Australian Wheat Bickering

October 12, 2012 at 12:17 am Leave a comment

The Wheat Export Marketing Amendment Bill 2012 is one of many issues used as poorly understood political footballs in Canberra.  Wheat is important because it is the staple food of almost half the world’s population and is one of the most important commodities produced by the Australian agriculture industry. Australia produces 3% of the world’s wheat but its exports represent around 15% of the world wheat trade annually.

Yet there is little news about what this bill, currently staggering slowly through parliament will do for the industry. Instead media commentary is all about the drama of who will cross the floor and whether the bill will get up.  At its simplest, the bill is aimed at ending a compulsory 22c a tonne levy wheat growers pay to the Government export body for “accreditation”.  It would seem a piece of de-regulation ideally suited to free market Opposition philosophies. But the Opposition is living up to its name and opposing the bill.

The Opposition have hidden the obtuseness of their opposition behind a supposed need for a “well managed transition”.  In a joint statement released today by the leader of the Opposition Tony Abbott and his deputy Warren Truss  tried to explain it away.  “Coalition in our first term will implement measures agreed by the industry to ensure a well-managed deregulation to free and open competition while maintaining our international reputation for quality and reliability,” they said.  Abbott and Truss said deregulation had to wait until they formed government to “safeguard” port access arrangements, transparency standards on stock information and minimum quality standards.  It pointed to the Indonesian live export debacle and for good measure it threw in pink batts and over-priced school halls to show why Labor could not be trusted on this.

The pair denied they would bring back the single desk, which Truss managed during Coalition Government. The waters are muddied by several of his “agrarian socialists” who have joined Labor in wanting state interaction in the industry removed.  These are National party members in WA, the state that grows the most wheat. WA grew 11 million tonnes in 2003-2004 which amounts to over $2 mlllion dollars to the export agency, money the industry would rather keep. The Western Grain Growers’ Committee of WA said Liberal policy was destroying its reputation in the bush. WGGC chair John Snooke said the will would remove “a redundant bureaucratic body which has no purpose and imposes an unnecessary cost on wheat growers in Western Australia.” Snook said there was no need legislation on issues such as wheat quality “because they already are being handled by the industry and by the market.”

That is the problem for Abbott and Truss: the industry is already deregulated. That happened in 2007 when the old Wheat Export Authority was wound up. Set up in the shadow of World War II, the WEA had grown to have wide powers. The main ones in the 21st century were to monitor the Australian Wheat Board single desk and to manage any other party that wanted to export Australian wheat. When both the WEA and the AWB was tarnished by the revelations of  kickbacks to Saddam’s Iraq in Oil for Wheat the WEA was disbanded.

In 2006 PM John Howard stripped AWB of its monopoly. This was against the wishes of many of his Nationals who argued the single desk was the only way to give Australian wheat farmers bargaining clout in an unfairly-run international market. The AWB was privatised and later acquired by Canadian interests.

In 2008 Labor introduced a new board with more limited power replaced the WEA. It was supported by the Liberals but not the Nationals. Confusingly the new body Wheat Exports Australia had a similar name and the same acronym. But the new WEA was given just one role to play: set up an accreditation scheme for the bulk wheat exports to ensure exporters met company standards. “The Scheme allows for the accreditation of bulk wheat exporters which meet the specified ‘fit and proper’ criteria and for WEA to exercise its monitoring and enforcement powers,” the (new WEA) says.

The problem is that this accreditation costs money and the (new) WEA is funded by a compulsory 22c a tonne of wheat levy from grain growers, and grain growers don’t like it. As one grain grower told me “If the bill doesn’t pass we’ll effectively be operating in a pseudo partially deregulated market continuing to fund  the current WEA which is of no use to us that I can see.” In May, the levy, called a Wheat Export Charge was removed pending the passing of the bill. But it was automated re-instated on October 1 when the bill had not passed through parliament.

The debate was adjourned again today with the Opposition divided and Labor wasting time on wedge politics.  The wisest words went to former Liberal MP Wilson Tuckey, who lost his seat to Nationals wildcard Tony Crook who supports the bill. Tuckey also wants a free vote in the Opposition. ”In political terms, do you feed a boil, or do you lance it?” he said

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