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STANDING COMMITTEE ON RURAL AND REGIONAL AFFAIRS
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Senate Committee Hansard

  1. 1. COMMONWEALTH OF AUSTRALIA Official Committee Hansard SENATESTANDING COMMITTEE ON RURAL AND REGIONAL AFFAIRS AND TRANSPORTReference: Wheat Export Marketing Bill 2008 and Wheat Export Marketing (Re- peal and Consequential Amendments) Bill 2008 [Exposure drafts] THURSDAY, 27 MARCH 2008 CANBERRA BY AUTHORITY OF THE SENATE
  2. 2. INTERNETHansard transcripts of public hearings are made available on the inter- net when authorised by the committee. The internet address is: http://www.aph.gov.au/hansard To search the parliamentary database, go to: http://parlinfoweb.aph.gov.au
  3. 3. SENATE STANDING COMMITTEE ON RURAL AND REGIONAL AFFAIRS AND TRANSPORT Thursday, 27 March 2008Members: Senator Sterle (Chair), Senator Siewert (Deputy Chair), Senators Heffernan, Hur-ley, Hutchins, McGauran, Nash and O’BrienParticipating members: Senators Abetz, Adams, Allison, Barnett, Bernardi, Birmingham,Bishop, Boswell, Boyce, Brandis, Bob Brown, Carol Brown, Bushby, Campbell, Chapman,Colbeck, Coonan, Cormann, Crossin, Eggleston, Ellison, Fielding, Fierravanti-Wells, Fifield,Fisher, Forshaw, Hogg, Humphries, Johnston, Joyce, Kemp, Kirk, Lightfoot, Lundy, Ian Mac-donald, Sandy Macdonald, McEwen, McLucas, Marshall, Mason, Milne, Minchin, Moore,Nettle, Parry, Patterson, Payne, Polley, Ray, Ronaldson, Scullion, Stephens, Troeth, Trood,Watson, Webber and WortleySenators in attendance: Senators Adams, Fisher, Heffernan, Hurley, Hutchins, McGauran,Nash, O’Brien, Siewert and SterleTerms of reference for the inquiry: To inquire into and report on: Wheat Export Marketing Bill 2008 and Wheat Export Marketing (Repeal and Consequential Amendments) Bill 2008 [Exposure drafts]
  4. 4. WITNESSESBARTOS, Mr Stephen Anthony, Director, Allen Consulting Group.................................. 1CROSBY, Mr John Roger, Chairman, Wheat Industry Expert Group........................... 17DRUM, Mr Patrick, Brocklesby Growers Group............................................................... 48GOLLASCH, Mr Philip, Brocklesby Growers Group ....................................................... 48GREBE, Mr Sasha, Trade Advocacy and Government Relations Manager, AWB Ltd ... 1GURSANSKY, Dr Benjamin Charles Gordon, Consultant, Grains Council ofAustralia ................................................................................................................................. 64HADLER, Mr Robert James, General Manager, Corporate Affairs, AWB Ltd............... 1McDONNELL, Mr James William, Brocklesby Growers Group ..................................... 48MORTIMER, Mr David Kenneth, Executive Manager, Food and AgricultureDivision, Department of Agriculture, Fisheries and Forestry ........................................... 17OSBORNE, Mr Alick Stevenson, Director, Australian Grain Exporters Association .... 57PHILLIPS, Mr Russell, General Manager, Wheat, Sugar and Crops Branch,Department of Agriculture, Fisheries and Forestry ........................................................... 17SHEALES, Dr Terence Charles, Chief Commodity Analyst and Manager,Agriculture Branch, Australian Bureau of Agricultural and Resource Economics,Department of Agriculture, Fisheries and Forestry ........................................................... 17SMITH, Mr Jamie Lachlan, Board Director, Policy Council, Grains Council ofAustralia ................................................................................................................................. 64
  5. 5. Thursday, 27 March 2008 Senate RRA&T 1Committee met at 9.00 amBARTOS, Mr Stephen Anthony, Director, Allen Consulting GroupGREBE, Mr Sasha, Trade Advocacy and Government Relations Manager, AWB LtdHADLER, Mr Robert James, General Manager, Corporate Affairs, AWB Ltd CHAIR (Senator Sterle)—I declare open this public hearing of the Senate StandingCommittee on Rural and Regional Affairs and Transport. The committee is hearing evidenceon its inquiry into the Wheat Export Marketing Bill 2008 and a related bill. I welcome you allhere today. This is a public hearing, and a Hansard transcript of the proceedings is beingmade. Before the committee starts taking evidence, I remind all witnesses that in givingevidence to the committee they are protected by parliamentary privilege. It is unlawful foranyone to threaten or disadvantage a witness on account of evidence given to a committee,and such action may be treated by the Senate as a contempt. It is also a contempt to give falseor misleading evidence to a committee. The committee prefers all evidence to be given in public but, under the Senate’sresolutions, witnesses have the right to request to be heard in private session. It is importantthat witnesses give the committee notice if they intend to ask to give evidence in camera. If awitness objects to answering a question, the witness should state the ground upon which theobjection is taken, and the committee will determine whether it will insist on an answer,having regard to the ground which is claimed. If the committee determines to insist on ananswer, a witness may request that the answer be given in camera. Such a request may, ofcourse, also be made