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- 4 December 2001
Grain Marketing Amendment Bill
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Page: 19457
Second Reading
Debate resumed from 14 November.
Mr SLACK-SMITH (Barwon) [9.24 p.m.]: The Opposition does not oppose the Grain Marketing Amendment Bill, which will amend the Grain Marketing Act by removing certain vesting rights and clarifying other vesting rights under the Act, except in relation to barley, canola and grain sorghum. Other grains and legumes, which previously came under the jurisdiction of the Grains Marketing Board, or Grainco, no longer come under its jurisdiction. The Grains Marketing Board now has vesting rights only in relation to barley, canola and grain sorghum. The bill will also replace all existing proclamations that vest commodities in the Grains Board with a clause that provides for barley, canola and sorghum to be vested in the board until 30 September 2005.
The Minister will no longer have to certify the costs and expenses of the board or the administrator. Honourable members would be aware that the expenses of the administrator are being paid by a third party, such as bank creditors, who should investigate and sign off on expenses and costs. So the Minister will no longer play a role in that regard. The bill includes the administrator of the board in the list of parties that enjoy statutory immunity under section 98 of the Act. That provision will provide statutory immunity to the Minister, the board, the director-general and staff of the board, but that immunity will not extend to fraud, negligence or reckless practice. That is an important provision in the bill.
The Grains Marketing Board has had a sad and sorry history. Honourable members would be aware that the New South Wales Grains Board was formed in 1991. Prior to that we had the Barley Marketing Board, the Sorghum Marketing Board and the Oats Marketing Board. The only one of those boards that performed reasonably successfully was the Barley Marketing Board. The other boards got into financial difficulties and collapsed. The Opposition supported the course taken by the Government for a number of reasons. When the Grains Marketing Board collapsed it owed producers about $150 million. A number of producers in regional New South Wales were facing financial ruin because of the money owed to them by the Grains Marketing Board.
Treasury decided to pay growers the sum of $11 million. Today, the producers of the three commodities to which I referred earlier are paying a levy of $150 per tonne. The money that is being collected from that levy is being paid to Treasury to compensate it for honouring its agreement with the Grains Marketing Board to pay $11 million to producers. Once that money has been repaid all bets will be off and that levy will no longer be imposed. Grainco, from Queensland, was the successful tenderer in obtaining vesting powers amounting to $25 million for those three commodities in the New South Wales grain industry. At that time there was a certain amount of angst about the fact that a Queensland company was taking over New South Wales vesting powers.
Things have changed since then. When Grainco purchased the right to take over the Grains Marketing Board by deed—Opposition members were not privy to the contract or the agreement that was signed—the contract stated that Grainco would have vesting powers in the New South Wales grain industry until 30 September 2005 and that it would have the right to purchase grain in New South Wales to recoup its $25 million investment.
That time frame was too long, but this year has been exceptional and if there are two or three years of drought we have to accept that 30 September 2005 is more than enough time for Grainco to recoup its $25 million investment. We now have an entry from left field, so to speak. ConAgra has now joined forces with Grainco. As honourable members are well aware, ConAgra is a multinational, foreign-owned grain trading company. It is the second-largest grain trader in the world. Although there was a certain amount of angst about Grainco from Queensland taking over the vesting powers of New South Wales, many growers and others in regional and rural New South Wales are concerned that a multinational, foreign-owned corporation now shares the vesting rights of the grains industry in New South Wales.
Mr Amery: It is not a merger.
Mr SLACK-SMITH: The Minister can say what he likes. The perception is that a multinational corporation now has a vesting interest in New South Wales. If I were in its position I would have done exactly the same. It was a great coup by ConAgra. Now it has a leg in, eventually it will have vesting powers in the New South Wales grain industry, and after 30 September 2005 all bets will be off. The vesting powers will be removed. Grains and legumes, which are not under vesting powers at the moment, are kicking some large goals. The success, especially in the oat industry, the chick pea industry and the mung bean industry, indicates that grains can be traded profitably without vesting powers. Of course, millet and sunflower and a range of other products are coming on to the market.
ConAgra will be rubbing its hands with glee because of its introduction to New South Wales, which is to the detriment of grain traders. By 2005 a number of grain traders in New South Wales will be out of the business or on the verge of not being able to complete with a giant like ConAgra. I understand also that the Grains Board is still under investigation by the Independent Commission Against Corruption [ICAC]. We are looking forward to the conclusions from the ICAC report. I am concerned that the Minister was not advised of or was not aware of the collapse of the New South Wales Grains Board until it was too late.
Mr Amery: Until I was advised.
Mr SLACK-SMITH: It is the Minister's responsibility to find out these things.
Mr Amery: I didn't know until I was told, that is right.
Mr SLACK-SMITH: That is much too late. Two weeks after the Grains Board approached the Minister and told him what a great job it was doing, the Minister found out that it had just lost $150 million. If the Minister got up to speed he would be fine. The Opposition does not oppose this bill. The Opposition believes that in the circumstances the Minister is seeking to protect the interests of growers and communities in the farming areas. We believe that the time frame for the vesting powers is too long. We believe that Grainco and ConAgra will have a large foothold in the grain industry of New South Wales to the detriment of other grain traders and members of the grain industry of New South Wales. We find ourselves in a sad and sorry situation. I sincerely hope that ICAC can find some evidence about what exactly happened in this sad tale of the Grains Board.
Mr BLACK (Murray-Darling) [9.35 p.m.]: Comrade Speaker, once again Country Labor is more than pleased to support city Labor's position on the Grains Board.
Mr Slack-Smith: Point of order: the honourable member for Murray-Darling should realise that your title is "Mr Deputy-Speaker", not "Comrade Speaker".
Mr DEPUTY-SPEAKER: Order! No offence was taken. There is no point of order.
Mr BLACK: Earlier the honourable member for Barwon suggested that the Opposition agrees with the Labor coalition to the extent that it is not opposing the bill, but a point of order is immediately taken. I am thinking just how important grain is to Murray-Darling. In the south we have rice, wheat and various other grain crops. The value of those crops to New South Wales can be measured by the fact that last year the total rice crop in the Murray-Darling and Murrumbidgee was 1.74 million tonnes. Further to the west, in the Balranald shire and the Wentworth shire, we have opportunity cropping. With the support of the Minister, opportunity cropping is becoming increasingly important.
We have gone down the track of indigenous land use agreements, which are supported by the Minister and the grain industry. To the north is Menindee. Because of its isolation, Menindee is well known for growing grains for seeding purposes as opposed to food purposes. Lake Tandou is a great example. Further north, to Bourke, we have a magnificent grain industry predicated upon profitability and employment. I do not need to remind the House where western New South Wales would be without irrigation. This bill is important but I note once again that the Leader of the National Party is not with us.
