STANDING COMMITTEE ON CONSTITUTIONAL AFFAIRS TRANSCRIPT OF EVIDENCE TAKEN AT PERTH, WEDNESDAY, 24 MAY 2000 SESSION 1 OF 12 Hon M.D. Nixon (Chairman) Hon Ray Halligan Hon Ken Travers <1>O/4 Committee met at 9.30 p.m. THOMPSON, MR ROBERT WILLIAM, Secretary, Australian Milk Producers Association, PO Box 5, Walpole, examined: PALMER, MR KINGSLEY, Treasurer, Australian Milk Producers Association, Railway Road, Waterloo, examined: GREEN, MR ARTHUR, Director, Australian Milk Producers Association, Box 138, Bunbury, examined: CHAIR—Good mornng, ladies and gentlemen. As you are aware, this is a meeting of the Constitutional Affairs Standing Committee of the Legislative Council. You are probably also aware that under the standing orders, the committee deals with two sets of matters. One is petitions and, also under Standing Order 230, it is required to review any uniform legislation. That is legislation which has to be passed by all States in accordance with the Commonwealth Act. The committee automatically had this bill referred to it because it is part of a piece of uniform legislation. Also under our standing orders, the committee must report back within 30 days. The only exception is when parliament is not sitting; we can then report to the President or at the next meeting of parliament. The committee is under a deadline to report back to the parliament by 20 June. The committee has a very difficult job to cover in that time what you are all aware is a rather controversial piece of legislation. I must go through a few formalities, while also trying to keep the matters as informal as we can. The committee has three members. Under the Standing Orders, other members of the Legislative Council can also participate. The committee is a committee of parliament, it is not a committee of the government. Three of the political parties from the Legislative Council are represented here today. Because at this stage it is a public hearing, I must ask anybody sitting in the public gallery firstly not to speak, and, secondly, not to take notes. Under the Standing Orders, Hansard are the only people allowed to take notes of the committee meetings. Have each of the witnesses signed a document entitled 'Information for Witnesses' and have they read and understood that document? Mr Thompson—Yes. Constitutional Affairs 24 May 2000 Page 1 Mr Green—Yes. Mr Palmer—Yes. CHAIR—These proceedings are being recorded by Hansard. A transcript of your evidence will be provided to you. I remind you that your transcript will become a matter for the public record. If for some reason you wish to make a confidential statement during today's proceedings, you should request that the evidence be taken in a closed session. However, even if your evidence is given to the committee in a closed session, the committee can still report on your closed evidence to the Legislative Council if it considers it necessary to do so, in which case your closed evidence will become public. That means that generally speaking, the committee can receive evidence, and discuss it in private between the committee and staff. If the committee mentions that evidence in a report to parliament, at that stage what you have said will become public. There is a way out of it. If it is a special case, the committee can request to parliament - it has never happened to my knowledge - that it not be made public. Those are the ground rules. If anyone has any evidence they wish to give to the committee only and they do not want it made available to the public gallery, we will take that evidence in a closed session. Anything they say will appear on the public record and will be printed on the Internet once the transcripts have been finalised. You have probably all spoken to David Driscoll on the telephone. Felicity Beattie is a research officer and also a lawyer. Those staff work with the committee full time. They are always working on committee business. Any evidence you give can either be oral or submitted in writing. In other words, if you have something written and you do not want to say it, you can table the matter and it will be made public. I will ask each of you to make an opening statement. Because you all coming from the same area, I ask you not to be repetitive if you can avoid it, as many of the matters raised will be common to all of you. Someone can make an opening statement. If anybody wishes to add or contradict the statement, it is appropriate we deal with matters when they arise rather than leave them to the end. Mr Thompson—I will comment on some aspects of the second reading speech of the Dairy Industry and Herd Improvement Legislation Repeal Bill. The second reading speech of the Minister for Transport states: . the recommendations of the national competition policy legislative review of Western Australian Dairy Industry Act 1973 were accepted. The review demonstrated that a net public benefit currently arose from the regulated farm-gate price for milk and the vesting of milk, in so far as it provides funds to the Dairy Industry Authority to provide services to the industry and to licence processors and dairy farmers with respect to food safety standards. <2>G/4 No mention is made of licensing of quotas in the Bill. I assume that is because quotas are a capital asset and a tradeable asset on the auction floor and are being treated as such in the bill by the government. The second reading speech goes on to state: Constitutional Affairs 24 May 2000 Page 2 It is well known that Victorian milk processors and the United Dairy Farmers of Victoria had been pressing for deregulation in Victoria. Due to the size of the production and processing sectors in that State, a decision by Victoria to deregulate would be likely to place considerable pressure on markets in other States. It must be noted that 92 per cent of Victorian milk production is already deregulated; that is, 92 per cent of milk processed in Victoria is sold in a deregulated environment. Only 8 per cent of that state's production is subject to regulation. The important point is that Victorian farmers sold their milk quotas to the Victorian government through the Victorian Dairy Industry Authority. Those farmers have already been compensated for their loss of quota property rights. CHAIR—What were they paid for their quotas? Was it a free-auction system? Mr Thompson—It was based on a levy system operating over 10 years. The compensation was paid for by the consumers through the levy. The farmers could drop out at any time between the first and the last year. The amount reduced as they stayed in the system to take advantage. CHAIR—Quotas were auctioned from time to time in Western Australia, so they had a market value that varied. How was the value determined when the Victorians sold their quotas back to the government? Mr Thompson—I do not know because there was no auction system. CHAIR—Was it a fixed price? Mr Thompson—I am not sure how they arrived at the price, but it was set. CHAIR—The going rate was paid and the quotas were purchased by the government. Mr Thompson—It was paid for by the consumers but underwritten by the government. The second reading speech continues: In addition, the national competition policy review of dairy legislation in Victoria found there was a negative public benefit from retaining dairy legislation. The reason there was a negative public benefit was that Victorians wanted deregulation. One could imagine the case they would have put to the NCP committee – if they put a case, and I do not know whether they did. The outcome was completely predictable: they wanted a negative public benefit and they got one. The second reading speech further states: Strong representation of Western Australia's interests towards the Federal Government's structural adjustment package was made by the Western Australian Farmers Federation dairy section president in his role as WA's representative on the Australian Dairy Industry Council. That is correct, but it was always with the assumption that Western Australia would pursue compensation for loss of quota and property rights. Constitutional Affairs 24 May 2000 Page 3 The minutes of the WAFF meeting of 1 March this year stated that Mr Harris - the president of the WAFF - said it was imperative that the package be delivered across all states in Australia the same as it was under federal legislation. However, he acknowledged that Western Australia had to resolve the local issue of quota compensation. It was always that case that Western Australia would pursue the issue. The second reading speech continues: The main feature of the package is that farmers will be paid a total of 46.23¢ a litre for drinking milk and 8.96¢ a litre for manufacturing milk produced in 1998-99. Western Australian dairy farmers will receive approximately $109m from that package. Between $170 million and $200 million will be raised through the levy over eight years. Depending on what model is used, the figure will vary within that range. It is a large variation and it will depend on growth and how much milk is sold in Western Australia by Victorians. The levy will be imposed on all milk sold in Western Australia regardless of its origin. We believe that the money raised in Western Australia should remain here to help pay for compensation. Western Australian producers and consumers should not be asked to subsidise the Victorian dairy industry.