at any other time. I remind people in the hearing room to ensure that their mobile phones are either turned offor switched to silent mode. Finally, on behalf of the committee, I would like to thank all ofthose who have made submissions and sent representatives here today for their cooperation inthis inquiry. I welcome representatives from AWB and the Allen Consulting Group. I inviteyou to make a brief opening statement and then the committee will ask questions. Mr Hadler—We would like to thank the Senate committee for the opportunity to be heretoday. We did lodge a formal submission with the secretariat last night—you may not haveseen that yet, but copies will be circulated. We will refer to some of that material today andwe would be pleased to go into more detail on that in due course. Sasha Grebe and I are partof a new management team at AWB that has been there for less than 18 months. Our charterhas been to rebuild the company following the oil for food program issues. Therefore, we arenot closely aligned with what happened in the past and our focus is very strongly on makingsure we have a good company going into the future. Mr Bartos is a consultant who has beencommissioned by AWB to write two independent reports that are attached to our submission,one on fair access to storage and handling infrastructure in the grains industry and the otheron an orderly transition of industry good services under the government’s proposed newwheat marketing arrangements. AWB has publicly welcomed the early release of the draft bill. We think this is a good wayof providing clarity about what the government is proposing and giving confidence to thegrains industry about the process that we are going to go through over the next six months.The reality is that Australia’s wheat export marketing arrangements have fundamentally RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  6. 6. RRA&T 2 Senate Thursday, 27 March 2008changed over the last 18 months and there is no longer a single desk in place. We have ahybrid set of arrangements, with a national pool that accommodates about 60 per cent ofAustralian wheat exports; there are bulk export permits that are given to a range of otherexporters; and wheat exporting in bags and containers is deregulated. Therefore, there iseffectively no single desk in place now. I think that is an important point to understand. The accreditation scheme that is being proposed by the federal government we believeprovides a good model to move forward. It is an evolution of the current arrangements. TheSouth Australian accreditation scheme, which is what the federal model is built on, I thinkprovides a very good example, a benchmark, of light-touch regulation of wheat exportmarketing. It fulfils all the good public policy principles of simplicity, transparency, neutralityand low cost. It was implemented in July and was fully running before the harvest last year. Itwas a very smooth implementation, and I think if we could achieve the same outcome withthe federal legislation that would be a good outcome for the grains industry and for wheatgrowers. If the accreditation scheme is not implemented, the reality is we will be left in a twilightzone of the arrangements I talked about before, where AWB will be required under legislationand its constitution to run a national pool but it will not have volume certainty because it willnot have the bulk veto. There will be bulk permits, and wheat exports in bags and containerswill be deregulated. That will be an extremely difficult operating environment for all playersin the grains industry, so the default situation of not passing this legislation is not good. We have had an opportunity to examine the draft bill in some detail and we have providedan attachment to our submission which identifies approximately 10 issues which we think areunintended consequences or potential compliance costs which this committee has theopportunity to fix before they become enacted in legislation. Briefly, and we can go back intothese in more detail if the committee desires, the legislation provides very broad powers to theregulator to develop and implement regulations on the back of this legislation. On the basis ofbriefings by the regulator last week, there is a risk that we could eventually have a wheatindustry ASIC and an attestation process that is very similar to the Sarbanes-Oxley process forbanks in the US. I think we need to guard against that. It would not be consistent with theintent of the legislation and it would not be consistent with the South Australian benchmark ofa light touch regulatory approach. The legislation also proposes some potential breaches based on phytosanitary measures.We need to be quite clear about whether that is foreign laws that we need to be careful aboutor laws set by AQIS. Potentially we are handing power over to foreign governments toinfluence how Australia’s wheat export legislation is enacted. We believe there is a need for greater detail in the legislation about the terms andconditions of fair access to bulk storage and handling infrastructure. There is a focus on pricein the legislation. There also needs to be an emphasis on non-price conditions, because that isin effect where anticompetitive behaviour can be quite explicit. We also think that thelegislation is a bit narrow in focusing just on port facilities. The reality is that the bulkhandlers operate very integrated storage and handling processes with up-country silos andport facilities providing an integrated storage and handling system. They can influencecompetition up-country as well as at port. RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  7. 