Mr Amery: The real one is, though.
Mr BLACK: Yes, I acknowledge that the honourable member for Lachlan is here, but the Leader of the National Party is not with us. During all of these debates he has been hiding up in his cave on level 12. Tonight I am told he is hiding in the members' dining room. I mention in passing that last week the Leader of The Opposition went to Tamworth and was met with instant dislike because the people of Tamworth were not prepared to spend the time to meet her in any other way. This bill puts in place final administrative details for the winding-up and eventual dissolution of the New South Wales Grains Board. The Government has made a commitment to continue vesting in the three grains—barley, canola and grain sorghum—until 30 September 2005.
The proposal can be summed up this way. Vesting rights under the Act—except for barley, canola and grain sorghum—will be removed. The bill will replace all existing proclamations vesting commodities in the Grains Board by a clause in the Act that provides for barley, canola and sorghum to be vested in Grainco until 30 September 2005. The bill provides that the Minister will no longer have to certify the costs and expenses of the board or the costs and expenses of the administrator in performing his role, if those costs and expenses are paid by third parties, such as the bank creditors. The bill will include the administrator of the board in the list of parties that enjoy immunity from suit or prosecution under section 98 of the Act and that immunity will include omissions as well as acts done.
The administrator has reported that the board's unaudited financial losses to 31 July are just over $160 million. The primary creditors of the board are the banks—the Commonwealth and Rabo. No monies are owing to the Government, and New South Wales grower creditors will be paid in full. I am more than pleased with this result. In the past six to eight months my office has received innumerable phone calls from growers anxious about those last payments. We now have a situation, thanks to the Minister, in which they will be paid in full. The administrator has made it clear that the board's original losses were the result of a significant increase in bank debt in 1999-2000—I will come back to some of the remarks made by the honourable member for Barwon—to fund operating losses, advances to joint venture partners, and additional stock purchases.
Some specific problems encountered by the board were, first, the substantial increase in grain purchases and sales activity, particularly the entry into unfavourable sales contracts resulting in trading losses of at least $44 million—primarily $10 million with Canola, $48 million with Sorghum, and $12 million with wheat; second, bad and doubtful debts of $16.3 million; and, third, unfavourable foreign exchange movements leading to exposure on significant sales denominated in foreign currencies, and foreign exchange losses of $46.8 million. I interpolate that the Grains Board was not the only organisation to make this mistake. I can quote Pasminco and Western New South Wales Mining, which hedged at 64¢, and other Western Australian mining companies that made the same mistake. I do not cast aspersions on those who made the mistake because there were plenty of people who did.
The final specific problem encountered by the board was the considerable overhead expenses in the order of $10 million. The background to all this is that New South Wales entered into various deeds, agreements and charges with Graincorp, which was previously referred to by the honourable member for Barwon, and the banks in an attempt to ensure the future of the Grains Board. Under the deeds, New South Wales agreed to continue vesting in barley, canola and grain sorghum until 30 September 2005. The Act currently provides that the reasonable costs and expenses of the administrator, as certified by the Minister, are payable from the funds of the board. When the costs and expenses of the administrator are paid directly by a third party such as the banks, this requirement places an unreasonable administrative burden on the Minister, who is required to assess and form a view as to the reasonableness of all costs and expenses incurred by the administrator for every payment.
Under section 98, to which I have previously referred, the Minister, the director-general, members of the board and the staff of the board enjoy immunity from prosecution or suit while acting under the Act. This immunity should be extended to the administrator. The inclusion of omissions updates the Act in line with similar provisions in other Acts. I acknowledge the honourable member for Lachlan, because I believe that the Grain Marketing Act 1991 was predicated on good intentions. Unfortunately, it did not proceed in the way that was intended. I shall go over some of the history, to which the honourable member for Barwon referred, and I shall quote some of the Minister's words about the background for the bill that was introduced, as I understand it, at the drive and behest of the honourable member for Lachlan. Perhaps I will traverse matters already raised by the honourable member for Barwon, but I think they need to be restated.
The Grain Sorghum Marketing Board was the first to get into trouble, way back in 1983. Incidentally, that was the centennial year of Broken Hill. The board forward-sold a significant portion of the crop in 1982 and 1983, and then, as the Minister reported, with the drought that was broken in 1983—well do I remember that year—it was too late: the board was unable to acquire sufficient grain at acceptable prices to meet its commitments. The board was put into administration and a scheme of arrangement was established, funded by a levy of $3.80 per tonne. The next board to get into strife was the Oilseeds Marketing Board in 1989. That board paid its growers cash prices for the 1988 crop that turned out to be well in excess of subsequent market realisations. The bottom line is that when prices fell the banks were after the board to the tune of some $5 million.
In 1990 the Oats Marketing Board collapsed. It had sold some 70 per cent of its 1989 crop to the Victorian oat pool and borrowed from its banks to pay growers in full. One mayor I am proud to support is Athol Roberts. He and I have had a chequered relationship, but also a very good relationship over many years. I am pleased to say that he quite disappointed me at an important time in 1989. Whether people were told the right thing or not—which was a question raised earlier tonight—is beside the point. I firmly declare to the House my defence of Athol Roberts based on my conviction that he did what he did within the constraints of what he was told. I do not for one moment believe that Athol Roberts acted with impropriety. History might say that he acted with a lack of knowledge, but again that raises the question of auditors and others. I repeat: I will defend Athol Roberts as one of my great mayors.
Only the Barley Board—originally under Athol Roberts—was without debt. The other three boards I have recounted had all gone for whatever reason. The tragedy is that at that time the then Government did not take the responsible course of action it should have taken. I will not say for one moment that producers are not to be trusted. That would be folly. However, I will say—and look at the record; Woolmark comes to mind—that it was a mistake to leave it in the hands, as it were, of the producers alone. Of course, one can argue that this is retrospective, and I am sure the honourable member for Lachlan will say that later. However, the Grains Board, for whatever reason, went down.
Through the Minister and the Government, we have a responsibility on the one hand to do the best we can for the community of New South Wales, but on the other had we must do what we can for the many grain producers, quite a few of whom I represent. I think of the grain producers of Bogan, the grain producers of Lachlan and the others whom I named earlier. My responsibility is to obtain for them the best result possible within the constraints faced by the Government. I commend the Minister's Grain Marketing Amendment Bill to the House. I believe that it represents the best that parliamentarians can do to solve a problem that has been troubling the grain producers of New South Wales for too long.
