Agricultural Industry Services Bill

The Hon. R. D. DYER (Minister for Public Works and Services) [3.40 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.

This bill facilitates the establishment of legal entities, called committees in the bill, to provide a range of services to agricultural industries. Such services include market services, the conduct of information and education activities, disease control and eradication, the promotion and supervision of quality assurance schemes, and the management of compensation schemes. At present these functions are carried out by a variety of boards and committees constituted in various ways. These include:

•marketing boards and committees, such as the Rice Marketing Board, constituted under the Marketing of Primary Products Act 1983;

•multifunction boards and committees constituted under various individual Acts such as the Poultry Meat Industry Act 1986; and

•limited compensation and disease control schemes conducted under such Acts as the Cattle Compensation Act 1951.

A common feature of many of these boards and committees is their power to levy compulsory charges on members of the agricultural industry which they serve. With changing times and attitudes in many agricultural industries, many of the functions of such boards and committees, particularly central government imposed compulsory functions, are seen as outmoded and no longer in the best interests of either the industry concerned or the broader community. This, together with the Government’s ongoing policy of reviewing legislation to ensure compliance with national competition policy and regulatory best practice guidelines have, in recent times, seen the repeal of some of the legislation constituting agricultural boards and committees. For example, the Dried Fruits Act 1939 which constituted the New South Wales Dried Fruits Board was repealed in 1997. While the Government’s commitment to national competition policy requires a review of legislation, the competition principles agreement recognises that restrictions on competition are justified in some circumstances.

In broad terms, restrictions on competition, which boards and committees in the agricultural sector often represent, will be justified where the benefits of the restrictions to the community as a whole outweigh the costs. There must be a net public benefit resulting from the restriction. The continuation of some agricultural industry committees is seen as necessary and desirable and many would meet a net public benefit test under competition policy. This is particularly so where the board or committee exists to address market failures causing "spill over" effects between those in the sector. Such market failures can result where industry has underspent on such services as research, the provision of marketing information and, of particular importance, disease control. However, it is considered that, rather than continue the multiplicity of different structures under which such boards and committees presently operate, regulatory best practice requires that all should, in time, be brought within one regulatory regime.

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The bill allows this to be done. It provides a shell which, as well as allowing new committees to be formed, will permit existing boards and committees to be reconstituted. I should emphasise, however, that the bill does not itself transfer these boards and committees to its jurisdiction: it merely provides the vehicle by which it may be done. It is considered that all committees providing services in the agricultural sector should comply with some basic principles which are embodied in the bill. These include the principles: firstly, that the committee should belong to the industry which it serves, but it should be subject to adequate supervision by government to ensure that its functions are being properly exercised; and, secondly, that the members of the industry should have adequate powers of direction and control of the committee, including the power to control the levy of compulsory charges on members.

Another fundamental feature of the bill is the requirement that the establishment of committees comply with national competition policy. All committees constituted under the bill will be subject to two overriding principles. Firstly, the formation of the committee will be subject to a transparent competition policy review. Secondly, the committee will have a limited life and its continuation will also be subject to a transparent competition policy review. Under the bill, a committee will be established by the making of a foundation regulation in accordance with the requirements of the Subordinate Legislation Act 1989. The committee will come into existence on the day on which the foundation regulation takes effect. Having a committee constituted by means of a regulation achieves three things. Firstly, it ensures that unless exempted under the terms of the Subordinate Legislation Act, the making of a foundation regulation will require the preparation of a regulatory impact statement in the ordinary way. However, in addition, the bill specifically requires that this regulatory impact statement must contain an assessment of the regulation carried out in accordance with the competition principles agreement.