7. Thursday, 27 March 2008 Senate RRA&T 3 Under the legislation, there are provisions for any person to appeal a decision. That is adangerous precedent. I think, in principle, the legislation should limit the ability to appeal toapplicants who are refused accreditation. If anyone—including competitors—is able toappeal, you could be placed in a very difficult position. The term ‘export’ is not actually defined in the legislation. That could create a legalminefield with a regulator about whether it is actually a sales agreement or whether it is wheaton board a ship. So there are some details there that need to be worked out. The only other material issue at this stage, I think, is that there are unreasonably onerousreporting obligations. Under the draft regulations, companies would have to report to WheatExports Australia within 14 days of any possible breach that could revoke their accreditation.I think it is too broad a requirement. It needs to be referred back to the specifics of thelegislation on the accreditation criteria and I think the time period also needs to be lengthened. They are some of the unintended consequences and compliance issues that we haveidentified in our brief analysis. We have attached to our submission the Allen Consulting Group report on bulk handling. Ithink there are a lot of misconceptions in the grains industry and amongst regulators about theactual state of affairs; this report provides a very good analysis of the current situation.Basically, the three bulk-handling companies in Australia have natural regional monopolies.Without the countervailing pressure of the single desk, they will be able to leverage thatmonopoly power. To give you some idea of the magnitude of their power, over 600 up-country silos and nine ports are owned and controlled by those three bulk-handlingcompanies. AWB has 22 up-country silos and half-ownership of one port in Melbourne. Thatgives you some idea of the potential mismatch between the bulk-handling companies, withtheir entrenched power, and other traders—not just AWB but also other traders—who do nothave access to storage and handling facilities and ports. So I think the fair access provisionsproposed in the bill are essential. Finally, the second paper by the Allen Consulting Group provides some suggestions for anorderly transition of industry good services. Under the old arrangements, AWB provided arange of services that were largely funded out of grower money, out of the pool, and theyincluded things such as wheat classification, industry information, delivery standards andstrategy development for the industry. The paper that the Allen Consulting Group preparedadopts a very hard-nosed economic analysis of where there is market failure in the delivery ofthose services if they were not provided by AWB, and it concludes that there are probablyonly three areas where there is potential market failure where other existing players in thegrains industry could manage those services. Wheat classification is one of those areas, and we have been in discussions with theGRDC, the Grains Research and Development Corporation, about taking over those servicesas part of an orderly transition. The second area is delivery standards of wheat at silo.NACMA, which is an industry association, has started work on industry generic deliverystandards, and we think that is probably the right organisation—with appropriate input fromgrain growers themselves—to develop that sort of information. Lastly, there is a gap in theprovision of information about stocks and trade in wheat. We believe that the ABS and Wheat RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  8. 8. RRA&T 4 Senate Thursday, 27 March 2008Exports Australia as it is proposed, in combination, would be able to fill that information gap.The ABS has the constitutional powers to collect the information. It would require additionalbudget funds to do that, but I think that there is a clear-cut case of market failure where thegovernment could provide appropriate support to the industry. CHAIR—Mr Bartos, do you wish to add any comment? Mr Bartos—No. I am very happy to simply respond. CHAIR—Thank you. Senator HEFFERNAN—Do you think that under the new legislation Australia’s wheatgrowers will be better off than they were under the old? Mr Hadler—There are potential benefits for wheat growers under the new arrangements.In theory, that derives from two drivers. By providing greater choice to wheat growers on whomarkets their wheat, potentially you will see innovation and competition in the marketing ofwheat. The second area where, in theory, there might be improved benefits from competitionin storage and handling is in driving down the costs of storage and handling. As I said, that isin theory. Particularly in the area of storage and handling costs, it would depend on fairaccess. Senator HEFFERNAN—Is that based on extending the port arrangements to the point ofdelivery? Mr