wheat Export
Marketing Bill 2008 should be amended to address these and other concerns
raised throughout this inquiry.
Committee recommendations
Recommendation 1
4.32
That the Wheat Export Marketing Bill 2008 when introduced into the
Parliament address the issues noted in this report with respect to the
accreditation of exporters and access to bulk storage and handling
infrastructure as set out in paragraphs 3.45 to 3.146 and 4.14 to 4.30 of this
report and that the other amendments suggested as follows also be reflected,
namely:
- clarification of Wheat Exports Australia's (WEA) objectives;
- clarification and guidance in relation to the range of powers and
discretions available to WEA;
- clarification and guidance in relation to the proposed process
for renewal of accreditation;
- clarification of the process for review of decisions; and
- legislative provision for review of the legislation.
Recommendation 2
4.33
That the bill be introduced into parliament as soon as practicable to
facilitate its passage prior to 30 June 2008.
Recommendation 3
4.34
The committee recommends that transitional financial education and
counselling (particularly in marketing and risk management) should be provided
through appropriate existing farmer organisations for a period of three to four
years to help existing producers effectively transition to the new market
operating environment.
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