Secondly, like all other regulations, the regulation will be reviewed every five years; a committee will thus be subject to regular review to ensure that its objects remain current and appropriate and that its continued existence is justified. Thirdly, and most importantly, it ensures that the constitution of the committee is subject to the scrutiny of this Parliament, since a foundation regulation under the bill will be subject to the normal disallowance procedure. When it comes to winding up a committee, again the members are in control. While the bill provides for the winding up of a committee to be initiated in a number of different ways, it is crucial to the concept of accountability to members that the members must be able, if they believe that a committee has outlived its usefulness, to initiate the winding up of the committee. The bill achieves this. The members may request the Minister to direct the taking of a poll on the question of whether the committee should be wound up. If a poll is held and at least half the votes cast support the winding up, with at least half the members casting a vote, the committee will be wound up. When the winding up is complete any assets of the committee, which, of course, belong to the members, will be dealt with as the Governor, on the recommendation of the Minister, directs.

This provision has been drafted so as to confer the necessary flexibility to ensure that any remaining assets are dealt with in the most equitable way. It is the intention that, as far as possible, the assets will be returned to the members, but the provision recognises that there are circumstances where this may be either impossible or inappropriate. For example, if the amount involved is relatively small and the number of members is large it may be uneconomic to distribute the assets among the members. Similarly, there may be circumstances where a hard and fast rule would result in inequities. It may be, for example, that the assets have largely been contributed by a particular segment of the members and to divide those assets between all current members would be unfair to those members and result in windfall gains to others. The provision for the Governor to determine the manner of distribution of assets on winding up will ensure that justice is done.

The bill contains many innovative features which, while ensuring necessary public interest constraints, are primarily designed to encourage primary producers to utilise its provisions to form committees to enable them collectively to better meet the challenges facing agriculture into the twenty-first century. The bill represents part of the continuing process of the modernisation of legislation relating to agriculture in the State and I am confident that it will prove extremely popular with industry. I commend the bill to the House.

The Hon. R. T. M. BULL (Deputy Leader of the Opposition) [3.40 p.m.]: The Opposition has much pleasure in supporting this legislation. Opposition members have some concerns about it, but we understand that the Government will address those concerns in the Committee stage. I thank the Government, the Department of Agriculture and the Minister’s advisers for their co-operation in these matters. This legislation will enable all those committees functioning under current commodity legislation to be brought under one piece of legislation, and enable the establishment of those legal entities.

Those committees, whether they be marketing boards or other boards, have various functions, including collecting levies and making decisions about marketing on behalf of the commodity groups that they represent. They have an important function in the administration of agricultural commodities in this State. The bringing of all those committees under one regulatory regime - the Agricultural Industry Services Act - is a good move that should be supported. If we have different requirements and different clauses in each piece of commodity legislation we run the risk of having inconsistencies throughout the industry. This good piece of legislation tidies up those inconsistencies and brings all these provisions under one bill.

The committee should belong to the industry it serves but it should be subject to adequate supervision by government to ensure that its functions are being properly exercised. The members of the industry should have adequate powers of direction and control of the committee, including the power to control the levy of compulsory charges on members. The establishment of the committee must comply with national competition policy and all committees constituted under the bill will be subject to two overriding principles. First, the formation of the committee will be subject to a transparent competition policy review and, second, the
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committee will have a limited life and its continuation will be subject to a transparent competition policy review. It is intended that the committees established under the proposed Act will replace all the various boards, committees and other bodies constituted under the other commodity Acts administered by the Minister for Agriculture.

The bill also identifies circumstances under which the affairs of such a committee may be wound up. Members may request that the Minister direct the taking of a poll on the question as to whether a committee should be wound up. If a poll is held and at least half the votes cast support the winding up, with at least half the members casting a vote, the committee will be wound up. I referred earlier to some concerns that the Opposition has in relation to this bill. Before I refer to those concerns I indicate that this piece of legislation is important for one reason: it is enabling legislation that will allow the imposition of a special levy on producers and the collection of that levy for the administration of the ovine Johne’s disease national program.

Honourable members would be aware that this important program is being undertaken by all States, in particular New South Wales. Unfortunately, the disease originated in New South Wales, which has by far the largest number of affected properties and flocks. It is incumbent on us to do the job properly in this State. It is imperative that we do the job properly to enable access to a number of other States that have already closed their borders to New South Wales sheep. This legislation will enable the collection of that levy from primary producers - sheep producers in New South Wales - so that funds are available for the administration of the program.