Mr ARMSTRONG (Lachlan) [9.50 p.m.]: At the outset I make the point that the New South Wales grain industry and, if one likes, the grain industry of Australia, is primarily in the hands or the husbandry of grain growers. Throughout the grain industry's history, grain growers have done the research and the marketing and have taken the risks, the profits and the losses. On this very night there are grain growers in New South Wales who are realising that they will take the losses caused by frost at Junee, Illabo, Mimosa, Ganmain, and Cowra, et cetera, that they would not have expected a month ago. There is nothing new in that. Governments of various colours and persuasions throughout Australia, particularly in New South Wales, have been asked by various grower organisations over the years to support grain growers. The whole reason that honourable members are debating legislation tonight is the requests for support for that product that have been made by grain growers and by those who service the industry.
In his second reading speech the Minister gave a fair and reasonable summation of the histrionics of the formation of the New South Wales Grain Board. To reinforce the Minister's second reading speech, I reiterate the following points:
During its first year the board made an operating surplus of $1.044 million, but abnormal losses relating to redundancies of previous board staff and stock losses resulted in an overall loss of $124,000. The board's second year of operations was much more successful, resulting in a surplus of $6.8 million. This was followed by a $2.2 million surplus in 1994, with the board’s equity—net assets—having risen to $13 million by August 1994.
In 1995 the board experienced lower throughput and, coupled with inter-year pool transfers, suffered a loss after abnormals of $2.8 million. This was more than made up in 1996, with an overall surplus of $7.7 million, raising the board's equity to $17.6 million. Two further profitable years in 1997 and 1998—$3.1 million and a bit under $1 million—along with an asset revaluation, resulted in accumulated funds reaching $22.1 million by 31 August 1998. The board's final year of declared surpluses was in 1998-99, which of course has been under considerable scrutiny by ICAC.
My point is simply this: it is not arguable that this board—however it was run and whoever ran it, which is irrelevant in the context of this debate—was, until 1998-99, successful in achieving its fundamental objective of providing support to the grain industry. Something then went wrong and there is not an honourable member of this House, including me, who knows what happened, and I challenge any honourable member in this Chamber to debate that issue with me tonight.
The Minister for Agriculture, for whom I have a deal of respect, was asked in this place eight or nine months ago what were the losses of the New South Wales Grain Board. He estimated $35 million. A week or so after that he was asked at a press conference what the New South Wales Grain Board losses were and he said he thought they were $17 million. The reporter asked where the Minister got that figure from and he said, "I think I heard Ian Armstrong mention that figure in the House the other day." Next it was suggested by the Deputy Leader of the Opposition in the other place that the losses were $90 million, and within 24 hours the Minister was saying he thought the losses could be as high as $90 million.
I am not taking the mickey out of the Minister. I am making the point that it was impossible to assess the losses accurately because of a whole lot of complexities that, until now, have not been sorted out. I have no doubt that who is to blame and how it happened will be revealed one day, but at this stage we should concentrate on where we go from here. That is an interesting point because the people I mentioned at the beginning of my speech are harvesting wheat, barley, sorghum, canola and so forth and some of them are owed $25,000, $30,000 or even $50,000—a co-operative at Forbes is owed $240,000. Those people have effectively said they know they may or may not get that money, but they want to know how they will be able to afford to pay for the new 32-foot John Deere header or whether they should buy other property at $1,100 an acre, which some of the land at Wollombi is fetching at the moment. They want to know what they should do. They want to know where they go to from here. They are a bit different from people who are involved in government or opposition: they are not so much interested in the politics of the situation but, rather, in getting on, and putting resources into the industry.
After what has occurred over the past couple of weeks, the big question tonight is where does this legislation leave the industry. Are there any changes that have occurred, or that are about to occur, that may advantage or disadvantage the people to whom I have referred? On behalf of the growers and those involved in the support industries I would like to be able to determine the effect that the latest marketing changes in New South Wales have had, and will have, on grain. Recently there has been a fair bit of debate. The Minister and I have debated matters through the press, which is a dreadful forum in which to try to debate these matters. The Minister and I have had a couple of differences of opinion already, but I am intrigued to note the confirmation on 29 November by ConAgra and Grainco that they will merge their grain marketing businesses in Australia into a new joint venture in a company named MarketLink (Aust) Pty Ltd, which will market three to four million tonnes of grain.
I am not very naive and I do not think anyone else is naive enough to think that ConAgra—which is the second-largest private company in the world and has a massive influence on commodity marketing in general and on grain in particular—would fork out money to buy into a very small operation in world terms, Grainco, for some charitable cause or because its proprietors like Grainco's managing director. ConAgra has bought in to obtain an advantage, and for no other reason. I asked myself what Grainco has to offer in terms of commercial advantage? Grainco is out there selling and they certainly would have sold to ConAgra. If ConAgra had rung up and said, "We want to buy 10,000 tonnes of barley tomorrow morning. Can you give us a price for it?" Grainco would have said, "Yes, certainly. Our price is X." Nothing stopped Grainco from trading and there was no reason from ConAgra's point of view to think it would not have been able to purchase grain from Grainco. Clearly ConAgra perceived an advantage by, metaphorically, getting into bed with Grainco.
Clearly, Grainco, the dominant grain storage handling company in Queensland, more than doubled its marketing volume last year when it paid $25 million to take over for five years the export monopoly rights held by the collapsed New South Wales Grain Board for barley, canola and sorghum that was produced in New South Wales. Oh dear, the Minister will try to tell us that those vesting rights were not sold, but what did ConAgra buy? If ConAgra did not buy an advantage, why did it fork out its money? ConAgra is not silly and has not made very many mistakes. ConAgra has not gone down the tube, so what did it buy? The Minister would like us to believe that ConAgra did not gain an advantage by knowing that Grainco had vesting rights. ConAgra may not have bought them directly, but honourable members can be guaranteed that ConAgra received a huge commercial advantage in getting the edge on its competitors because ConAgra would have a hold on the company that held the vesting rights on three commodities produced in this State until 2005.
If anyone can argue otherwise and tell me what else ConAgra bought to get the advantage, I would like to hear about it. I have read the newspapers, I have listened to the Minister, and I have tried to keep myself informed as best I can. But no banker, government, or marketing commodity operator has been able to suggest what else ConAgra bought to get the advantage. I will rest my case by saying that until I am proven wrong, ConAgra has bought an advantage by buying access to vesting rights that have been legislated by the Government, which locks in the growers of those three commodity until 2005.
In 2005 we will see who is right and who is wrong. The Government does not give a damn about anyone in this Chamber tonight: we do not matter. But I want to know whether the grain growers who are risking their money, their capital, and their sweat and tears are getting an advantage. I challenge any member of this House to tell me how the grain growers of New South Wales will be advantaged by the marriage between ConAgra and Grainco.
