Wheat Export Marketing Amendment Bill 2012

Bills Digest no. 164 2011-12

PDF version [336 KB]

WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Paula Pyburne
Law and Bills Digest Section 
19 June 2012

Contents
Purpose
Background
Financial implications
Main issues
Key provisions
Concluding comments


Date introduced:  21 March 2012
House:  House of Representatives
Portfolio:  Agriculture, Fisheries and Forestry
Commencement:  Sections 1–3 on the day of Royal Assent; Schedule 1 on 1 October 2012; Schedule 2 on 1 January 2013 and Schedule 3 on 1 October 2014 provided that the Minister has, before that day, published a notice in the Gazette under subsection 12(1) of the Wheat Export Marketing Act 2008.[1] The provisions of Schedule 3 will not commence at all unless such a notice is published.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill's home page, or through http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation. When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/.

Purpose

The Wheat Export Marketing Amendment Bill 2012 (the Bill) amends the Wheat Export Marketing Act 2008 (the WEMA) in three phases:

  • first, it abolishes the Wheat Export Accreditation Scheme on 30 September 2012 and establishes the requirement that a person passes an access test in relation to a port terminal service with effect from 1 October 2012
  • second, it winds up Wheat Export Australia on 31 December 2012, and
  • third, it repeals the WEMA on 1 October 2014.

Background

History of regulation of the wheat industry

‘Single desk’ is the term used to describe the monopoly marketing of wheat by the Australian Wheat Board (1939–1999), and its privatised successor, AWB (International) Limited (1999–2008).[2]  A key characteristic of the single desk was the national pooling of returns to growers, whereby the price received by growers (apart from adjustments for quality and transport costs), was the average from sales minus the costs incurred by the Board.[3]

The scope of the single desk varied over time, encompassing both domestic, and export, sales of wheat until 1989, then only export sales, and finally from 27 August 2007 to 30 June 2008, only bulk wheat export sales. Following the ‘food for oil’ bribery scandal[4] and the revelations of the Cole Inquiry[5], the position of AWB as the holder of a single desk monopoly export licence for wheat became untenable.[6]

Momentum for change to the export marketing arrangements built up over time, in particular, following the National Competition Policy Review of the Wheat Marketing Act 1989 in 2000[7], the successful deregulation of the export of other grains and agricultural products[8], and increasing grower dissatisfaction about the performance of the single desk, notably in Western Australia.[9]

Since 2006 there have been further amendments, which will culminate in this Bill, to bring about the deregulation of the wheat industry:

  • first, the Wheat Marketing Amendment Act 2006[10] gave effect to temporary changes to the Wheat Marketing Act 1989.  The changes transferred the right to veto bulk wheat export applications from AWB International to the Minister for Agriculture, Fisheries and Forestry until 30 June 2007
  • second, the Wheat Marketing Amendment Act 2007[11] provided, amongst other things, that the temporary transfer of the power of veto over bulk wheat from AWB International to the Minister would be extended to 30 June 2008
  • third, the Wheat Export Marketing Act 2008[12] (WEMA) established a system for regulating the export of bulk wheat by companies which were accredited by Wheat Exports Australia (WEA) under the wheat exporter accreditation scheme (the Scheme), and  
  • fourth, the Wheat Export Marketing (Repeal and Consequential Amendments) Act 2008 effectively abolished the single desk arrangements which had been operating in various forms since 1939.

Productivity commission and government response

The WEMA also required that the Productivity Commission conduct a review of that Act commencing no later than 1 January 2010, and completed by no later than 1 July 2010.  This Bill is a response to the findings and recommendations of that review.

The Productivity Commission report, published on 1 July 2010, noted that the transition to competition in the exporting of bulk wheat has progressed relatively smoothly, particularly given difficult international trading conditions; and that the regulatory arrangements for marketing bulk wheat exports during the transitional phase since 2008 had given growers confidence in adjusting to deregulation.[13]  It contained a series of recommendations including, but not limited to:

  • abolishing the Wheat Export Accreditation Scheme[14], Wheat Exports Australia[15] and the Wheat Export Charge[16] on 30 September 2011, and
  • removing the access test requirements for grain port terminal operations on 30 September 2014.[17]

While the Government agreed in-principle with these recommendations, it believed that a three stage approach (such as that set out in this Bill), would be a more effective transition to full market deregulation.[18]

Committee consideration

House of Representatives

The Bill was referred to the House of Representatives Standing Committee on Agriculture, Resources, Fisheries and Forestry (the House of Representatives Committee) for inquiry and report.[19] The focus of the inquiry is the impact that deregulation could have on quality assurance, particularly in relation to Australia’s biggest competitor countries Canada and the USA, both of which have quality assurance processors with exports.[20]

The House of Representatives Committee published its report on 18 June 2012 recommending that the House of Representatives pass the Bill.[21]

Senate

The Bill referred to the Senate Rural and Regional Affairs and Transport Legislation Committee (the Legislation Committee) for inquiry and report by 25 June 2012.[22]

Also relevant to this Bill is that on 23 March 2011 the Senate referred the matter of operational issues arising in the export grain storage, transport, handling and shipping network to the Senate Standing Committee on Rural and Regional Affairs and Transport (the Senate Standing Committee) for inquiry and report.[23]  The report of the Senate Standing Committee was published on 16 April 2012.[24]

The views of submitters to those inquiries are canvassed under the heading ‘Main issues’ in this Bills Digest.