Leaving aside the bill for a moment, the eventual eradication of ovine Johne’s disease is something that I hold dear to my heart. Clearly, far too much inaction over many years has enabled this disease to develop - certainly not at a rapid rate because it not that sort of infectious disease - at a rate that has presented a problem for rural lands protection boards in the southern highlands, the tablelands and southern areas, including the Riverina. This disease will affect us badly in the future if we do not support its eradication. I remind honourable members that it took 27 years to eradicate brucellosis and tuberculosis in cattle. It may well take 20 years to eradicate ovine Johne’s disease in our sheep flock. If we do not have the willpower and we do not provide sufficient financial resources to undertake this task, it is likely that the whole program will not succeed.

Farmers whose stock is affected by the disease should receive compensation. They carry an enormous burden for sheep producers in New South Wales and indeed in Australia by having to eradicate the disease and quarantine stock. I have not been able to persuade my Federal or State colleagues in relation to that matter, but I remind the House that in January 1997 the Victorian Government and the Minister for Agriculture in that State provided $1 million in funding to eradicate the disease in 26 flocks in Victoria. That did not get rid of the problem but it was a good commitment by that Government. I would like to see a similar commitment by this State Government to compensate farmers who have to eradicate this disease. In correspondence to me the New South Wales Farmers Association addressed its concerns in relation to this legislation. I will not waste the time of the House going through that correspondence because the Government will address those concerns. I once again thank all those involved for their co-operation. I may make some comments in relation to those matters in Committee.

The Hon. ELISABETH KIRKBY [3.49 p.m.]: On behalf of the Australian Democrats I support the Agricultural Industry Services Bill. I have consulted at some length with and received correspondence from the New South Wales Farmers Association on this legislation. Following discussions with the Government that resulted in changes to the original legislation, the association is more confident that the legislation will be of value across the agricultural sector. In a letter dated 28 May the association stated:

. . . the Minister entered into negotiations with us, and we have agreed to support the Bill based on the changes that have been made.

In that letter the association also pointed out its concerns. The first was that the legislation could be used to transfer the cost of government services to industry. The association stated in its letter:

We . . . believe that the proposed amendment to clause 4(5)a on page 15, plus the commitment by the Minister on this issue in his second-reading speech go as close as we can to reaching a desired outcome on this matter.

The second concern of the New South Wales Farmers Association was that the majority of committee members should be elected from constituents rather than be appointed by the Minister. It believed the money being expended would be industry money and, therefore, constituents should have some control over the committee. In response to this request the Minister agreed to insert a new clause 6(3) on page 7, to provide that the
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majority of the committee will be elected from constituents rather than be appointed by the Minister. The association further requested that those committee members should be grower constituents, with "grower" defined in the Act. That request was not supported by the Minister, for technical reasons - specifically, that a scheme under this Act may be established by traders or processors who would not support growers being appointed to their committee.

The New South Wales Farmers Association also raised the issue that if traders or processors established a scheme, the impact of any levy would most likely flow on to the growers, and, therefore, they should have some say. In the end, the association decided to accept the amendment proposed by the Minister without the inclusion of the word "grower". Perhaps the association was forced into that position because its concern was valid and its request to have growers on the committee, with or without traders and processors, was reasonable. I hope that the association’s failure to secure that amendment will not result in growers being in an unsatisfactory position at some time in the future.

The association stated that if it was clear that a proposal to have traders only on the committee would have a financial impact on growers, then Parliament should take the opportunity to disallow such a proposal. That presumes that a regulation to establish a committee under the Act would lie on the table of both Houses. The association gave an example of fruit agents at Flemington markets who decided to impose on themselves a levy of $1 per box to raise money to promote the markets. Those agents would be the constituents under the Act and would elect a majority of members to the committee to manage the levy funds. It is highly likely that in such a situation the agents would simply transfer the cost of the levy to fruit growers in a reduced price.