Hadler—Correct. Senator HEFFERNAN—Do you think there is a greater risk of regional monopoly ratherthan collusion at the point of delivery? Mr Hadler—Yes, I do. There are natural regional monopolies. CBH in WA basicallycontrols the storage and handling infrastructure there. It is a long way from there to thedomestic market on the east coast and they effectively have a natural regional monopoly. Onthe southern coast of Australia, ABB in South Australia has an established regional monopoly,and GrainCorp on the east coast has an established regional monopoly. Senator HEFFERNAN—So your report from Mr Bartos addresses those issues. Mr Hadler—It does. Senator HEFFERNAN—This is a fairly emotional debate for a lot of people. Apparentlythere was a fair bit of emotion here yesterday. Do you think that the buyer of last resort is athing that is fixed in people’s minds? I actually think that the buyer of last resort had someupsides and some downsides. The serious downside was that AWB Ltd, as you know, couldcash-accumulate and then dump it into the pool to get rid of it, which they did. I promisedSasha I would not go through the Geneva desk rubbish today. Senator ADAMS—Not like you did yesterday. Senator HEFFERNAN—That was only a bit of a tickle-up yesterday. There is no decentexplanation for some of that, I can tell you. Do you think there is any legitimacy to the buyerof last resort? RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  9. 9. Thursday, 27 March 2008 Senate RRA&T 5 Mr Hadler—I think it is a bit of a red herring, to be honest. The reality is that there is nobuyer of last resort. Under the current legislation and the arrangements managed by AWB, ifwheat does not meet delivery standards we do not have to accept it. That wheat is then usuallydiscounted into the domestic market or other markets as feed wheat at a lower price or itcannot be sold, because it does not meet anyone’s quality standards. Senator SIEWERT—Who normally does that? Who does the discounting and how doesthat happen? Senator HEFFERNAN—The market. Mr Hadler—The domestic market is deregulated, so it just happens through other tradersand customers. Senator SIEWERT—What we heard yesterday was that we have had the single desk, ithas been the buyer of last resort and that if wheat is shot or sprung we have always been ableto put it in the pool. So what you are saying is that, no, that has not happened; it goes into thedomestic pool. Senator HEFFERNAN—That is not quite an accurate interpretation of how it reallyworks at the bridge. For shot and sprung wheat, sure, there will be grade set up through theaccumulators, whether it is GrainCorp, AWB or whoever under the present arrangements. Butgenerally the better buyer is the local domestic buyer. Senator SIEWERT—That is what I am trying to work out. We have to get to the bottomof this. Are they actually the buyer of last resort? What has happened in real life, as opposedto what people wish would happen? Mr Hadler—I think what happens in real life is that wheat growers have their cake and eatit too. What I mean by that is that they try and get a higher price on the domestic market,particularly pre-Christmas, when wheat prices spike because of the lack of supply, and thenthey try to stick some of it into the pool to hedge their bets. That is how it works in practice. Senator SIEWERT—And that has been accepted? Senator ADAMS—In the eastern states. Mr Hadler—In the eastern states, yes. Senator HEFFERNAN—Where there is a domestic market, yes. Mr Hadler—There is not as big a domestic market in the west. Senator HEFFERNAN—But obviously, under the present arrangements, financialinstruments have a big place, and a lot of people get burnt by experience that they could dowithout in that process. Under the buyer of last resort system, I thought it was a curioussecurity blanket for the industry if they understood that you, AWB—and I am still hopefulthat some of your AWB blokes are going to go to jail— Senator McGAURAN—I raise a point of order on that last comment. Senator HEFFERNAN—What? That is what I think. Senator McGAURAN—Well, it is out of order. Senator HEFFERNAN—I do not think it is out of order. RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  10. 10. RRA&T 6 Senate Thursday, 27 March 2008 Senator McGAURAN—It is a slur on those at the table. Senator HEFFERNAN—No, it is not. This is the new brigade here. Senator McGAURAN—Whatever the reference was, I take it as such, and I appeal to thechair. Senator HEFFERNAN—Don’t be a sook! Senator McGAURAN—I appeal to the chair. CHAIR—Senators, I must admit that I was talking to another committee member, and Imissed that. Senator HEFFERNAN—This is the new brigade here. CHAIR—Senator Heffernan, carry on. Senator McGAURAN—Don’t tell me what my point of order is! Senator HEFFERNAN—Don’t be a sook! Under the buyer of last resort arrangements, itis a fact that AWB Ltd, as opposed to the pool, could buy wheat in the cash market and then,if they needed to, they could sell it to the buyer of last resort—that is, back to the growers.That is a fact, isn’t it? Mr Hadler—That is a fact. Senator HEFFERNAN—And then, of course, if it suited AWB Ltd they could buy grainfrom the pool, which they did to the tune of whatever it was—2.9 million tonnes—and sell itthrough the Geneva desk. Mr