Policy position of coalition parties

Whilst the abolition of the single desk by the WEMA generated considerable debate and was the subject of some amendments in the Senate, its passage through the House of Representatives was marked by only ten dissenting votes.[25]

The position of the Liberal Party of Australia (the Liberals) in relation to moves to deregulate the wheat industry can be gleaned from the comments of Brendan Nelson, then Leader of the Opposition who stated:

The Liberal Party will not be opposing the Wheat Export Marketing Bill 2008 ... Wheat growers have always been our first priority and focus throughout this process and in our policy making.  This is not a simple issue.  Among wheat growers there is a considerable diversity of opinion about the best arrangements for wheat marketing.  I would like to recognise and thank the many individual growers who took the time to contact their local members and my office, in writing, by telephone and in person, to offer their views. Some will be very happy with the changes in this legislation. Others will not be supportive. We have weighed these views very carefully in arriving at what we believe is the right decision.[26]

In response to the report of the Productivity Commission, National Party member John Cobb, who is the Shadow Minister for Agriculture and Food Security, had this to say:

Growers have not seen the forecast benefits from the deregulation of the wheat market and the Government needs to wait until growers are satisfied with the new arrangements before creating more uncertainty and considering further changes.

Removing wheat exports accreditation process will take away the checks and balances wheat customers expect—putting the nation’s reputation at risk.[27]

Policy position of independents

One of the ten who voted against the move to abolish the single desk was independent member, Tony Windsor.  In 2008 Mr Windsor expressed his disappointment that the Government was determined to ignore the views of those Australian wheat growers who had indicated that they wished to retain the single desk marketing system.[28]  However, at the time of forming the minority government following the 2010 Federal election, Mr Windsor reportedly ‘confirmed that reinstating the single desk for wheat marketing is not on his negotiation agenda’.[29]

Financial implications

According to the Explanatory Memorandum, ‘there are expected to be no significant resource implications from a budget perspective’.[30]

However, it should be noted that the wind up of the WEA on 31 December 2012, and the abolition of the Wheat Export Charge by way of amendment to the Primary Industries (Customs) Charges Regulations 2000[31], means that decisions will have to be made about how the balance of the Wheat Exports Australia Special Account will be spent.  This matter is addressed under heading ‘Main issues’ in this Bills Digest.

Main issues

Abolish WEA and the Wheat Export Accreditation Scheme

Under the current arrangements WEA accredits an exporter under the Scheme having assessed that, amongst other things:

  • the applicant is a company or co-operative and a trading corporation
  • the company is 'fit and proper' in relation to financial resources, risk management arrangements, business record, trust and candour, experience and ability of executive officers, compliance with applicable Australian and foreign laws, compliance with designated sanitary and phytosanitary measures, and compliance with applicable United Nations sanctions provisions, and
  • the applicant is not under external administration.[32]

The requirement that an exporter is ‘fit and proper’ in relation to financial resources may have provided some financial protections to bulk wheat exporters which are not enjoyed by those whose wheat is exported by container—and which will be lost with the abolition of the Scheme.[33]

The Productivity Commission recommended that the WEA be abolished stating:

There is no persistent market failure that requires government intervention in the bulk wheat export industry beyond a transitional period, and nothing particular about wheat that requires a system of accreditation without which other grains and most agricultural commodities operate smoothly.[34]

The response to this recommendation varies both between farmers groups and grain export companies; and between states.  The responses reflect the diversity of the wheat industry in Australia and the acceptance (or otherwise) of the move away from the single desk.

The submission to the Senate Legislation Committee by the South Australian Farmers Federation (SAFF) acknowledged that ‘there needs to be a sunset clause’ in respect of WEA.  However, it believed that ‘it is far too soon to be winding up WEA’.[35]  On the contrary, SAFF advocated for an expansion of the WEA charter to play a role in protecting the industry from the market dominance of bulk grain handlers in each state, and to oversee the transparent release of stocks information.[36]

NSW Farmers’ Association considered that WEA ‘should maintain an accreditation function, as well as be given charter to perform industry good functions’.[37]  In a similar vein, AgForce proposed that instead of abolishing WEA that the function and role of WEA be changed stating:

We would like to see the funding mechanism and the organisational shell be retained for industry oversight and good purposes. Primarily the restructured WEC [sic] would be an industry funded body responsible for ensuring the quality of Australian wheat and undertaking industry good functions.[38]

However, the Pastoralists and Graziers Association of Western Australia approved of the end of WEA on the grounds that ‘the majority of growers are now comfortably operating in a competitive market, and as such many of the transitional arrangements established under the [WEMA] are no longer required as an ongoing measure’.[39]

Wheat exporters were generally supportive of the move to abolish WEA.  GrainCorp, for example, considered that the reforms in the Bill ‘are the logical next step to improve the competitiveness of Australian wheat exports, following the process of deregulation which commenced in 2008’.[40]  The submission by CBH echoed that sentiment.[41]

However, the Senate Standing Committee took the view that:

... accreditation by the WEA has served to provide a useful safeguard during the process of deregulation and should be continued. The committee is also of the view that the government should consider an amended and expanded role for the WEA to perform a range of other industry good functions including quality assurance to protect Australia's reputation as a quality wheat exporter; and performing the role of industry Ombudsman.[42]

Access test/code of conduct

What the access test currently covers

The Productivity Commission describes the key functions of export grain port terminal facilities as being:

  • grain received via road or rail grid. All grain received at an export terminal is weighed. The grain is typically quality tested and checked for insect infestation. It will then be unloaded and transported to grain silos or sheds containing grain of a similar type and quality. It might be fumigated if necessary.
  • accumulating grain in silos before shipment, and employing elevator towers and conveyor belts to blend grain and move it between silos.
  • using conveyor belts to transport grain from the storage facilities to the ship weigher and to the ship loader (located on a pier or berth) which pours grain into the holds of bulk grain vessels.[43]

The regulatory scheme established by the WEMA was designed to ensure that accredited wheat exporters that own or operate port terminal facilities provide other accredited exporters with fair and transparent access to those facilities.[44]  Importantly under the existing terms of the WEMA, without accreditation, exporters are prohibited from exporting wheat in bulk from Australia.[45]  

