Marketing of Primary Products Amendment (Rice Marketing Board) Bill

The Hon. R. D. DYER (Minister for Public Works and Services) [9.51 p.m.]: I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The provisions of the bill relate specifically to the Rice Marketing Board for the State of New South Wales and how the board operates under the Marketing of Primary Products Act 1983. The Rice Marketing Board was the first marketing board to be constituted under the original Marketing of Primary Products Act 1927. It was officially constituted by proclamation on 9 November 1928. By any comparison, the board has proven itself to be one of the most successful, if not the most successful, statutory marketing authorities to have been established. This position was most clearly demonstrated in the late 1995 review of the board conducted under the then recently introduced competition policy guidelines.

This review concluded that the board was generating significant net public benefits and that those benefits were expected to grow. While the fact that the board is able to generate a net public benefit is significant in itself, it is more significant to see that outcome as a result of evolution and the board’s adaptation to the changing environment in which it operates. This process of adaptation is active and ongoing, and I will have more to say on this theme in my further statements of support for the proposed legislation. The amendments which it is now proposed to be made to the Marketing of Primary Products Act in respect of the Rice Marketing Board have three main purposes:

•to put contractual arrangements between the Rice Marketing Board and any bodies or persons which it appoints as authorised agents and/or buyers onto a more normal commercial basis. Provision is being made for such appointments to be for periods of up to four years, and those appointments cannot be revoked during their term without the approval of the Minister for Agriculture;

• to apply a parallel provision to any exemptions from vesting made by the board under section 57 of the Marketing of Primary Products Act; and

•to ensure that the current Marketing of Primary Products Act exemption from the provisions of Part IV of the Commonwealth Trade Practices Act continues in respect of the activities of the Rice Marketing Board after 21 July 1998 when amendments to the Trade Practices Act come into full force.

There are two features of the rice industry which make these amendments necessary. Firstly, rice production requires an infrastructure of drying and storage facilities which need to be provided on a collective basis to realise economies of size and thereby contain costs. Whoever provides such facilities is making a commitment to significant investment expenditure and would reasonably expect to enter into a commercial agreement for such facilities to be used under contract for at least an initial period of a few years. Secondly, as a manifestation of the previous point, it is necessary to recognise the industry rationalisation which occurred in the mid 1980s and which resulted in the current relationship between the Rice Marketing Board and the organisation now known as the Rice Growers Co-operative Limited.

In the implementation of its decision to extend the vesting power of the Rice Marketing Board and to preserve existing arrangements within the industry, the Government has significantly adapted its legislation to a competitive framework and will continue to do so. The proclamation of the extension to the board’s vesting power of 5 December 1997 was quite different in form to the proclamation which it replaced. Ownership of all rice is now vested in the board, with the board having the sole right to determine whether to grant any exemptions from vesting under its powers under section 57 of the Marketing of Primary Products Act.

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These amendments which I now put before the House enable commercial contractual arrangements between the board and any authorised agent and/or buyer appointed by the board. The board may make appointments of authorised agents and buyers for periods of up to four years on a rolling basis. This bill and the vesting proclamation make these provisions generic, but at the same time they effectively support the existing arrangement between the Rice Marketing Board and the Rice Growers Co-operative. The onus and accountability for any arrangement entered into now will rest squarely with the Rice Marketing Board and that is the way it should be. Thus, while the Rice Marketing Board has been shown to generate a net public benefit, it is also apparent that competition policy is impacting on the way in which the board performs its functions.

However, competition policy is only one of a number of recent impacts on the board. Other significant impacts include the changing world trade environment, changes in water policy, changed policy on land ownership in the Murrumbidgee irrigation area and the need to further develop sustainable farming practices. It is the concern of the Minister for Agriculture that as the operating environment of the board changes, we do not impose change at such a rate that the board becomes dysfunctional. In this context of a changing environment I should also point out that a further effect of the proposed legislation will be to bring forward to 2000 the next competition policy review of the board.

Assuming the board fully uses the proposed power to enter into rolling four-year agreements, it will be necessary for the Government to decide in 2000 any further policy changes with which the board will have to comply from 2004 onwards. I have spoken very favourably of the Rice Marketing Board and its adaptiveness to change. It is appropriate that I should have done so. The legislation now proposed is the culmination of an extended period of consultation with rice industry leaders on the implementation of this Government’s decision on the 1995 competition policy review of the board. It retains the integrity of the Government’s decision announced in early 1996 to maintain the existing industry arrangements within the rice industry.