The other major player in the New South Wales grain industry is Graincorp. As members would be aware, Graincorp took over the Grain Handling Authority, which has successfully been floated as a listed company. The Australian Financial Review of 30 November reported on GrainCorp's managing director, Tom Keene, who has held that position since prior to the acquisition of the Grain Handling Authority by Graincorp, when the then Government racked up $3 million in debts and sold it at a knock-down price. The Australian Financial Review said:
Graincorp's managing director, Mr Tom Keene, said his own view was Grainco's link with Con Agra would reduce grower support for regulation of NSW grains as he believed growers "owned" regulation and the involvement of a privately owned company further removed control of that regulation from them. "The whole purpose of having regulation is not there any more," he said.
Of course, Grainco is not a competitor. That company happens to own the majority of storages throughout New South Wales, and therefore the crop is received into its storages. I would be most remiss, in a debate such as this and with the opportunity presenting itself, if I did not make the point that grain growers face another problem, apart from the dilemma of where their vesting powers are likely to leave them with the products that are left up until 2005. They also have the problem of not knowing whether the New South Wales Government will honour its promise of 27 June this year, when the Treasurer said in another place that $235 million would be provided for above-rail CSOs to enable continuity of the cartage of wheat on New South Wales branch lines.
We were informed last week that that money is still there, but it will be spent on the storage of stock at Bangor and Werris Creek. Where will the remainder be spent? It will be spent on buying high-volume rolling stock and grain trucks and on subsidising petroleum products by rail over the Blue Mountains. Following increases in freight applicable this year for the cartage of wheat to franchises such as the Warren line and the Coonamble line and the silos at Kyacetu, to name but a few, the Government announced that it would offer a rebate to offset some of the increased charges being applied to farmers. The offset amounted to $2 million this year, and the Minister for Transport said it may be available for next season as well. I thought that was pretty good politics; I would have done the same if it had happened during the next election.
That $235 million is not bad. If you can spend $284 million, you will save $231 million on your promise. But the bottom line is where does that leave the branch lines, particularly those west of the Newell Highway? Bearing in mind that those east of the Newell Highway are basically the line from Harden to Trajere, Woodstock and Grenfell, the line to Coolah, the line to Merriwa, and the remaining lines that are west of the Newell Highway, where does that leave them? Where does it leave the local shires? Just tonight I was phoned by a grower at Illabo who told me that the Roads and Traffic Authority is out there pinning growers on local shire rates. That is another subject. But the bottom line is that the shire will cop the brunt of the change from rail transport using branch lines to road transport. The Government has to make up its mind, first, whether it will support growers in the cartage of wheat and ensure that these branch lines remain open, and, second, whether it will give an absolute undertaking that it will address the matter in a transparent manner and publicly say what will happen to the joint venture between ConAgra and Grainco so that growers know where they stand for the next five years.
Mr HICKEY (Cessnock) [10.05 p.m.]: I support the Grain Marketing Amendment Bill, which represents the culmination of the Government's legislative package and action to address the financial collapse of the New South Wales Grains Board. Clearly, it was a matter of great disappointment that the Grains Board got into financial difficulty. Investigations into the causes for that are ongoing and, despite the Opposition's attempt to claim otherwise, the Minister for Agriculture has made it clear that he will facilitate whatever inquiries the administrator believes are necessary.
Indeed, only last week the Minister approved of the administrator holding a Corporations Law examination of key Grains Board staff and directors. Such examinations–which, with the approval of the courts, have the status of a formal inquiry—require the approval of a government agency or entity. Under Commonwealth Corporations Law, the Australian Securities and Investment Commission has approving powers. These powers, however, do not apply to New South Wales statutory bodies under New South Wales Corporations Law. Hence, unless the Government had moved in July this year, when the new national Corporations Law came into force, to ensure that the appropriate powers could be exercised, the ability to facilitate investigations into the Grains Board would have been hindered.
Without the Grain Marketing Regulation 2001, the administrator's desire to hold a formal examination could well have been thwarted, or could have faced extremely complex processes before being granted approval. The Government and this Minister have ensured that all possible examinations and inquiries can proceed promptly and without hindrance. Whilst it is important to inquire into what went wrong in the past and into who should be held responsible, it is also important to look forward and provide for the future. Ensuring a satisfactory outcome for growers has been the most important driver for the Government since the board first got into difficulties. With the board advising the Government in August 2000 that it was no longer in a position to trade in its own right, alternative solutions for the provision of marketing services to growers had to be found.
It was also necessary to determine the future of the board's statutory powers. One solution put forward in certain quarters was to completely deregulate the New South Wales coarse grains and oilseeds market, put the board into liquidation, and let the market sort it out. The Government decided against such a course and, instead, after consulting with the New South Wales Farmers Association, decided to retain the legislative framework and the board's vesting powers, as set out in the bill. Going cold turkey and deregulating at once would have led to much heavier losses by the board, due to its having to be liquidated on a fire sale basis. There would have been no facility for ensuring that growers who had supplied the pools would have received the balances owing to them.
The opportunity to benefit from the single-desk premiums available on the export market, particularly for barley exports to China and Japan, would have been lost. Growers would have been left to the vagaries of the marketplace, just when they had harvested the two key commodities, barley and canola. The majority of farmers who had been arguing strongly for the continuation of the export single-desk premiums, particularly for barley, and for a grower-oriented marketing service to continue to be provided, would have been let down, and they would have been very critical of the Government. The banks also would have found themselves wearing much higher losses, in the absence of any ability to salvage something from the wreckage. Whilst the Parliament may not have much sympathy for the major banks, governments are bound to act responsibly and to ensure that value is retained, where it can be.
The Government had an opportunity to make decisions on the future of the board in an orderly way and to ensure an orderly outcome. The bill confirms the Government's decision to pursue an orderly outcome. Retaining the board's powers, and seeking expressions of interest for the exercise of those powers in the interests of growers, has resulted in Grainco Australia Ltd making the winning tender and being appointed the sole agent of the board for five years, until the end of September 2005. The honourable member for Lachlan clearly agreed that we still do not know what has happened after the event. The Leader of the National Party says that we are expected to know before the event happened. It makes one wonder who is leading the National Party and who knows what is going on.
Mr Amery: It is clear who should be.
Mr HICKEY: It is very clear, as the Minister says. It is great to say that we know who should be leading the National Party. I commend the bill to the House.
Mr R. W. TURNER (Orange) [10.10 p.m.]: I will not oppose the Grain Marketing Amendment Bill, but I have some reservations about certain aspects of it. The objects of this bill are to amend the Grain Marketing Act 1991 to limit the application of the Act to certain commodities—namely, barley, canola and grain sorghum—to provide that the vesting of commodities in the New South Wales Grains Board by operation of the Act ceases on 1 October 2005, and to confer the same immunity from liability on an administrator of the board, who is acting on a temporary basis at the moment, as is conferred on the board in carrying out functions under the Act. Clause 1 of the bill sets out the name of the legislation as the Grain Marketing Amendment Act 2001. Clause 2 provides that the commencement of the proposed Act is on the date of assent of that Act. Clause 3 is a formal provision that gives effect to the amendments to the Grain Marketing Act 1991 as set out in schedule 1 to the bill. New section 45, in schedule 1 to the bill, states:
(1) A commodity is absolutely vested in and is the property of the Board at the time that the commodity comes into existence.