The access test established by the WEMA required accredited exporters with a bulk wheat port terminal to comply with the continuous disclosure rules and:

  • before 1 October 2009:  accredited exporters with a bulk wheat port terminal were required to publish the terms and conditions of access to these services. WEA was empowered to revoke the accreditation of an exporter which failed to provide access to another accredited exporter on the published terms and conditions[46], and
  • from 1 October 2009 onwards: an accredited exporter was required to have in operation, under Part IIIA of the, then, Trade Practices Act 1974 (now the Competition and Consumer Act 2010 (CCA)), an access undertaking relating to its port terminal.[47]

At the time of writing this Bills Digest, the Australian Competition and Consumer Commission (ACCC) had accepted access undertakings from:

  • Australian Bulk Alliance Pty Ltd regarding the Melbourne port terminal[48]
  • Co-operative Bulk Handling Ltd regarding four port terminals in Western Australia[49]
  • Viterra Operations Ltd regarding six port terminals in South Australia[50], and
  • GrainCorp Operations Ltd regarding seven port terminals in Queensland, New South Wales and Victoria.[51]

Changes in this Bill

According to the Productivity Commission, ‘the link between the access test and the bulk handlers’ ability to export (via accreditation) is seen as providing an important incentive for meeting the test’.[52]  This is reflected in the submission by the NSW Farmers’ Federation.[53] Nevertheless, the Productivity Commission view is that:

Using Part IIIA [of the CCA] to regulate access will bring the wheat industry into line with the general competition law applying to other industries. Therefore from 1 October 2014, the access test should be abolished and grain port terminals should then be subject to the generic provisions of Part IIIA.[54] [emphasis added]

According to the second reading speech this Bill:

...  will facilitate the removal of the access test requirements for grain port terminal operators on 30 September 2014.  The market will then move to full deregulation, with all aspects of the industry subject to general competition law administered by the Australian Competition and Consumer Commission. This will bring the wheat export market into line with other agricultural commodity markets and promote further competition in the wheat export industry, leading to increased productivity and profitability.

To provide certainty for growers and bulk wheat exporters about security of access to grain port terminal services in the longer term, the access test will only be abolished if the industry has a non-prescribed voluntary code of conduct covering grain export terminal operations in place.[55] [emphasis added]

Code of conduct

It is proposed that from 1 October 2014 a voluntary industry code of conduct to govern port access should operate (under Part IVB of the CCA).[56]  The rationale for a voluntary industry code of conduct administered by the participants in an industry, as an alternative to a mandatory industry code, is that in most cases, the net benefit of effective self regulation will exceed that of government intervention. This is the case for a number of reasons, including:

  • industry participants are usually better placed to tailor codes of practice to the business conditions and other circumstances facing an industry
  • self regulation will often impose lower compliance costs on business than government regulation
  • self regulation is more flexible, as voluntary codes of conduct can be amended by industry participants as required, independent of governmental and parliamentary processes.[57]

Code of conduct/access test—remedies

Part IVB of the CCA relates to industry codes.  It broadly provides that a corporation must not, in trade or commerce, contravene an applicable industry code.[58]  Part IVB sets out various remedies available to the ACCC and third parties in the event of a breach of an applicable industry code.

Relevant to this Bill is the definition of the term ‘applicable industry code’ which means, in relation to a corporation that is a participant in an industry, the prescribed provisions of any mandatory industry code relating to the industry, and the prescribed provisions of any voluntary industry code that binds the corporation.[59]  Importantly, the code of conduct which is proposed in this Bill will not be prescribed.  This means that the remedies in Part IVB of the CCA will not apply to a breach of that code of conduct.

Instead, where the provider of a port terminal service fails to participate in the non-prescribed voluntary code of conduct, or fails to adhere to the non-prescribed voluntary code of conduct, it will be open to exporters to take action under Part IIIA of the CCA, which provides three methods of access.[60] 

The first method is by access undertakings whereby providers of infrastructure services may voluntarily submit access undertakings to the Australian Competition and Consumer Commission (ACCC).  Where an access undertaking is accepted by the ACCC, that undertaking provides the terms and conditions of access to all third parties.[61]  This is the method which has been tied to the accreditation process under the WEMA since 1 October 2009.

The second method is the use of effective access regimes which have been created and implemented by state and territory governments for particular infrastructure services within their jurisdiction.  This method is incorporated into the WEMA by proposed subsection 9(3) at item 29 of Part 1 of Schedule 1 to this Bill.

The third method is by declaration and negotiation/arbitration.  Under this method a party may apply to the National Competition Council to have the service provided by a facility regulated. This is a two stage process:

  • in stage 1—declaration—an application is made to the National Competition Council to consider and make a recommendation to the relevant Minister on whether the criteria for applying access regulation are met such that the service should be declared
  • in stage 2—negotiation/arbitration—a service provider and access seeker can negotiate terms and conditions of access to a declared service, and failing agreement the ACCC can be called upon to arbitrate and make an access determination.[62]

However, it should be noted that the Chairman of the ACCC, Rod Sims, recently acknowledged that a shortcoming of this third method ‘is the delay in reaching decisions on whether infrastructure should be declared’ and that ‘for businesses on both sides of the argument that are enduring these delays, the result is uncertainty and increased costs’.[63]

Comments

NSW Farmers’ Association fears that:

... a move away from regulated port access to a non-prescribed voluntary industry code of conduct will result in behaviour from those operating port terminals [that] will lead to sub‑optimal and reduced reliability of shipping movements to customers.[64]

The Senate Standing Committee expressed its concern about the efficacy of a code of conduct:

... without a deterrent such as the possible relinquishment of a [bulk handling company’s] export accreditation, there is no incentive for the [bulk handling company] to adhere to the voluntary code of conduct. The committee also has grave concerns about the effectiveness of a voluntary code of conduct. The ability for the ACCC to take action against breaches of the code would likely be limited.[65]

On the other hand, GrainCorp drew attention to the lengthy process of having an access undertaking approved by the ACCC stating:

The ‘gaming’ of the regulatory process by [accredited bulk wheat exporters] has placed a significant financial burden, equivalent to thousands of man-hours, and millions of dollars of costs on port infrastructure owners.

