Ian Gilfillan: Australian Democrats in the SA Parliament

	Extract from Hansard Legislative Council 4 April 2001

Ian Gilfillan Australian Democrats Member of the Legislative Council		Parliament Index 2001 Autumn Sitting Index Browse by Subject Search all Democrats material About the SA Parliament Hansard on line

I. That, in the opinion of this Council, a joint committee be appointed to inquire into and report on the impact of dairy regulation on the industry in South Australia and, in so doing, consider-

(b) What has been the impact of deregulation on the industry in South Australia?

II. That, in the event of a joint committee being appointed, the Legislative Council be represented thereon by three members, of whom two shall form a quorum of Council members necessary to be present at all sittings of the committee.

III. That this Council permits the joint committee to authorise the disclosure or publication, as it thinks fit, of any evidence or documents presented to the committee prior to such evidence being reported to the Council.

IV. That a message be sent to the House of Assembly transmitting the foregoing resolution and requesting its concurrence thereto.

The deregulation of the dairy industry is a fait accompli: it is an accepted fact and we cannot wind back that particular clock, but there are things that can be explored in the work of this select committee. One of them is that we are getting calls from the current dairy industry, the latest being from Queensland (which I heard on the ABC News this morning) for an urgent review of the impact of deregulation on the Queensland industry, and other matters associated with it.

Although it does not necessarily apply to this debate for setting up a joint select committee, I would like to inform the Council that my colleague Senator Woodley has in fact pushed for a modified form of re-regulation of the dairy industry, and that has been distributed widely within the industry itself. I quote from a paper that Senator Woodley has distributed as follows:

RE-REGULATION. The Democrats believe the dairy industry should be re-regulated. We make no conditions about what form re- regulation should take but clearly the farm gate price for market (liquid) milk is where we would start. Any re-regulation should be agreed by all states and the commonwealth as it is clear that any regulation must be national and uniform.

The agricultural ministers for the states and the commonwealth must convene a meeting as soon as possible and negotiations with the industry must include grass-roots farmers represented by the Australian Milk Producers Association. The recent ABARE report is clear that eventually the price for market milk will be the same as the price paid for manufactured milk, so there is no doubt that tying the price of market milk to the price received for manufactured milk will continue to drive down the price to farmers.

This is because the bulk of manufactured milk is sold into a corrupt world market. It is neither fair nor necessary for milk sold for domestic consumption to be priced below the cost of production because of the price obtained for the export of manufactured milk.

I have in front of me the document from the Parliament of the Commonwealth of Australia entitled `Deregulation of the Australian Dairy Industry', Report by Senate Rural and Regional Affairs and Transport References Committee, October 1999. Chapter Two of the report entitled `The Australian Dairy Industry' talks about deregulation. I think it is important to read into Hansard the paragraph which heads the chapter, as follows:

Deregulation of the Australian dairy industry will mean it will be the only major dairy industry in the world without government support for dairy farmers. This is including New Zealand, which will continue to have significant government legislative support through the New Zealand Dairy Board single desk export support and privileged access to world markets such as butter access to the European Union which is not available to other countries.

The document, at some length, outlines the anticipated effects of deregulation, but we ought to consider just how significant the dairy industry is. In this report there are some dot points-in the form of an `industry snapshot'-applying to the diary industry which I will read into Hansard, as follows:

· Supplies 12 per cent of world diary trade (third largest dairy trader after the EU and NZ

· Is Australia's third largest rural industry in value at the farmgate (behind beef and wheat)

· Produces 10 billion litres of milk-a 55 per cent increase since 1986, and 6 per cent average annual increase during the 1990s

· Has 13 500 dairy farmers-a 30 per cent reduction since 1985 (19 342)-with approximately 98 per cent of dairy farms in family ownership

· Average farm size (now 180 hectares) and average herd size (now 149 cows) have doubled since the 1980s

· Has seen dairy companies invest $1.5 billion to expand manufacturing capabilities in the five years to 1998

· Is an important regional employer ( 60 000 direct jobs at farm and manufacturing level)

· Has 75 per cent of Australia's milk production processed by dairy farmer owned cooperatives

· Has 45 per cent of all milk intake and 50 per cent of all milk used for manufacturing controlled by the two major diary cooperatives (Bonlac Foods and Murray Goulburn, both Victorian based)

One must say that that is a pretty vibrant industry by any standard and it begs the question, `Why did we need to deregulate?' I have a personal view about that.

The Hon. IAN GILFILLAN: I think deregulation has virtually destroyed the economic viability of small dairy farmers. It is very hard to find figures to substantiate the gains-the actual advantage-to the consumer. Consumers are paying more for milk now than was the case before deregulation, whereas the producer is getting dramatically less. It is unclear how well the price was known before deregulation. If it was between 35¢ and 39¢, there is one rather alarming report that it is now down to 18.5¢ a litre in certain markets, which really is the highway to bankruptcy.

That is bad enough, but it is clear that there are quite a lot of personal tragedies, suicides and serious health deterioration from the stress of this. Even if we cannot reverse it, I think we owe it to the industry to offer an open forum so that we can get the detail and data and see whether adjustments could and should be made to at least attempt to ameliorate the devastation that deregulation has brought.

The Hon. IAN GILFILLAN: The interjection is that water is more expensive than milk if you buy it in a bottle which, at least to a certain extent, does point to the farce of the current situation. In South Australia we did have a discrepancy between certain groups of dairy farmers-those in the South- East, and I do not want to go into that in detail because it has been raised before-who have in their opinion received discriminatory treatment in the compensation, and I believe that that should and would be addressed by the select committee so that their grievances can be heard.

I do not believe it is my role to argue any particular line in moving to set up a select committee because it should-and I believe it would-approach its responsibilities with an open mind. It is very hard to read the Border Watch particularly and other rural papers without learning of the impact of the devastation that deregulation has caused. Headlines I have in front of me read `Dairy row deepens' and `Frustration mounts over restructure.' It is in this article that the price was cited as 18.5 cents per litre. Another headline is `Dairy Farmer Numbers Declining Rapidly.'

It is a traditional, strong and cherished industry in Australia. It has been efficiently conducting its business over decades. I think that we in South Australia owe it to the industry to offer a forum through the select committee so that, along with the consumer, the industry can present its case, both the manufacturing and the dairy farming, and to evolve through that process, as we have done so successfully in the past in this parliament, to recommendations which will be to the advantage of all the parties involved. I urge support for the motion.