In my experience with the former Egg Marketing Board there was always debate as to when an egg became the property of the board. Was it when the egg dropped into the nest box or into the roll-out cage, or was when it was delivered to the board? It was never verified—although the general consensus was that it was as soon as it was dropped into the nest box or the roll-out cage. Therefore, when is grain vested in the board? Is it as the grain comes out of the header, when it is delivered to the board or by some other arrangement? Some farmers will always take advantage of markets and store their grain in a field bin out in the paddock or fumigated in a silo for a few years, waiting for a market opportunity. When does it become the property of a board? New section 45 continues:
(2) Subsection (1) does not apply to a commodity referred to in section 34 (3), but on delivery of any such commodity in accordance with the relevant arrangement, the commodity is, unless the arrangement otherwise provides, absolutely vested in and is the property of the Board.
(3) Any commodity vested in the board by the operation of subsection (1) or (2) and accepted by the board is so vested freed from all mortgages, charges, liens, pledges, interests and trusts affecting it, and the rights and interests of every person in the commodity are converted into a claim for payment for the commodity so accepted.
Grain is a valuable commodity after the farmer has ploughed the paddock, sowed the crop, sprayed it and gone through wet and/or dry conditions. This year certain areas are having a bumper crop; other areas have been fraught with hail and dry conditions, and a lot of areas have suffered substantial frost. A lot happens to grain before debate begins about when it is vested in the board. While the Opposition does not oppose the bill, I have some reservations about whether the board is needed for five years. If the debt is paid off in one or two years—there having been a number of bumper years—will the vesting of five years still apply? Does the $1.50 levy apply until the debt to Treasury of some $11 million is repaid? Many of the more modern generation progressive farmers—rather than the old traditional farmers who have been through many years with the Wheat Board—do not believe that the New South Wales Grains Board should have been propped up in the first place.
A number of grain traders do not believe that any grain should have vesting rights. In fact, there are very few agricultural products that do have vesting rights. Previous speakers have mentioned oats, chickpeas, linseed and lupin crops—none of which have vesting rights. They have all been deregulated. Cotton—the modern agricultural success—has never been under vesting rights or any guaranteed market. The industry markets its product, and does it very well. Recently milk was deregulated and a new generation of farmers is emerging. Milk will again be one of the success stories and a major export. It is a success story, especially in relation to exports into South-East Asia. The egg industry, with which I was involved, was deregulated in 1988. As a result, prices came down quite dramatically—although most of the benefit of that deregulation went to the retailer. For example, in my time the retailer made perhaps 5¢ to 10¢ out of a carton of eggs, but all of a sudden he was making 80¢. There was no great advantage to the producer. Indeed, in the following 10 years there was a mass exodus of producers from the egg industry. These days only a handful of producers is left.
Other agricultural success stories include the new emerging olive and wine grapes industries. The boards have basically all gone. We have all heard of the potato board and the onion board. There was debate in this place about the table grape industry. The sultana grape industry fell under a board arrangement as well. Farmers and grain traders believe that farmers are businessmen. More and more farmers accept that they are not just farmers, that they are in business and have to make their own decisions. They have to take a calculated risk when they grow a commodity and decide how it should be sold. A lot of new farmers are forward selling part or all of their crop, some selling for cash or on terms, and some selling to grain traders and the Grains Board. If they sell to a trader or another farmer—say to cattle feedlots or to poultry farms—and that trader or farmer goes belly up and is not able to pay the debt they miss out because of the calculated risk they took.
That should be a business risk, and it should be treated no differently from drought, flood, hail or frost, or suppression of prices due to an oversupply of the market, whether that be the world market or the local market. I am pleased that the Minister for Agriculture is in the Chamber because I have a couple of questions to put to him. Though the Opposition will not oppose this bill, it has a number of concerns about the need for this legislation and its ability to extract the $50 per tonne levy from some, not all, farmers. Will the levy be deducted from farmers delivering to Grainco? Will farmers still have the right to sell to other farmers, traders and interstate dealers provided the levy is deducted?
Concerns have also been raised with me that the Government consulted only the New South Wales Farmers Association, members of the Grainco board and farmers who were owed money by the Grains Board before making a decision to inject taxpayers' funds. If all interested parties were consulted, maybe we would not have had the unanimous decision to go the way that we are going today. Other honourable members have spoken about the involvement of Grainco and the buying in of ConAgra. This House has heard both sides of the argument. It has been said that this will give Grainco and Australian grain growers excellent overseas marketing opportunities.
However, concerns have been expressed that ConAgra might buy in for its own vested purposes and that we are yet to learn what will be the detrimental or beneficial effects of that action for our grain growers. I would hope that it would lead to export marketing opportunities, because without viable exports our grain industry will be in dire straits, as Australia cannot consume all the grain that it grows. Other honourable members who have taken part in this debate have spoken about FreightCorp and freight increases on New South Wales branch lines, as against main lines, resulting in many grain trucks going onto our roads that normally would not go onto our roads.
We all know that those trucks break up substandard roads, especially some back roads and council roads, without any provision being made for proper funding to restore and maintain those roads. That is an old argument that will go on for many years. It asks what role rail should play in the movement of grain, as against the use of our very efficient road transport system. We have heard that the New South Wales Grains Board is still under investigation by the Independent Commission Against Corruption. We await with bated breath the result of that investigation. I repeat, the Opposition will not oppose this legislation, although it has some reservations about it.
Mr MARTIN (Bathurst) [10.22 p.m.]: I support the Grain Marketing Amendment Bill. Initially, I commend the Minister for Agriculture for his role in bringing this legislation before the House. The Minister has adopted a positive role. It is good that the bill has the support of the Coalition. I should point out that the sorry state addressed by this bill resulted from legislation that was introduced in this House in the early 1990s principally by the honourable member for Lachlan in his role as Minister for Agriculture at that time. It is interesting that the Leader of the National Party is not in the Chamber. He demonstrates his Napoleonic leadership from somewhere miles behind the frontline.
Mr R. W. Turner: Where is your leader?
Mr MARTIN: The Minister for Agriculture is at the table of the House. I hope the honourable member is not equating the standing of the Premier with that of the Leader of the National Party. Our leader in this debate, the Minister for Agriculture, is very capable and does not need the presence of the Premier. Members of this Chamber would be horrified that the honourable member for Orange would ascribe to the Leader of the National Party the same standing as the Premier of this State. The only contribution of the Leader of the National Party is to ask a couple of questions in question time, laying responsibility for the problems that this bill addresses at the feet of the Minister and the Government. In fact, the truth is the exact opposite.