This has led to increased administrative costs, and decreased service delivery efficiency, which ultimately mean that additional costs are incurred and then passed back to grain growers.[66]

It would appear then, that although a non-prescribed voluntary code of conduct sounds appealing at first blush it will not deliver remedies to either growers or exporters in the event of a breach of the code.  Instead, growers and exporters will be reliant on the operation of Part IIIA of the CCA, which is acknowledged as being expensive and may not provide a speedy response to concerns about access to port terminal services.

Continuous disclosure

Existing section 24 of the WEMA contains the current continuous disclosure rules.  The section requires that a provider of a port terminal service must disclose the relevant policies and procedures for managing demand for the port terminal service as well as information about the shipping stem.

However, some submitters believe that there should be greater access to information—in particular ‘information flow on the quality and volumes of grain received at various receival sites’.[67]  The Standing Committee summed up the problem as follows:

The committee received a lot of evidence about the importance of being able to access timely information about wheat stocks in order to make informed decisions. It heard a range of evidence from submitters relating to market asymmetries in accessing information. Vertical integration of the [bulk handling companies] and their near-monopoly position in most regions results in the trading arm of some of those companies appearing to have exclusive access to detailed information that is not available to other traders.[68]

AgForce made similar claims.[69]

This Bill does require port terminal services to comply with continuous disclosure rules as part of the proposed access test, including more detailed information about the shipping stem on a daily basis.[70]  However, the Bill does not require the disclosure of information to the extent that many would like.  When the WEMA is eventually repealed, the requirement for continuous disclosure of information will be an element of the voluntary code of conduct.[71]

Special Account

The Senate Standing Committee noted that the WEA Special Account will still hold funds when the WEA is abolished.[72]  The WEA annual report 2010/11 shows that at 30 June 2011, the balance of the WEA special account was $4 190 359.[73]

The Government has acknowledged that:

... the account will still hold surplus funds when the WEA is abolished. The Department of Agriculture, Fisheries and Forestry will be repaid $500,000 owing from a previous funds transfer that was not used. The remainder will be reinvested in the wheat industry after consultation with relevant stakeholders.[74]

The Senate Standing Committee took the view that ‘these funds should be prioritised to the provision of wheat market information that will benefit grain growers’.[75]

The Bill operates so that the WEA Special Account will continue in existence as the Wheat Industry Special Account from 1 January 2013.  The purpose of the Wheat Industry Special Account is stated broadly as being to fund a measure or program to assist the wheat export industry, or a sector of that industry.  It will be up to the Minister to approve the funding.[76]

Industry good functions

‘Industry good’ functions can be defined as services to the industry that support trade and industry development and affect, at least, a significant subset of the entire industry. Industry good functions can exhibit ‘public good’ characteristics, ‘private good’ characteristics, or varying degrees of each.[77]

Many of the submitters expressed a concern that the ‘industry good’ functions which had been carried out by the AWB as the operator of the single desk were no longer being undertaken. 

The Productivity Commission had this to say on the question of ‘industry good’ functions:

If the industry sees merit in the coordinated provision of a range of industry goods, it may wish to consider establishing an industry-led body.  Several participants to this inquiry have proposed such a body, and there is evidence the industry is already working toward this.

Where an industry good has predominantly intra-industry public good characteristics, such as the provision of monthly stocks information, there may be a case for implementing a compulsory levy, supported by legislation. Such a mechanism can be used to ensure that the industry good is provided and paid for by industry participants.[78]

The Productivity Commission recommended that the existing Grains Research and Development Corporation levy collection framework[79] would be ‘the most practical and cost-effective option for funding stocks information by state’.[80]  This Bill does not address the question of an industry levy.

Key provisions

Schedule 1—commencing 1 October 2012

Items 3–27 of Schedule 1 to the Bill make consequential amendments to the definitions contained in the WEMA.  Importantly, item 18 inserts the definition of the term ‘old Act’, being a reference to the WEMA as it was prior to the amendments contained in this Bill (when enacted).

For the purposes of this Bills Digest, the term ‘old Act’ will be used in the same context.

Abolish the Wheat Export Accreditation Scheme

Under the provisions of Part 2 of the old Act, a company which exports wheat (other than in bags or containers), must be accredited under the wheat export accreditation scheme.  Accreditation is dependent upon an exporter satisfying certain eligibility criteria including that the company is a fit and proper company[81], that the company passes an access test in relation to any port services which it (or an associated entity) provides[82] and that the company complies with certain reporting obligations.  The access test is contained in section 24 of the old Act.

Item 29 of Schedule 1 to the Bill repeals Part 2 of the old Act to abolish the wheat export accreditation scheme.               

Pass an access test

In addition, item 29 of Schedule 1 to the Bill inserts a new Part 2 into the WEMA—about access tests.  Proposed section 9 requires a person to pass one of the two specified access tests in relation to a port terminal service.  Both of the access tests are drawn from Part IIIA of the CCA.  

Proposed subsection 9(1) provides that a person passes the access test in relation to a port terminal service if there is an access undertaking, under Division 6 of Part IIIA of the CCA[83], relating to the provision of access to the port terminal service to wheat exporters for purposes relating to the export of wheat[84], and the access undertaking requires the person to comply, and the person does comply, with the ‘continuous disclosure rules’.