Hadler—That is technically correct, but the motive in that is to maximise returns togrowers under the legislation and the constitution. Senator HEFFERNAN—I hear all that, but I do not see the truth of that, I have to say. Asyou know, the Wheat Export Authority are a bunch of pansies and could not provide anysupervision of that. Obviously, in this last harvest, AWB closed the pool off before thesouthern harvest had commenced. We had talked about this before. Why was that? Mr Hadler—I am not sure that is quite correct. What happened was that AWB, because ofthe changed regulatory arrangements with bulk permits and deregulation of bags andcontainers, announced prior to harvest that it would not have any guaranteed access dates. Inpast years, AWB has published a date when the pool delivery would close in each port zone.The way the wheat harvest works is that, because of climatic conditions and the way theseasonal conditions work, the wheat harvest usually starts in Queensland, sometimes as earlyas late July to mid August. It goes down and around the country, and usually the last places tocomplete harvest are in south-west WA, around Albany. While we said that we would not giveanyone the clarity of having a published access date—because we did not want to givecompetitors a free ride of dumping into the pool, as Senator Heffernan has talked about—wegave a commitment that we would not close the pool until harvest had finished in each portzone. So what we did was to progressively close the pool in each port zone as harvest waslargely or fully completed. That gave all wheat growers an opportunity to deliver to the pool. RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  11. 11. Thursday, 27 March 2008 Senate RRA&T 7 Senator HEFFERNAN—Can I just say that in practice—by the way, I have to declare aninterest— Senator McGAURAN—This is not relevant. Senator HEFFERNAN—It is very relevant; you would not know, Senator McGauran,because you do not grow wheat. But at the bridge at Junee, when that happened, the price ofwheat dropped $30 a tonne overnight. That is what worries me. I am confident that, if wethink through this legislation, Australia’s wheat growers could be better off as long as weprovide things like the port to the point of delivery and we somehow monitor collusion. Yousay, Mr Hadler, that anyone can appeal. Who can they appeal to? Mr Hadler—The companies act and the Trade Practices Act, I think, provide sufficientprotection for wheat growers from market power, but the grains industry itself could— Senator HEFFERNAN—I would have to say—thinking of the Woolies and Coles thing—that I am not too sure about that. Bear in mind that the courts and the law system are not aboutthe truth; they are about the law. The more you extend the law, the more you delay theprocess. CHAIR—Senator Heffernan, you are probably wasting your valuable time. Mr Hadler—Just to finish that comment, Senator Heffernan, I think that the grainsindustry and the legislation, in combination, could provide sufficient grower protection. Whatdo I mean by that? I think NACMA, as an industry group, is looking at standard industrycontracts, and that could be a good way, through a voluntary code of practice, of providingindustry support for greater transparency on estimated silo returns and how growers aretreated at silo. Senator HEFFERNAN—Under the present arrangements where 20 per cent of thegrowers grow 80 per cent of the wheat—it is probably higher now—some of those growersactually want to get into the export thing themselves. Would it be fair to say that one of thegreat dangers to the wider wheat industry in Australia would be the management of thequality of that farm storage? Already in New South Wales—I will not name the storagefacility—there is a huge weevil outbreak in one facility of the majors. Would you see somedangers in supervising farm delivered exported wheat? There could be anything from weevilsto God knows what. Mr Hadler—There are clearly some risks, but I think the reality is that the market providesa very good protection of quality. At the end of the day customers will send a clear pricesignal to those people who cannot deliver a quality product. That will provide a blowtorch towheat marketers to ensure they manage the storage and handling system a lot better than theyhave in the past. As you are aware, the current storage and handling system is a black box.There is no transparency about it, there are no rules. Senator HEFFERNAN—It is called commercial-in-confidence. Mr Hadler—The more that we expose those current arrangements to greater transparencyand greater market pressure the better the outcomes for wheat growers. Senator HEFFERNAN—This is my final question: in your submission—and I have notread it if it was delivered overnight—have you made some recommendations to instruct both RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  12. 