The Leader of the National Party spoke about prudential governance and transparency, when it was a lack of those qualities in the Coalition Government that led to the need for this bill. That Government went through the process of consultation with New South Wales farmers, putting the growers in charge without any checks and balances. That is the reason for the bill before the House today. Minister Amery should get the pat on the back that he deserves for putting the interests of growers first, and ensuring that that the grower pool payments meant that growers would have a guarantee of getting paid for their produce. This bill puts in place a mechanism that anyone would agree is fair and reasonable.
I commend the honourable member for Murray-Darling for his thoughtful and incisive contribution to this debate. I thank my colleague the honourable member for Cessnock for his contribution, whilst recognising the contributions from the other side of the Chamber. However, Coalition members should recognise that the problem addressed by this bill really is of their making. The honourable member for Lachlan made a reasonable contribution to the debate but, as he did in the urgency debate this afternoon, he skirted around some of the crucial issues. I must take issue with him on the question of increased freight charges on branch lines and his hinting at closures of those lines.
The honourable member for Lachlan was a Minister in the Coalition Government which, in its seven years in office, set a record for closing branch lines in this State. In contrast, the Carr Government has started reopening those branch lines. In actual fact, in recent times Country Labor has taken up what it regarded as the unfair policy of Freight Rail and the uneven increases it imposed on certain branch lines. That issue has pretty much been resolved, and there will be a cap on those freight increases in future, with rebates being paid to farmers. Whilst Coalition members have been talking about this issue, the Carr Government has been doing something about it.
In terms of grower pool payments, the delay in finalising the outstanding 1999-2000 pool payments to growers was because of the significant task that confronted the administrator of reconciling the various pool positions. This was a difficult problem from an accounting point of view. The administrator has now estimated that the total pool equity to be paid to growers will be approximately $11 million, which has been underwritten by Treasury. Honourable members must realise that the accumulated loss is about $160 million. It is fair to say that some of these matters are still being investigated by the Independent Commission Against Corruption.
But one wonders about the management ability of Graincorp, the only organisation in corporate Australia that trusted John Elliott and his Waterwheel organisation. I do not want to disparage the man, the president of the ill-fated Carlton Football Club, but something like $6 million went on the nod in a week. Who else would do that? These were the people that the Coalition put in charge. Opposition members spoke about prudential responsibility and aimed barbs at Minister Amery. Those barbs are easily deflected. I return to grower pool payments. The outcome—payment to growers of approximately $11 million—followed significant consultation between the administrator and the New South Wales Farmers Association, on the assumptions and calculation used by the administrator in deriving his preliminary estimates.
With the scheme of arrangement approved on Wednesday 24 October this year, the administrator anticipates grower payments could commence early this month. This payment to growers has been made possible by a loan to the board from the Government of up to $13 million, which is to be repaid to the Government over the next four years through authorised buyers fees. It is interesting that, since this debate started and this scenario began to unfold, the Opposition has failed to state where it stands on this issue—except that the honourable member for Lachlan stated his firm opinion that deregulation is the way to go. That opinion is at odds with some of the comments made in this debate.
The Opposition's legislation, which lacked transparency, had no safeguards in place and no prudential oversight. The Government, through this Minister, came to the aid of producers. We recognised the complexities of industry. Much has been said tonight about the motives of ConAgra, but that business is a major player in this area. Some Opposition members insinuated that the motives of ConAgra were less than pure. At the end of the day it is a business. I hope that company will use its expertise to expose Australia to international markets. The honourable member for Orange indicated earlier in debate that we must be exporters if our grain industry is to be viable. So we require a degree of trust in this area. We should not read too much into ConAgra buying into this business.
The honourable member for Lachlan said earlier, "Why does that company want to be in this business? Is it in this business to make money?" Of course it is! No honourable member—not even members of the Opposition, who are supposed to be bastions of free enterprise—should be worried about that. I do not want to delay debate on this bill any further. The comments that I made in relation to grower pool payments reflect positively on the Minister, his department and officials, who dealt as quickly as possible with the difficult task that was before them. I now hope that everybody will accept that this legislation is in the best interests of industry. I look forward to its success. I commend the bill to the House.
Mr McGRANE (Dubbo) [10.32 p.m.]: I support the Grain Marketing Bill. I should declare an interest in this issue as I have been a grain grower all my life. Honourable members would be aware that I declared an interest earlier in relation to gaming machine legislation. The grain industry is an extraordinarily important industry for Australia and New South Wales. If grain growers are not making money, New South Wales will suffer. Grain growers in Australia are some of the most efficient—if not the most efficient—growers in the world. Twenty years ago I travelled to the United States of America to compare its grain industry with the industry in Australia. I came back to Australia with the firm belief that we were far in front of the Americans in relation to our utilisation of plants and soils, and our grain production per acre of ground was far in excess of American production.
Our grain market has improved since that time. As was mentioned earlier by other honourable members, today the grain industry is a much more specialised industry. The plant is bigger, technology is better and young farmers are good at determining what crops should be grown. The grain industry in Australia is quite diversified. My grandfather and my father grew only wheat, oats and barley. Thirty years or so ago, when I came into the industry, I diversified and grew a number of other crops. Individual farmers now grow a variety of crops, which is good for the environment and also improves the soil. It is also good for Australia because all that grain is exported. As I said earlier, we have good grain-growing farmers in Australia, who need some degree of protection.
A few weeks ago, after a series of creditor meetings, the Government announced that a scheme of arrangement was formally approved by the court on 24 October—an issue referred to earlier by the honourable member for Bathurst. That scheme of arrangement provides for certainty for all players and stakeholders for the balance of the period until 30 September 2005, when the regulation expires. The court order to implement the scheme of arrangement, pursuant to existing provisions in the Grain Marketing Act 1991, has resulted in a relatively simple and straightforward amending bill. If the scheme had not been approved, a complex and messy situation could have resulted, requiring the Government to pass additional legislation to address difficulties that it could have faced. Fortunately, that was not necessary and we are now dealing with a relatively simple bill.
It is expected that the authorised buyer fees collected until 30 September 2005 will be sufficient to repay the Government loan. If we have a series of good seasons and the loan is repaid early the collection of authorised buyer fees will cease. However, if we have a series of poor seasons over the next three or four years and the collection of authorised buyer fees is insufficient to repay the loan, growers can be assured that that collection of fees will still cease on 30 September 2005, with the Government waiving any outstanding unpaid balance. Because of this minor risk to taxpayers of this State, the Department of Agriculture and the board have been instructed to ensure that authorised buyer fees that are owing are collected and paid.