Proposed subsection 9(3) provides that a person passes the access test in relation to a port terminal service if there is a decision in force, under Division 2A of Part IIIA of the CCA[85], that a regime established by a state or territory for access to the port terminal service is an effective access regime, that wheat exporters have access to the port terminal service for purposes relating to the export of wheat, and the person complies with the ‘continuous disclosure rules’.

The ‘continuous disclosure rules’ as set out in proposed subsection 9(4), require that, in relation to a port terminal service:

  • there is a current statement on the person’s website setting out the relevant policies and procedures for managing demand for the port terminal service
  • the website also contains a loading statement setting out the name of each ship (called a loading ship) scheduled to load grain using the port terminal service as well as the additional information about each loading ship which is listed in proposed subparagraphs 9(4)(c)(i)–(xi)
  • the loading statement is updated each business day, and
  • the ACCC has a copy of the information set out in the most recently updated loading statement; and the information was given to the ACCC in the manner and form approved by the ACCC.[86]

Having established the nature of the two access tests, proposed section 7 requires a provider of a port terminal service to pass the access test if the provider (or an associated entity) exports wheat using the port terminal service.  The provider must pass the access test at all times during the 12 month period commencing on the day of the export of the wheat.  The export of wheat in a bag, or container, which holds not more than 50 tonnes of wheat, is exempt from the requirement to pass the access test: proposed subsection 7(2).

In addition, proposed subsection 8(1) prohibits a person who is the provider (or an associated entity) of a port terminal service from exporting wheat if the person was required under proposed section 7 to pass the access test, but did not do so at the time of the export.  In addition, proposed subsection 8(5) extends the prohibition to a person who, for example, aids or abets a contravention of proposed subsection 8(1), induces a contravention, or is directly or indirectly, knowingly concerned in or a party to, a contravention of the subsection.[87]  Under proposed section 10, the Secretary may notify the Chief Executive Officer of Customs that he or she wishes the Customs Act 1901 (the Customs Act) to apply to an exportation of wheat that contravenes proposed section 8.  In that case, the Customs Act has effect as if the goods included in that exportation were goods described as forfeited to the Crown under section 229 of the Customs Act.

Proposed subsection 7(4) contains an exception to the rule that the provider of a port terminal service must pass the access test if the provider uses that port terminal service.  Similarly proposed subsection 8(2) contains an exception to the prohibition against exporting wheat using a port terminal service where the exporter failed to pass the access test.  In either circumstance, the Secretary[88] may provide that the relevant sections do not apply where he or she is satisfied that there are special circumstances for doing so.  The Bill is silent about the nature of the matters to be taken into account by the Secretary in exercising this discretion.  However, according to the Explanatory Memorandum:

the Secretary may have regard to such matters as the nature and duration and circumstances of the failure to pass the access test, any remedial action that has been taken since the failure, or if there is no connection between the exporter and the port terminal service provider who did not pass the access test.[89]

Item 54 of Schedule 1 to the Bill repeals and replaces section 72 so that these decisions of the Secretary can be appealed to the Administrative Appeals Tribunal.

Information gathering

Division 1 of Part 3 of the old Act sets out the powers of the WEA to obtain information.  Items 
31–48
of the Bill amend sections 25–28 of the old Act so that the information gathering powers which were previously those of the WEA will be transferred to the Secretary.  These provisions are consistent with the terms of the Secretary’s powers in proposed subsections 7(4) and 8(2).  In addition, item 62 of Schedule 1 to the Bill repeals and replaces section 87 to allow for the sharing of information by the Department of Agriculture Fisheries and Forestry, Customs, the ACCC and the WEA which is relevant to the operation of the WEMA as amended. 

Schedule 2—commencing 1 January 2013

The amendment in item 14 of Part 1 of Schedule 2 to the Bill effectively abolishes Wheat Export Australia with effect from 31 December 2012. This allows for the completion of outstanding tasks such as the preparation of the final Annual Report and the Report for growers.

What remains is the renamed WEA Special Account which will continue in existence as the Wheat Industry Special Account.  Proposed section 60 of WEMA, which is inserted by item 15 of Schedule 2 to the Bill provides that the purpose of the Wheat Industry Special Account as being to fund a measure or program to assist the wheat export industry, or a sector of that industry.

Schedule 3—proposed to commence 1 October 2014

Item 1 of Schedule 3 to the Bill repeals the Wheat Export Marketing Act 2008 in its entirety.  The effect of Schedule 3 is that the access test will continue to operate until 30 September 2014 to provide industry with the chance to adjust to the new environment.

Importantly, the provisions in Schedule 3 to the Bill will not commence unless the Minister, before 1 October 2014, has published a notice in the Gazette notifying approval of a code of conduct covering grain export terminal operators in accordance with the criteria in proposed section 12 in Part 1 of Schedule 1 to this Bill.

Concluding comments

The wheat export industry in Australia has undergone significant changes since 2008 when the ‘single desk’ was abolished.  This Bill heralds another round of changes which move the wheat export industry closer to being fully deregulated. 

There remains amongst some growers perceived gaps in terms of the information available in the market place on which they must base their decisions to sell, and the absence of any agency to carry out ‘industry good’ functions.  These gaps have been reflected in some of the recommendations of the House Standing Committee on Agriculture, Fisheries and Forestry in its Advisory Report into the Bill.[90]

It may be that the discussions which must take place before 2014 about the content of a code of conduct with help to crystallise the extent of those gaps and provide a vehicle for agreement about how, and by what method, those gaps can be filled.

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2434.



[1].       Item 29 of Part 1 of Schedule 1 to the Bill inserts proposed section 12 into the WEMA.  Proposed subsection 12(1) authorises the Minister to publish a notice in the Gazette approving a code of conduct. The WEMA will not be repealed until such time as the Minister approves a code of conduct under this section.