In that situation the fruit growers, who would not have a say on the committee, would not be able to debate the levy but would still have to pay. As growers make the least profit from agricultural enterprises, I fully share their concerns. The association’s policy director stated in the letter that there is no fail-safe way to get around the problem by means of legislation. Perhaps the Minister will address these concerns in his reply for the benefit of the industry. The final matter raised by the New South Wales Farmers Association was the ownership of assets in the event of the winding up of a committee. The association stated:

We believe that the amendment that the Minister has agreed to (21(5) on P 23) covers this issue as well as possible, recognising that if there was only a minimal amount of assets to distribute, it could be impractical to divide them up among levy-payers.

The association finally stated:

Overall, the association is now prepared to support the legislation, recognising as we do that for programs such as the proposed OJD eradication program -

which was mentioned by the shadow minister and Deputy Leader of the Opposition, the Hon. R. T. M. Bull -

it is necessary for the sheep industry to have some means available to raise funds from industry.

The Deputy Leader of the Opposition said that there had been inaction by previous governments in regard to the threat of ovine Johne’s disease. There has also been inaction over the past two years while growers have begged the Minister to do something about the eradication of ovine Johne’s disease. There is no doubt that the Government has been dragging its feet. After all, it did not take long to introduce footrot control. I do not know why it has taken so long to introduce and implement measures to assist in the control of ovine Johne’s disease. Not only is the control of that disease important, but there is still concern about bovine Johne’s disease within the dairy industry, which may be debated in the next piece of legislation.

A levy needs to be imposed on both dairy farmers and sheep farmers to ensure that proper control measures and methods of eradication are implemented. It is possible under the present legislation to raise money from industry by means of a levy. It is very sad, and maybe cynical, to compare the raising of money to assist farmers whose stock may be affected by either bovine Johne’s disease or ovine Johne’s disease with the funding by the Commonwealth and State governments of $24 million to relocate a football team to the central coast. The amount of $24 million can be found for a football club, but all that the State Government can find to assist farmers whose livelihood may be totally threatened by ovine Johne’s disease is $1 million.

Honourable members should reflect on that, particularly as recent statistics show that far more people visit libraries and museums than attend sporting fixtures. I am not saying we should not have sporting fixtures, but with all the other calls on Federal and State government funds, it is sick that they have provided $24 million to relocate a football team. I would go so far as to say that it is obscene.
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However, it has happened, and the Bears will be very happy. I wish similar concern was shown for farmers.

The Hon. D. J. Gay: The Bears are getting twice as much as the farmers per annum.

The Hon. ELISABETH KIRKBY: I am not denying that; in fact, I am trying to emphasise it. It is appalling, and I cannot understand where we are coming from.

The Hon. M. J. Gallacher: The Western Suburbs club got another $10 million.

The Hon. ELISABETH KIRKBY: That makes it even worse. It is appalling when we need money for child care, carers, health, community care, the hospital system and schools. We should not be supporting sporting fixtures or sporting teams to that extent when the money given to agriculture in particular is so piddling. I support the legislation.

Reverend the Hon. F. J. NILE [4.01 p.m.]: The Christian Democratic Party supports the Agricultural Industry Services Bill. The bill will create one Act under which a range of services can be provided to agricultural industries, and thereby allow the eventual repeal of a number of existing Acts and orders that currently provide for such services and are under review in line with competition policy and best-practice regulation guidelines. The New South Wales Farmers Association expressed concerns in a letter to the shadow minister for agriculture, the Deputy Leader of the Opposition, dated 28 May 1998.

The letter acknowledged that the association had received co-operation from the Minister for Agriculture, and Minister for Land and Water Conservation and that the Government would move amendments to meet the association’s concerns. The amendments will provide that committees will deliver benefits to their proposed constituents; that constituents be represented on committees - an amendment which will render clause 6 consistent with Government amendment 2 - that industry members have majority representation on committees; and that there be an orderly distribution of assets in the event that a committee is wound up. The Christian Democratic Party is pleased to support the bill and congratulates the Minister on his ability to achieve that degree of co-operation.