Another issue of interest to honourable members is that decisions taken in respect of the failure of the New South Wales Grains Board—decisions that are reflected in the contents of this bill—are the most appropriate decisions that could have been taken. They have ensured the continuation of orderly marketing, that premiums earned from the single export desk continue to be earned, and that growers continue to have countervailing powers in the marketplace. The most important aspect of this bill is that it will ensure that growers who are owed money by the board will be paid in full. While I and other honourable members support the merger of ConAgra with Grainco, there is some element of doubt about the benefits of such a merger. At this stage it is like looking into a crystal ball.
It could be said that the experts in ConAgra and other markets would enhance the grain industry in New South Wales and in Queensland. As the honourable member for Lachlan said earlier, why did ConAgra buy into Grainco? Did it do so to benefit shareholders in a private company? Those in the grain industry are playing a game of chance. Grain growers can have a bumper crop but, because of seasonal conditions such as hail, fire, frost or rain, they can lose it all overnight. In November last year in my electorate it rained for 11 days, causing a colossal amount of damage to the wheat crop and confronting many wheat farmers with financial ruin. However, the Federal and State governments came to their rescue. The Federal Government gave wheat growers sufficient money to replant this year's crop. Wheat growers in my electorate have never had better grain crops than they had this year.
As grain growers are involved in a game of chance we must ensure that they have a sound marketplace. As the honourable member for Lachlan said earlier, no-one is able to establish why such huge losses were incurred in the grain industry in the last couple of years. That loss has been estimated at anything from $25 million to $50 million, $80 million, $90 million and $160 million. There are rumours that the loss could be higher than that. However, that loss is now water under the bridge. We must ensure that it never happens again. As was said earlier in debate, in due course we will establish why there was such a massive loss of money in the grain industry in such a short period.
I commend the Minister for his approach to this difficult matter. He has always been open to contributions from all sectors of the grain industry. It is good to know that we have a Minister who listens. It is important with legislation that the Minister listens to different opinions—and there are always different opinions. The honourable member for Orange and the honourable member for Lachlan, even though they are supporting the one principle in this bill, spoke about different ends of the spectrum in regard to marketing. I commend the bill to the House.
Mr THOMPSON (Rockdale) [10.40 p.m.]: I heard the honourable member for Dubbo declare that he had a personal interest in this bill. I also want to declare such an interest. However, my interest is of a more vicarious nature. It is an interest I have on behalf of my in-laws, Fred and Nita Humphreys of Gum Flat Road, Gum Flat, which is just out of Inverell. They have a lovely little property in the electorate of Northern Tablelands. I am pleased to note that the Opposition supports the bill.
Mr R. W. Turner: No, we are not opposing it.
Mr THOMPSON: One must respond to that erudite interjection. The bill will pass because the Opposition has not put forward any particular argument against it. Therefore, it supports the bill. Honourable members opposite can pick and choose whatever words they like, but that is the net effect of their response to the bill. I was going to make the point that the obvious support of the Opposition would warm the hearts of my in-laws, because Fred and Nita have been lifetime supporters of the old Country Party and the current National Party. However, over the past few years, since the National Party was ousted from their electorate, they have started to look more closely at the incumbent. I hold out hope that in the fullness of time they might come round. I respect their judgment and political beliefs immensely, and I would not presume to verbal them in any way as to which way they might vote. They are wonderful people and have the respect of everyone in their district.
Over the years they have grown all sorts of grain on their small property—wheat, corn sorghum, oats, and so on. I remember some years ago they had a magnificent crop of peas. I suppose that is not a grain, but it is the sort of thing country people well and truly understand. People were camped around the paddocks ready to pick the peas the next morning, but overnight a terrible hail storm wiped out the entire crop and sent the family broke. Honourable members understand that that sometimes happens on the land.
Fred and Nita are probably typical of many country people. They have worked extremely hard all their lives. On occasions they have benefited from good seasons but, as I have learned over my 30-plus years of experience with them, the good years occur only now and then. Generally, farm life is a hard slog. It is hard work, continually battling the elements. In supporting this bill I pay tribute to the many hard-working, decent Australians who farm the land, often in the face of great adversity. Through Fred and Nita Humphreys I have had the opportunity to meet many other good people who have invested not only their money but also their lives in farming. This bill will help to resolve a number of difficult aspects of grain marketing in New South Wales and I commend it to the House.
Mr TORBAY (Northern Tablelands) [10.44 p.m.]: I am pleased to support the bill. In doing so, I commend the Minister for being able to put the bill through the House with bipartisan support, given the significant and difficult circumstances surrounding this issue. The recent financial losses incurred by the New South Wales Grains Board show that operations in commercial markets should be left to those with the necessary commercial skills to maintain a strong bottom line. Grainco certainly brings those skills to the marketing of coarse grains in New South Wales. Governments should be wary of monopoly marketing arrangements unless they are clearly to the public good. The deed of arrangement that I will speak of presents a clear case of the public good. While some have chosen to criticise the deed of arrangement, it is clear that both the deed and the testing of marketing powers is the best way forward, given the financial circumstances of the New South Wales Grains Board.
Grainco Australia Ltd is a grower-owned company that is based in Queensland, and it knows about the interests of growers. It has grown out of the merger and privatisation of several smaller Queensland statutory grain marketing boards, and has a proven track record over the past 10 years or so. Grainco was interested in expanding to service the New South Wales market and was able to come up with the best bid to take over the board's role of providing marketing services to New South Wales grain growers. While there were some minor teething problems when Grainco commenced operations in New South Wales last November, they were due largely to Grainco being given the green light so far into the season, which was then already under way. With a full season now under its belt, Grainco’s performance is well regarded by large numbers of its current and potential clients in New South Wales.
As a commercially driven operator, the substantial majority of whose ownership is vested in grain growers from Queensland and throughout the rest of Australia, Grainco has the incentive to perform in the best interests of those growers. The remaining share capital in Grainco is held by its employees. A deed of arrangement entered into between the Government, Grainco and the board sets out the obligations and responsibilities Grainco is required to fulfil. While the details of this deed are commercial in confidence, there are some key elements of it that Parliament should be aware of. I am told the deed appoints Grainco as the board's sole agent for malting barley and for exports of feed barley, canola and sorghum. The deed also involves Grainco meeting certain of the board's contracts and in helping with the winding down of the previous board's affairs. The deed provided for Grainco to take over a significant proportion of the previous board's assets—land and buildings, vehicles, premises, et cetera—and operating staff, and charges Grainco with supervising compliance with the Grain Marketing Act.