[2].       A history of the regulation of the Australian wheat industry is contained in P Hicks and T John, Wheat Marketing Amendment Bill 2006, Bills Digest, no. 111, 2006–07, Parliamentary Library, Canberra, 14 March 2007, viewed 16 May 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillsdgs%2FSZHM6%22

[3].       Productivity Commission, Wheat Export Marketing Arrangements, Inquiry report, no. 51, July 2010, p. 4, viewed 16 May 2012, http://www.pc.gov.au/__data/assets/pdf_file/0005/99554/wheat-export-report.pdf

[4].       P Volcker (Chairman), Independent inquiry committee into the United Nations oil-for-food programme, 2005, http://kms1.isn.ethz.ch/serviceengine/Files/ISN/13894/ipublicationdocument_singledocument/b2775461-f442-4575-b746-9c038d3c8bb6/en/ManipulationReport.pdf  

[5].       T R H Cole (Commissioner), Report of the Inquiry into certain Australian companies in relation to the UN Oil-for-Food Programme, Commonwealth of Australia, 2006, viewed 16 May 2012, http://dpl/Books/2006/ColeInquiry/coleinquiry/www.oilforfoodinquiry.gov.au/agd/WWW/unoilforfoodinquiry.nsf/Page/Report.html

[6].       L Staley, ‘Taking apart Australia’s last single desk’, Institute of Public Affairs Review, September 2008, p. 55, viewed 16 May 2012, http://www.ipa.org.au/publications/1397/taking-apart-australia/pg/5

[7].       M Irving (Chairman), National Competition Policy Review of the Wheat Marketing Act 1989, Commonwealth of Australia, December 2000, viewed 16 May 2012, http://ncp.ncc.gov.au/docs/AG%20review%20of%20the%20Wheat%20Marketing%20Act%201989,%20December%202000.pdf

[8].       For example, sugar, rice, barley, oats, cotton, dried fruits, eggs, oilseeds, sorghum, beans, peanuts, honey and potatoes.  B Nelson (former Leader of the Opposition), ‘Second reading speech: Wheat Export Marketing Bill 2008’, House of Representatives, Debates, 3 June 2008, p. 4274, viewed 16 May 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fhansardr%2F2008-06-03%2F0106%22

[9].       Productivity Commission, Wheat Export Marketing Arrangements, op. cit., p. 4.

[10].      P Hicks and T John, Wheat Marketing Amendment Bill 2006, op. cit.

[11].      P Hicks and A Martyn, Wheat Marketing Amendment Bill 2007, Bills Digest, no. 186, 2006–07, Parliamentary Library, Canberra,  2007, viewed 22 May 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillsdgs%2FZREN6%22

[12].      P Pyburne, Wheat Export Marketing Bill 2008, Bills Digest, no. 128, 2007–08, Parliamentary Library, Canberra, 2008, viewed 16 May 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillsdgs%2FDPPQ6%22

[13].      Productivity Commission, Wheat Export Marketing Arrangements, op. cit., p. 2.

[14].      Ibid., recommendation 4.1.

[15].      Ibid., recommendation 4.3.

[16].      Ibid., recommendation 4.4.

[17].      Ibid., recommendation 5.2.

[18].      J Ludwig (Minister for Agriculture, Fisheries and Forestry), Australian Government response to the Productivity Commission recommendations on wheat export marketing arrangements, 23 September 2011, viewed 22 May 2012, http://www.daff.gov.au/__data/assets/pdf_file/0017/2017511/govt-response-to-pc-review-nov2011.pdf

[19].      Details of the House Standing Committee on Agriculture, Resources, Fisheries and Forestry inquiry are at: http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees?url=arff/wheat/index.htm

[20].      House Standing Committee on Agriculture, Resources, Fisheries and Forestry, Full deregulation of wheat export market under scrutiny, media release, 29 March 2012, viewed 24 May 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressrel%2F1541391%22

[21].      Standing Committee on Agriculture, Fisheries and Forestry, Advisory Report on Wheat Export Marketing Amendment Bill 2012, House of Representatives, Canberra, 18 June 2012, recommendation 4, viewed 18 June 2012, http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees?url=arff/wheat/report/full_report.pdf

[22].      Details of the Senate Rural and Regional Affairs and Transport Legislation Committee inquiry are at: http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=rrat_ctte/wheat_export_2012/index.htm

[23].      Details of the Senate Standing Committee on Rural and Regional Affairs and Transport inquiry are at: http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=rrat_ctte/grains_2011/index.htm

[24].      Senate Committee on Rural and Regional Affairs and Transport, Operational issues in export grain networks, The Senate, Canberra, 2012, viewed 22 May 2012, http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=rrat_ctte/grains_2011/report/index.htm

[25].      Australia, House of Representatives, Votes and proceedings, no. 25, 4 June 2008, pp. 335–337, viewed 22 May 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fvotes%2F2008-06-04%2F0006%22

[26].      B Nelson (former Leader of the Opposition), ‘Second reading speech: Wheat Export Marketing Bill 2008’, op. cit., p. 4274. http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fhansardr%2F2008-06-03%2F0106%22

[27].      General news, ‘Deregulation warning’, The Land, 5 May 2011, p. 5, viewed 22 May 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressclp%2F745246%22 

[28].      T Windsor, Official Newsletter of the Independent Federal Member for New England, June 2008, viewed 22 May 2012, http://www.tonywindsor.com.au/newsletters/0806.pdf

[29].      L Knight, ‘Single desk not on Windsor’s wish list’, The Land, 3 September 2010, viewed 22 May 2012, http://theland.farmonline.com.au/news/nationalrural/grains-and-cropping/general/single-desk-not-on-windsors-wish-list/1930025.aspx

[30].      Explanatory Memorandum, Wheat Export Marketing Amendment Bill 2012, p. 3.

