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CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer and Copyright Details
Agriculture, Fisheries and Forestry
Legislation Amendment Bill (No. 1) 1998
Date Introduced: 12 November 1998
House: House of Representatives
Portfolio: Agriculture, Fisheries and Forestry
Commencement: Schedule 1 of the Bill,
which relates to the repeal of the Dried Vine Fruits
Equalization Act 1978, commences on 1 January 1999. The other
provisions commence on Royal Assent.
To:
-
- terminate the Dried Vine Fruits Equalization Scheme; and
-
- substitute reference to the National Meat Processors'
Association with reference to the Australian Food Council's
Processed Meats Forum.
Dried Vine Fruits Export Equalization
Scheme
The major amendment proposed by the Bill is the
termination of the Dried Vine Fruits Equalization Scheme (the
Equalization Scheme). Dried vine fruits comprise sultanas, currants
and raisins.
The Equalization Scheme requires, for each
season's production, the Australian Dried Fruits Board to determine
for each type of dried vine fruit each exporters average export
return and an industry return for all export markets. Where the
average export return of an exporter is greater than the industry
return, this amount is then multiplied by the tonnage to which the
sales relate and is paid into a trust fund, the Equalization Trust
Fund. Where the industry return exceeds the average export return,
this amount is then multiplied by the tonnage to which the sales
relate and is paid from the Equalization Trust Fund to the
exporter. In effect the Equalization Scheme averages export returns
received for dried vine fruits.
Historical Rationale for Dried Vine
Fruits Equalization Scheme
The Equalization Scheme was established in 1978
under the then Fraser coalition government. The then Minister for
Primary Industry, the Hon. Ian Sinclair, gave the following reasons
for the introduction of the scheme:
Without an industry commitment to equalisation,
the industry's marketing circumstances carry the inherent risk of
substantial diversions of fruit from export to the more attractive
but limited Australian market, beyond the capacity of that market
to absorb and still maintain a reasonable level of return to
growers. Should that happen, the likely end result would be a
significant fall in overall return to the industry and a
corresponding fall in grower incomes.
The Association (the Australian Dried Fruits
Association) has become increasingly concerned that the voluntary
commitment to equalisation will not withstand a developing climate
of competition between dried vine fruit packers in South Australia,
where the one packing house not participating in voluntary
equalisation is located. The Association has therefore asked that
the Government secure equalisation by placing it on a statutory
footing. Having regard to the possible adverse consequences for
grapegrowers, including growers in the related wine grape producing
industry, and for important regional communities if overall
industry income were diminished because of abandonment of
equalisation, the Government has acceded to that request.(1)
Major Reviews of the Dried Vine Fruits
Equalization Scheme
In July 1988, the then Treasurer, the Hon P.
Keating, requested the Industry Commission (IC) to inquire into the
dried vine fruit industry. The IC was requested to identify and
report on the significance of factors that may facilitate or impede
the development of the industry, or in any other way affect its
competitiveness and efficiency.
On 1 September 1989, the IC released its report
on the dried vine fruit industry. The report made a number of
findings on the effects of assistance provided to the dried vine
fruit industry, including that:
-
- the dried vine fruit equalisation scheme in effect subsidises
exports by taxing domestic sales.
The IC considered three options for future dried
vine fruit industry assistance arrangements: retention of existing
measures; modification of existing measures; and fundamental
reform. The IC was of the opinion that:
-
- retention of existing measures would continue to penalise
efficient and innovative producers and marketeers of dried vine
fruit and tax Australian consumers to subsidise exports, and
-
- modifying the existing assistance arrangements would be
difficult because the close inter- relationships between many of
the arrangements makes it difficult to assess how effective
modifications might be.
The IC favoured fundamental reform of the
existing assistance arrangements for equalisation. The IC
recommended that statutory equalisation provisions be withdrawn at
the end of 1994.
In the October 1989 issue of the Australian
Dried Fruit News, which is the journal of the Australian Dried
Fruits Association, the Association came out against the IC's
recommendations. The Association's principal criticism of the IC
report was that it failed to substantiate the case for the drastic
changes to the industry's marketing arrangements. The Association
argued that the IC had relied heavily on unsubstantiated
assertions, assumptions that could not be relied on, and the
projections of its economic model which the [IC] conceded were
incapable of predicting the real effects of its proposed reform
package. The Association also submitted that the lack of authority
of the report was illustrated by numerous qualifications, variables
not accounted for and the frequent reliance on the word may.
Major Legislative Changes to the Dried
Vine Fruits Equalization Scheme
In its original form the Equalization Scheme
averaged domestic returns and export returns from sales of dried
vine fruits. The Dried Vine Fruits Legislation Amendment Act
1990 removed the arrangements for the equalisation of returns
from domestic sales and provided for the equalisation only of
export returns.
Rationale for Termination of Dried Vine
Fruits Equalization Scheme
The termination of the Equalization Scheme
follows an industry/federal government roundtable held in February
of this year where it was agreed the current scheme was no longer
appropriate and should be terminated.(2)
The Minister in the Second Reading Speech to the
Bill states:
The industry now contends that, in the
prevailing market circumstances, equalization arrangements are
inappropriate, and mask market signals and inhibit industry and
marketing innovation. The industry peak body, the Australian Dried
Fruits Association has requested the termination of the scheme.
Item 1 of Schedule
1 repeals the Dried Vine Fruits Equalization Act
1978. The affect of the repeal is to terminate the
Equalization Scheme.
The effect of item 2 of
Schedule 1 is to ensure that equalization occurs,
despite the repeal of the Dried Vine Fruits Equalisation Act
1978, for a season starting on 1 January 1997 or 1 January
1998.
The major amendments proposed by the Bill to the
Pig Industry Act 1986 substitute reference to the National
Meat Processors' Association with reference to the Australian Food
Council's Processed Meats Forum (AFC). The AFC replaced the
National Meat Processors' Association as the Australian meat
processors' peak representative body.
-
- House of Representatives, Parliamentary Debates
(HANSARD), 15 November 1978, p. 2824.
- Parliamentary Secretary to the Minister for Primary Industries
and Energy, Media Release, 22 May 1998.
Ian Ireland
27 November 1998
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ISSN 1328-8091
© Commonwealth of Australia 1998
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