Key elements of the deed so far as growers are concerned are the obligations on Grainco to provide pools for barley, canola, and sorghum, and to apply proper pool practices in conducting those pools. They are also obliged to make prompt payment to growers and to account to the administrator of the board and the New South Wales Government for their performance under the deed, including operating of pools, prices paid to growers, collection of authorised buyer fees, costs incurred in handling, storage and movement of grain, and single desk export activity. There is also a clause that ensures that Grainco's shareholding by growers cannot drop below 50 per cent without the prior approval of the New South Wales Government. The Government has indicated to me that any such approval is most unlikely to be forthcoming.
Although Grainco, in accordance with the bill, is required to maintain those obligations through until the expiry of the regulatory powers on 30 September 2005, Grainco is otherwise an independent grower-owned public company, and is free to enter into all kinds of partnerships, joint ventures and arrangements in the best interests of its owners and clients. One such arrangement that has gained a little publicity recently is Grainco’s establishment of a subsidiary company, 75 per cent owned by Grainco, in conjunction with ConAgra, to provide Grainco and its customers with marketing services. This linkage to a major multinational provides Grainco with increased opportunities to market growers' production, and also to gain market intelligence and feedback about customer requirements and how growers can better meet them.
Legitimate concern is being expressed by industry groups about the potential for the Grainco- ConAgra group to use vesting as a means to suppress the market. As I have said, vesting powers in a commercial operation is imperative to pay grain growers for the 1999-2000 pool payments and to meet the terms of the deed of arrangement. The issue of the future behaviour of Grainco-ConAgra will need to be scrutinised, and the bill allows that to happen.
While we may be disappointed at the collapse of the New South Wales Grains Board—and there has been much comment about that during this debate—it has provided an opportunity for a vibrant private sector organisation with a substantial grower majority ownership to step in and provide farmers in New South Wales with the sophisticated level of service they need. This bill makes it clear that the current regulatory powers over barley, canola and sorghum marketing will expire on 30 September 2005. The market for those grains will thus be completely deregulated on and from 1 October 2005. Grainco will have to compete with other operators in the marketplace from that point onwards. The onus is on Grainco to perform to the satisfaction of New South Wales growers in the intervening period so that it can maintain a substantial presence in the New South Wales market after that date. I commend the bill to the House.
Mr AMERY (Mount Druitt—Minister for Agriculture, and Minister for Corrective Services) [10.50 p.m.], in reply: Because of the lateness of the hour I will keep my remarks as brief as possible. I will not give a critique of every contribution that was made. I thank the various members of the House who contributed to the debate in a good spirit and in an informative way. They include the honourable member for Barwon, who led for the Opposition, the honourable member for Lachlan and the honourable member for Orange from the National Party; the honourable members representing the electorates of Murray-Darling, Cessnock and Bathurst from Country Labor; the honourable member for Dubbo and the honourable member for Northern Tablelands from the Independent crossbenches; and the honourable member for Rockdale from the Australian Labor Party, who made an entertaining contribution to the debate.
I am unable to respond to every matter that was raised. I will comment on the legality of the matters in the bill, but I encourage honourable members who may have questions about various aspects of the Grainco arrangement to not only seek briefings from my department—the honourable member for Northern Tablelands has asked a number of questions of my office—but also to place questions on notice so that I can deal with the various aspects of concern. Picking up on a number of matters that were raised, the honourable member for Barwon said first that the Opposition would support the Government. That is an important aspect because there had been a cloud over whether the Opposition supported the continuation of vesting. He made the comment, which I think was repeated by the honourable member for Orange, that the vesting period may be too long.
The honourable member for Barwon, like the honourable member for Orange and the honourable member for Lachlan, also asked a number of questions about ConAgra. The honourable member for Northern Tablelands in his contribution picked up on some of the things I am about to say. I make the point that ConAgra does not have a share in the vesting rights. The Crown Solicitor and others have been looking into aspects of the ConAgra arrangement. There is a deed of agreement that has been adopted by the Supreme Court and supported by the lenders. Obviously, the Government is looking at the legality of the arrangements between ConAgra and Grainco. The advice so far would suggest there has been no breach of that arrangement. Therefore, ConAgra does not have a share in the vesting rights. The vesting rights are in the board, and Grainco is the sole agent, as I think the honourable member for Northern Tablelands said.
ConAgra has a 25 per cent interest and Grainco a 75 per cent majority interest in a Grainco-owned subsidiary company. Grainco has the control, but has access to a greater market opportunity, expertise and market intelligence. The honourable member for Lachlan asked what ConAgra will get out of this. It is a mutual arrangement for access to markets. In relation to the time frame referred to by a number of members, the New South Wales Farmers Association wanted the maximum possible extension of the vesting powers, and five years was the maximum feasible term that could be sought under the National Competition Policy. There were two other aspects of the time frame. The first was that we had to work out whether we were going to collect enough buyers' fees. We wanted to make sure the vesting powers were in place long enough to enable us to collect those buyers' fees to meet those financial arrangements, which have been well debated.
The second aspect was that we had to attract someone. No-one will pay $25 million in return for vesting powers for one year. We had to offer five years as an incentive. I hope that clarifies that aspect. Farmers would not have been happy with the shorter period of the extension of the regulatory powers. The honourable member for Orange referred to the authorised buyers' fees [ABFs]. They are required to repay the government loan. A shorter period for collecting the ABFs would have meant that a lesser sum of money would have been available as a government loan. This process was about trying to collect as much money as possible and securing the farmers' interests. A shorter period would have left farmers with a lower payout from the 1999-2000 pools. As I said, Grainco is a majority shareholder in MarketLink, the subsidiary company of which ConAgra owns 25 per cent. Grainco directors have a fiduciary responsibility to their shareholders.
MarketLink is a market service provider and is a low capital subsidiary of Grainco. ConAgra is bringing its expertise, its contacts and some throughput of grain, but is not putting in significant amounts of capital. I think the honourable member for Lachlan may have asked a question about that. ConAgra has not bought a shareholding in Grainco; it has entered into a partnership in a subsidiary of Grainco. The concerns about an American company buying out or buying a large share of Grainco and therefore inheriting the vesting powers will be watched carefully by the Government in so far as the legalities of the transfer are concerned. Overall, all honourable members made positive contributions compared with the quality of the contributions of some Opposition members to the disallowance motion on this issue only a couple of weeks ago.
In thanking the honourable member for Lachlan, who has been verballed and named by me a few times as the former Minister for Agriculture who introduced the legislation, I note that his contribution was a strong one. In fact, some people have observed that he continues to show up the person who succeeded him as Leader of the National Party. His contribution tonight clearly showed that. The bill will now go to the upper House. A number of questions were asked in the course of the debate. If I have not answered those questions in my reply, I will write to the individual members to answer particular questions raised during the debate.
Motion agreed to.
Bill read a second time and passed through remaining stages.
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