The Hon. R. D. DYER (Minister for Public Works and Services) [4.02 p.m.], in reply: I thank the Deputy Leader of the Opposition and others who spoke in the debate for their support of this measure. I shall refer the comments made by the Hon. Elisabeth Kirkby to my colleague the Minister for Agriculture, and Minister for Land and Water Conservation for consideration. I foreshadow - as Reverend the Hon. F. J. Nile said - that the Government intends to move amendments in Committee which take account of concerns expressed by members of the Opposition in another place and concerns expressed by the New South Wales Farmers Association. The general effect of the amendments is as stated by Reverend the Hon. F. J. Nile, though I shall outline their purposes in a little more detail in Committee. I commend the bill to the House.

Motion agreed to.

Bill read a second time.

Part 1

The Hon. R. D. DYER (Minister for Public Works and Services) [4.05 p.m.], by leave: I move Government amendments Nos 1 to 5 in globo:

No. 1 Page 5, clause 4. Insert after line 23:

(a) the Minister is satisfied that the establishment of the committee would be to the benefit of the committee’s proposed constituents, and

No. 2 Page 6, clause 6, line 34. Omit "(if any)".

No. 3 Page 7, clause 6, line 1. Omit "there are to be elected members and".

No. 4 Page 7, clause 6. Insert after line 19:

(3) More than half of the members of the committee are to be members elected from among the committee’s constituents.

No. 5 Page 15, clause 21. Insert after line 34:

(5) In making a recommendation referred to in subsection (4):

(a) the Minister must first consider whether it would be fair and practicable for those assets, or any part of them, to be returned to persons who are, or who have recently been, constituents of the committee and, if so, must recommend accordingly, and

(b) in relation to any assets remaining after the provisions of paragraph (a) have been complied with, the Minister must then consider whether there is any other organisation having the same general objects as those of the committee and, if so, must recommend that those remaining assets be transferred to that organisation or, if there is more than one such

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organisation, to each of those organisations in such proportions as the Minister considers appropriate, and

(c) in relation to any assets remaining after the provisions of paragraphs (a) and (b) have been complied with, the Minister must then consider how best those remaining assets can be dealt with in the public interest and must recommend accordingly.

(6) In considering the matters referred to in subsection (5)(a), (b) and (c), the Minister must consult with the members of the committee.

As I said when I replied to the second reading debate, these amendments have been drafted to take account of concerns expressed by Opposition members and by the New South Wales Farmers Association. The association has indicated that it supports each amendment as drafted. The first amendment provides that committees are established to deliver benefits - I emphasise that word - to their constituents. Amendments 2 and 3 - amendment 3 is consequential upon amendment 2 - require that industry committees include elected members.

The fourth amendment provides that the industry is adequately represented on an industry committee. This is to be achieved by ensuring that the majority of industry committee members are elected from the committee’s industry constituents. Finally, amendment 5 provides that there is to be an orderly distribution of assets in the event that a committee is wound up and that unspent industry contributions are retained by the industry for uses similar to those for which they were originally levied. With those short comments I commend the amendments to the Committee.

The Hon. R. T. M. BULL (Deputy Leader of the Opposition) [4.08 p.m.]: The Opposition supports the Government amendments, which meet concerns that have been raised about the legislation, as documented by the Hon. Elisabeth Kirkby from the Australian Democrats. The first amendment overcomes the potential for a transfer of the cost of government services to agriculture. Concerns were expressed that residual assets of an industry program could be taken by the Government despite the fact that the assets were clearly paid for by the industry. The amendments prevent this from happening. The measure that provides for the composition of the committees recognises that a committee can operate only with a majority agreement of industry participants. The Government amendments meet the three concerns that Opposition and Independent members have expressed.

Amendments agreed to.

Part as amended agreed to.

Bill reported from Committee with amendments and passed through remaining stages.