[31].      The amendment to the Primary Industries (Customs) Charges Regulation 2000 was by way of the Primary Industries (Customs) Charges Amendment Regulation 2012.  It should be noted, however, that if Schedule 1 to this Bill does not commence on 1 October 2012, the regulation is repealed.

[32].      Section 13, Wheat Export Marketing Act 2008.

[33].      P Cleary, ‘Co-op comes a cropper, farms face ruin’, The Australian, 27 August 2010, p. 7, viewed 24 May 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressclp%2FSVRX6%22   and Gilgandra Marketing Co-operative Limited v Australian Commodities and Marketing Pty Ltd and Anor, [2010] NSWSC 1209, (22 October 2010), viewed 24 May 2012, http://www.austlii.edu.au/au/cases/nsw/NSWSC/2010/1209.html

[34].      Productivity Commission, Wheat Export Marketing Arrangements, op. cit., p. 119.

[35].      South Australian Farmers Federation, Submission to Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the Wheat Export Marketing Amendment Bill 2012, 23 April 2012 viewed 24 May 2012, https://senate.aph.gov.au/submissions/comittees/viewdocument.aspx?id=9960ad7f-7d5c-4923-b0b5-bcfcf30f8e1e

[36].      Ibid.

[37].      New South Wales Farmers’ Association, Submission to Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the Wheat Export Marketing Amendment Bill 2012, April 2012 viewed 24 May 2012, https://senate.aph.gov.au/submissions/comittees/viewdocument.aspx?id=88af1da3-7f2c-4bfc-9ab1-9f13414af72f

          ‘Industry good functions’ are discussed below.

[38].      AgForce Queensland Industrial Union of Employers, Submission to Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the Wheat Export Marketing Amendment Bill 2012, 20 April 2012, viewed 24 May 2012, https://senate.aph.gov.au/submissions/comittees/viewdocument.aspx?id=a807d479-e1f2-439a-a02c-c577de150bb4

[39].      Pastoralists and Graziers Association of WA Inc, Submission to Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the Wheat Export Marketing Amendment Bill 2012, 1 May 2012 viewed 24 May 2012, https://senate.aph.gov.au/submissions/comittees/viewdocument.aspx?id=0c2643ca-8b71-4f92-a4fd-fb0ba688deb2

[40].      GrainCorp Operators Limited, Submission to Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the Wheat Export Marketing Amendment Bill 2012, n.d., viewed 24 May 2012, https://senate.aph.gov.au/submissions/comittees/viewdocument.aspx?id=d955774e-b9d6-469d-bbd5-53ecb1bfdec3

[41].      CBH Group, Submission to Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the Wheat Export Marketing Amendment Bill 2012, n.d., viewed 24 May 2012 https://senate.aph.gov.au/submissions/comittees/viewdocument.aspx?id=f53497db-90f8-4347-8636-5a82a42768bf

[42].      Senate Rural and Regional Affairs and Transport References Committee, Operational issues in export grain networks, op. cit., p. 45.

[43].      Productivity Commission, Wheat Export Marketing Arrangements, op. cit., p. 175.

[44].      F Crosbie (ed.), ‘Bumper crop: Recent port terminal services access undertakings under the wheat access regime’, Australian Journal of Competition and Consumer Law, vol. 20, no. 1, March 2012, pp. 36–40 at p. 36, viewed 24 May 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22library%2Fjrnart%2F1511023%22

[45].      Section 7, Wheat Export Marketing Act 2008.

[46].      Subsection 24(1), Wheat Export Marketing Act 2008.

[47].      Subsection 24(2), Wheat Export Marketing Act 2008

[48].      The text of the undertaking by Australian Bulk Alliance Pty Ltd can be viewed at: http://www.accc.gov.au/content/index.phtml/itemId/964331

[49].      The text of the undertaking by Co-operative Bulk Handling Ltd can be viewed at: http://www.accc.gov.au/content/index.phtml/itemId/868802

[50].      The text of the undertaking by Viterra Operations Ltd can be viewed at: http://www.accc.gov.au/content/index.phtml/itemId/868800

[51].      The text of the undertaking by GrainCorp Operations Ltd can be viewed at: http://www.accc.gov.au/content/index.phtml/itemId/868801

[52].      Productivity Commission, Wheat Export Marketing Arrangements, op. cit., p. 173.

[53].      New South Wales Farmers’ Association, Submission to Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the Wheat Export Marketing Amendment Bill 2012, op. cit., paragraph 2.1(d).

[54].      Productivity Commission, Wheat Export Marketing Arrangements, op. cit., pp. 173–174.

[55].      S Sidebottom (Parliamentary Secretary for Agriculture, Fisheries and Forestry), ‘Second reading speech: Wheat Export Marketing Amendment Bill 2012’, House of Representatives, Debates, 21 March 2012, p. 3697, viewed 4 June 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fhansardr%2Fcd08e91c-1ffc-4955-a61a-1a9087358780%2F0040%22

[56].      Productivity Commission, Wheat Export Marketing Arrangements, op. cit., p. 174.

[57].      The Treasury, Policy Guidelines on Prescribing Industry Codes under Part IVB of the Competition and Consumer Act 2010, Australian Government, Canberra, May 2011, p. 2, viewed 5 June 2012, http://archive.treasury.gov.au/documents/2035/PDF/Policy%20Guidelines%20on%20Prescribing%20Industry%20Codes.pdf

[58].      Section 51AD, Competition and Consumer Act 2010.

[59].      Section 51ACA, Competition and Consumer Act 2010.

