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Australian Government Review of the Wheat Marketing Act 1989, December 2000

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Australian Government Review of the Wheat Marketing Act 1989, December 2000 NATIONAL COMPETITION POLICY REVIEW OF THE WHEAT MARKETING ACT 1989 Mr Malcolm Irving AM Mr Jeff Arney Professor Bob Lindner December 2000 © Commonwealth of Australia 2000 ISBN 0 642 76904 4 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth, available from the Department of Agriculture, Fisheries and Forestry. Requests and inquiries concerning reproduction rights should be directed to the Secretary, Department of Agriculture, Fisheries and Forestry, GPO Box 858, Canberra ACT 2601. Published by the NCP - WMA Review Committee GPO Box 858 Canberra ACT 2601 Copies are available from: Shopfront Department of Agriculture, Fisheries and Forestry GPO Box 858 Canberra ACT 2601 Australia (Freecall telephone number 1 800 020 157) Foreword FOREWORD This review of the Wheat Marketing Act 1989 (the WMA) was conducted under the National Competition Policy (NCP), which was agreed to by all Australian Governments in 1995. Under this agreement, Australian governments are to review all legislation that affects competition, and to complete these reviews by the end of 2000. On 4 April 2000 the Honourable Warren Truss MP, Federal Minister for Agriculture, Fisheries and Forestry, announced the NCP review of the WMA. When announcing the review, the Minister directed the Committee to focus on those parts of the legislation which restrict competition, and impose costs or confer benefits on businesses involved in the Australian wheat industry and the community generally. The independent review Committee appointed by the Minister comprised Mr Malcolm Irving, Mr Jeff Arney and Professor Bob Lindner. The Minister directed the Committee to deliver their final report by 15 December 2000, which was extended to the end of December. The Committee consulted widely throughout the review process. Stakeholders were given the opportunity to provide submissions, to consult privately with the Committee and to make their views known in open public forums. The Committee travelled to representative towns across the wheat belt in the five mainland States to consult at first hand. Many individuals travelled long distances and the Committee wishes to thank all those involved. Similarly, the Committee thanks all those involved in drafting submissions. The Committee also commissioned technical assessments from the Allen Consulting Group, took advice from leading academics in Australia and overseas, and examined the public literature on wheat marketing and the NCP. In doing so it sought evidence on those effects of the WMA on competition able to be evaluated within an NCP framework. The Committee also visited a number of countries which either import Australian wheat, or compete with Australia in the international marketplace. These visits provided a valuable perspective on the Australian system and the Committee thanks all those who made their time available. The Committee released the draft report on 13th October 2000 and received comments from stakeholders that proved invaluable in the formulation of this report. The Committee would like to thank the Secretariat for their tireless support in the review process. Mr Malcolm Irving AM Mr Jeff Arney Professor Bob Lindner Chairman Member Member III Contents CONTENTS EXECUTIVE SUMMARY ................................................................................................. 1 The legislation.................................................................................................................... 1 The ‘public benefit’ test..................................................................................................... 5 Concluding remarks......................................................................................................... 10 1. INTRODUCTION......................................................................................................... 11 1.1. Terms of reference................................................................................................. 11 1.2. Structure of the report............................................................................................ 14 References........................................................................................................................ 15 2. NATIONAL COMPETITION POLICY REVIEWS ................................................ 16 2.1. National Competition Policy ................................................................................. 16 2.2. The Wheat Marketing Act 1989............................................................................. 17 2.3. The NCP process for reviewing legislation........................................................... 18 2.4. Conduct of the NCP Review of the WMA............................................................ 19 References........................................................................................................................ 20 3. AUSTRALIAN WHEAT INDUSTRY........................................................................ 21 3.1. Size and significance of the wheat industry .......................................................... 21 3.2. Durum wheat ......................................................................................................... 26 3.3. Wheat’s contribution to farm incomes .................................................................. 28 3.4. Australian wheat supply and disposal ................................................................... 30 3.5. World wheat trade.................................................................................................. 31 3.6. Australia’s wheat export markets .......................................................................... 37 3.7. Government involvement in Australian wheat marketing..................................... 41 3.8. Summary................................................................................................................ 45 References........................................................................................................................ 47 4. STAKEHOLDER VIEWS ........................................................................................... 49 4.1. Who was consulted................................................................................................ 49 4.2. Companies and organisations ................................................................................ 50 4.3. Government and research ...................................................................................... 62 4.4. Farm partnerships and private individuals............................................................. 64 4.5. Overseas consultations .......................................................................................... 67 References........................................................................................................................ 72 5. OBJECTIVES OF THE LEGISLATION AND EFFECTS ON COMPETITION 75 5.1. Procedure for clarifying the objectives.................................................................. 75 5.2. The current Act...................................................................................................... 76 5.3. The original Act and later amendments................................................................. 77 5.4. The Minister’s second reading speech................................................................... 79 5.5. Annual Report of the Wheat Export Authority...................................................... 81 5.6. Ministerial statements............................................................................................ 82 5.7. Actions, impacts or evidence of those affected by the legislation......................... 82 5.8. Inferred objectives of the Act ................................................................................ 82 5.9. Effect on competition ............................................................................................ 83 5.10. Appropriateness of granting a monopoly to a private company............................ 86 References........................................................................................................................ 91 V Contents 6. WHEAT EXPORT AUTHORITY.............................................................................. 92 6.1. What regulatory functions and powers does the WMA confer on the WEA? ...... 92 6.2. Intention of the new export arrangements ............................................................. 93 6.3. How have the new export arrangements worked in practice? ............................... 94 6.4. Changes to the current system ............................................................................... 96 6.5. Scope and process of the ‘2004 review’................................................................ 96 6.6. Expanded Role for the Wheat Export Authority ................................................... 98 6.7. Industry-Government Forum................................................................................. 99 References...................................................................................................................... 100 7. THE PUBLIC BENEFITS TEST .............................................................................. 101 7.1. Framework for evaluating benefits and costs and their impact ........................... 101 7.2. Main benefit/cost areas.......................................................................................
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