At the same time, it has recast key provisions relating to the operations of the board so that the relevant provisions reflect a competitive marketplace and do not necessarily lock up a single arrangement. This change to legislation has also been made in such a way as to accommodate contractual arrangements which enable an authorised agent or buyer of the board to have a normal commercial security of supply as a foundation upon which that agent and/or buyer might reasonably undertake any necessary investment in infrastructure to support the industry. I commend the bill to the House.

The Hon. R. T. M. BULL (Deputy Leader of the Opposition) [9.51 p.m.]: The Opposition supports this bill. For some time the Rice Growers Association and the Rice Marketing Board have been negotiating with the Government for amendments to the Marketing of Primary Products Act. Honourable members will know that the recently completed competition policy review determined that the rice industry be allowed to continue with its current regulatory arrangements. Those with knowledge of the rice industry know that the Rice Marketing Board has total vesting powers over all rice grown in New South Wales. That means that all rice grown in New South Wales goes to the Rice Marketing Board, which has exclusive contractual arrangements with the Rice Growers Co-operative, which in turn mills the rice for the market.

Although the rice industry is heavily regulated, it did well to survive the Hilmer review process. The final decision was based on the most important consideration of any Hilmer review, that is, what is in the public interest. Obviously, the review decided that it was in the public interest for the rice industry to continue to be regulated. I am sure rice growers are especially grateful for that decision. The rice industry is perhaps one of the best industries to hold up in terms of a high level of production and skills, which range from the growers to the marketing board and the Rice Growers Co-operative. That brilliant co-operative has done extraordinarily well in terms of overseas sales. Indeed, it now exports 25,000 tonnes of rice to Japan, which is no mean feat. The co-operative relies heavily on export markets and presently exports some 80 per cent of rice grown in New South Wales. That shows that the rice industry is an important primary industry in New South Wales.

This bill puts in place regulatory arrangements that will allow the rice industry to be exempt from certain provisions of the Trade Practices Act and amends the contractual arrangements between the Rice Marketing Board and any other bodies or persons which it appoints as authorised agents or buyers. The marketing board has been keen to extend its contractual arrangements over four years rather than one year, and that is provided in this bill. That means that authorised agents and buyers will have security of supply over a reasonable period.

Considerable costs and infrastructure expenditure are associated with the contractual arrangements. The rice industry has been keen to gain a parallel provision to any exemption from vesting, that is, an exemption from part IV of the Trade Practices Act, and that is provided in this bill. The Opposition supports this bill, which will ensure, amongst other things, that the current regulatory regime continues and that the industry’s much-lauded success as a rural industry in New South Wales continues.

The Hon. ELISABETH KIRKBY [9.56 p.m.]: I support the remarks of the shadow minister for agriculture. Anyone who has seen the way the Rice Marketing Board operates and the sophisticated way in which it markets its product, and who understands that this corporation is making great
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inroads into export markets and is exporting quality product in a sophisticated manner will fully support this bill. The Rice Marketing Board is a success story in the export of primary products. Certainly, any intention to change the method of marketing at this time would not be in the best interests of rice growers, the rice industry or, indeed, Australia. New South Wales is the largest rice producer in Australia. The Government has made a wise decision which must be supported. I am happy to support this bill.

The Hon. R. S. L. JONES [9.57 p.m.]: I support the legislation. My policy adviser, Jenni Emblem, contacted rice growers in relation to the legislation. The Rice Marketing Board is happy with this bill. As the Hon. Elisabeth Kirkby said, the rice industry is one success story in New South Wales. I hope that it will further penetrate the Japanese market - bust it wide open. I am sure that the industry will soon export sufficient product.

Reverend the Hon. F. J. NILE [9.58 p.m.]: The Christian Democratic Party supports the Marketing of Primary Products Amendment (Rice Marketing Board) Bill, which will allow the board to be even more efficient. Like other honourable members, we have been impressed with the marketing activities of the board, which has been able to sell Australian-grown rice overseas, particularly rice from New South Wales. That is a great mark of success. A number of people think of South-East Asia as the original rice bowl of the Asian nations. The people involved in breaking into that market should be congratulated. I am pleased to support this bill.

The Hon. R. D. DYER (Minister for Public Works and Services) [10.00 p.m.]: I thank honourable members for their support for this bill and I commend it to the House.

Motion agreed to.

Bill read a second time and passed through remaining stages.