[60].      The information about the three methods of access is sourced from National Competition Council, Access to monopoly infrastructure in Australia: national third party access regime, October 2011, viewed 5 June 2012, http://www.ncc.gov.au/images/uploads/Access_to_Monopoly_Infrastructure_in_Australia.pdf

[61].      Subsection 44ZZA(3) of the Competition and Consumer Act 2010 sets out the criteria that the ACCC applies in determining whether to accept an undertaking.

[62].      National Competition Council, Access to monopoly infrastructure in Australia: national third party access regime,
op. cit.

[63].      R Sims (Chairman, ACCC), Competition and regulating monopolies: Some perspectives from the ACCC, Address to the Western Australia Chamber of Commerce and Industry, 15 November 2011, viewed 5 June 2012, http://www.accc.gov.au/content/item.phtml?itemId=1017282&nodeId=a74ee737414552599489be025e4b3062&fn=Competition%20and%20regulating%20monopolies:%20some%20perspectives%20from%20the%20ACCC%20-%2015%20November.pdf

[64].      New South Wales Farmers’ Association, Submission to Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the Wheat Export Marketing Amendment Bill 2012, op. cit., paragraph 2.1(d).

[65].      Senate Rural and Regional Affairs and Transport References Committee, Operational issues in export grain networks, op. cit., p. 101.

[66].      GrainCorp Operators Limited, Submission to Senate Rural and Regional Affairs and Transport Legislation Committee,  Inquiry into the Wheat Export Marketing Amendment Bill 2012, op. cit., p. 16.

[67].      South Australian Grains Industry Trust, Submission to the Rural and Regional Affairs and Transport References Committee, Inquiry into operational issues in export grain networks, n. d., viewed 14 June 2012, https://senate.aph.gov.au/submissions/comittees/viewdocument.aspx?id=347dc79b-939f-48e3-92ce-315578b3f549 and https://senate.aph.gov.au/submissions/comittees/viewdocument.aspx?id=df0230e1-c2a7-4980-8e88-2bf27932441f

[68].      Senate Rural and Regional Affairs and Transport References Committee, Operational issues in export grain networks, op. cit., p. 99.

[69].      AgForce Queensland Industrial Union of Employers, Submission to Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the Wheat Export Marketing Amendment Bill 2012, op. cit.

[70].      Item 29 of Part 1 of Schedule 1 to the Bill inserts proposed subsection 9(4) which contains the continuous disclosure rules.

[71].      Item 29 of Part 1 of Schedule 1 to the Bill inserts proposed paragraph 12(2)(b) which requires the Minister to be satisfied that the code of conduct requires providers of port terminal services to comply with continuous disclosure rules.

[72].      Senate Rural and Regional Affairs and Transport References Committee, Operational issues in export grain networks, op. cit., pp. 45–46.

[73].      Wheat Exports Australia, Annual Report 2010–11, Commonwealth of Australia, 2011, p. 42, viewed 5 June 2012, http://www.wea.gov.au/PDF/WEA_Annual%20Report%202010-11%20-%20Online%20version.pdf

[74].      S Sidebottom (Parliamentary Secretary for Agriculture, Fisheries and Forestry), Second reading speech, op. cit.

[75].      Senate Rural and Regional Affairs and Transport References Committee, Operational issues in export grain networks, op.cit., pp. 45-46

[76].      Inserted by item 15 of Part 1 of Schedule 2 to the Bill.

[77].      Productivity Commission, Wheat Export Marketing Arrangements, op. cit., p. 365.

[78].      Ibid., p. 24.

[79].      The Grains Research and Development Corporation (GRDC) is a statutory corporation, founded in 1990 under the Primary Industries and Energy Research and Development Act 1989. The GRDC is funded jointly by a 0.99 per cent levy on grain growers (0.693 per cent levy on maize) that is matched by the Australian Government. The industry levy is collected on 25 crops and is determined each year by the grains industry's peak body, Grains Producers Australia.  Further information about GRDC is on their website which can be viewed at: http://www.grdc.com.au/director/about/

[80].      Productivity Commission, Wheat Export Marketing Arrangements, op. cit., recommendation 7.1.

[81].      Existing paragraph 13(1)(c), Wheat Export Marketing Act 2008.

[82].      Existing paragraph 13(1)(e), Wheat Export Marketing Act 2008.

[83].      The Australian Competition and Consumer Commission is empowered to accept access undertakings in accordance with section 44ZZA of the Competition and Consumer Act 2010.

[84].      An access undertaking is a document which establishes the terms and conditions under which a service provider is willing to offer or negotiate access to services provided by an essential facility to an access seeker.  Access providers may give an access undertaking to the ACCC which specifies the terms and conditions on which access will be made available to third parties.  If the ACCC accepts the undertaking, the provider is required to provide access in accordance with the undertaking.

[85].      It is the Minister who makes the relevant decision under section 44N of the Competition and Consumer Act 2010.

[86].      Item 49 of Schedule 1 to the Bill inserts proposed section 29 to give the Australian Competition and Consumer Commission the power to monitor compliance with the ‘continuous disclosure rules’ under subsection 155(1) of the Competition and Consumer Act 2010.

[87].      Item 59 repeals and replaces subsections 76(4) and 76(5) so that a pecuniary penalty of no more than 3000 penalty units (that is, $330 000) is payable for a contravention of subsections 8(1) and 8(5).

[88].      For the purposes of the Wheat Export Marketing Act 2008, a reference to the Secretary is a reference to the Secretary of the Department of Agriculture, Fisheries and Forestry.

[89].      Explanatory Memorandum, Wheat Export Marketing Amendment Bill 2012, p. 8.

[90].      Standing Committee on Agriculture, Fisheries and Forestry, Advisory Report on Wheat Export Marketing Amendment Bill 2012, op. cit., recommendations 1–3.


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