12. RRA&T 8 Senate Thursday, 27 March 2008this committee and the government on betterment of the legislation to give a brighter future toAustralia’s wheat growers? Mr Hadler—Yes, we have. Senator HURLEY—You mentioned briefly the ABS providing more information. I wantto follow up on that. I have been told that in the US, because of a previous marketing disaster,information is published about crop sizes and wheat sales. Is that something you envisageseeing happening here? There has been some discussion that people will not disclose thatinformation because it is commercial-in-confidence. Mr Hadler—There are some gaps in the provision of industry data at the moment, notablyaround stocks. The ABS has tried to publish information about stocks but it is not verycomprehensive. It is a national database. To be more relevant to the grains industry it needs tobe broken down into port zone, because that is where all the action will happen under anaccreditation system. The information that will be important to the market, which will be inpart commercial-in-confidence but can be protected when it is aggregated up through theABS, is information about where the stocks are in the storage and handling system and someof the shipping stem information around where the trade flows are going, and how much andwho to. That will provide significant transparency improvements on what is there at themoment. Mr Grebe—On that, one of the things that we need to bear in mind here is a principle thatyou want timely information. It is not so much the collating. A lot of what is collected in theUS is probably too detailed. What we are looking for here is clear signals to the market. Wewant the information provided in a timely manner so people have access to it and it is usefulin a commercial way. Senator HURLEY—Will this be essential for good marketing operations? Mr Hadler—Yes, we would see continued information flow as an industry good service. Itwould naturally be provided in this instance by the ABS because of the market failure aspectsof that information. Senator HURLEY—So AWB would not have any problem with disclosing what stocks itheld and where its markets were? Mr Hadler—No, we would be committed to providing it on a commercial-in-confidencebasis to the ABS, and they would aggregate it up so that it would be industry information.AWB, as part of the current arrangements, has probably had the most onerous and explicitreporting requirements of any company in the grains industry. For us it is not a big leap offaith to go to a new system, as has been proposed. Senator HURLEY—I have a question about the kinds of safeguards that are around aboutcompany information and the WEA having the ability to look at company records. You weresaying that that may well be too onerous and that the WEA does not need to know that degreeof detail. Could you expand on that a bit more? Mr Hadler—The legislation basically gives carte blanche to the current Export WheatCommission to determine all the regulations for how the system will work in practice aroundaccreditation and revocation of accreditation. In briefings last week, members of the Export RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  13. 13. Thursday, 27 March 2008 Senate RRA&T 9Wheat Commission outlined a range of proposals which would require significant compliancecosts by a company up front to prove accreditation as a fit and proper person and ongoingcompliance requirements in providing information to the new Wheat Exports Australia, as itssuccessor, to prevent a breach and a revocation of accreditation. The proposals aresignificantly more detailed and onerous than the processes under the light touch regulatorymodel in South Australia. I think that this committee needs to have a look at the differencebetween the South Australian model and the potential model that could be put in place by theExport Wheat Commission under the new accreditation legislation. Some of the detail weprovide in our submission outlines some of the potential risks and costs associated with that. Senator O’BRIEN—Can you identify the parts of the bill rather than the regulatory modelwhich is proposed to devolve from the bill that you say leads to that, or alternatively are yousaying that that is the interpretation of the bill by the officers? Mr Hadler—It is the interpretation of the bill in subsequent regulation. I think the intent ofthe bill is quite light touch but there is the potential for that to be unwound through regulatorydevelopment. Senator ADAMS—A number of those companies that are already accredited in SouthAustralia will be the same companies that will be applying for a market. Mr Hadler—That is correct. There are now 10 accredited exporters under the SouthAustralian barley accreditation scheme. That has been implemented very smoothly andwithout incident. Senator NASH—How do you think pools are going to operate in the new environment? Mr Hadler—I think there will be innovation, and I think there will be more pools—theycould be regional pools or product pools. The cash market will play a bigger role. It is yet tobe seen how the competitive forces will play out but I suspect there will be innovation andsome of the complexities and costs built into the current system will disappear. Senator NASH—I note that you said earlier that we will not have volume certainty withpools. One of the things that AWB said over the years is how important it is that they knewwhat the stocks were so they could run the pools appropriately. I gather from what you aresaying that innovation will mean a different way of doing things, given that in a lot ofinstances there will not be that volume certainty for traders. Mr Hadler—That is correct. The reality is that under the old single desk arrangementsAWB built a Mercedes model of national pooling. It was a very high cost model and it had allthe bells and whistles. Quite frankly, that was unsustainable, and growers started to complainabout the cost of it, particularly in drought years, which we have had in the last two years, andwe had to significantly cut back on the cost. The only way that you can manage that high-costmodel is with volume certainty. In an accreditation system where there is competition you willskinny down and you will end up with a Holden model of pooling. It will do the job thatwheat growers need. Senator NASH—I think there are a lot of growers out there who would prefer the Merc!You were talking about the ABS statistics around the information on stocks, I think. Giventhat there is going to be potentially such a large amount of on-farm storage, how will there be RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  14. 14. RRA&T 10 Senate Thursday, 27 March 2008any certainty that the statistics the ABS come up with are actually correct when that will haveto be taken into account as well? Mr Hadler—I am not underestimating the transitional issues, and I think we will need tolook closely at how the government and the industry manage that issue. There is no doubt thaton-farm storage is becoming a much bigger part of the market, particularly on the east coast,where domestic industry play a much bigger role as direct customers with wheat growers. So Ithink we will need to work through that, but I do not see that as a material impediment to thislegislation. Mr Grebe—Just on that, I think one of the areas that we are pushing about that disclosureand that knowledge of information is less from a recording or a data analysis perspective butmore about ensuring that everybody has access to the same information. In terms of what theABS will be looking at: for example, currently the bulk-handling companies will know whatyou have delivered into the system, what I have delivered and what every individual has putin. In the past, they have been unable to commercialise that. Moving forward, if they shouldgain accreditation, they will have access to that consolidated knowledge in a way thatindividuals do not. So what we have identified and what the Allen Consulting Group reporthas picked up on is that potential conflict or unfair advantage that they will have. Senator NASH—The unfair advantage that will come from the information. Mr Grebe—So when we talk about this data collection it is not to then do a report a yearlater to say, ‘This is what happened’; it is to ensure that they are not able to cherry pick orhave an unfair advantage of knowledge to commercialise. Senator NASH—You mentioned the receival sites in your opening remarks, too. Justbacktracking, I have the same concerns you do about access to the port facilities. I think thatabsolutely would have to be nailed down. I asked the EWC yesterday and also GrainCorp—sothat can’t be named!—what appropriate access is. Currently, looking at the legislation at themoment, the Export Wheat Commission had no idea. This, to me, is absolutely vitallyimportant. What is appropriate access at the port facilities for other traders so that thiscompetition that everyone says will work—which I sincerely doubt—has an ability to actuallywork? Mr Hadler—We cover that in some detail in our submission. I suggest that Mr Bartosquickly answer that for you. He has done the work. Senator NASH—I am happy to leave it to the submission if you just want to do that. Mr Bartos—That is an excellent question because, although there is in general a consensusthat access is needed, what exactly does that mean in practice? That is the heart of yourquestion. Our report goes into that in quite some depth. It is probably different at differentparts of the supply chain, whether it is at up-country receival sites, the transport or the portfacilities. With the ports, there are actually access regimes in place at the moment. Taking forexample the Western Australian one, which is legislated in the west, one of the interestingthings about that is that the terms and conditions of access are not actually stated in thelegislation. It has not arisen as a policy issue to date, I suppose because AWB has been theexporter. It will arise in the new market. RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  15. 15. Thursday, 27 March 2008 Senate RRA&T 11 What kinds of access regime would you put in place? We go through that in our report, andwe suggest that some of the models would include basing it on the voluntary undertakingsthat have been put in place in Victoria and South Australia in particular for the handlers, theSouth Australian system being a good model. Voluntary undertakings under the TradePractices Act are, in a sense, a slightly weak instrument, but they are enforceable in thecourts—they are disclosable—so that provides a basis. But the other thing that is reallycrucial is not simply the physical access but also this whole question of information that isheld, particularly at ports, in relation to arrivals and departures of ships and their location withrespect to the grain. That information is absolutely critical, and we are suggesting in thisreport that the solution there is a much better regime of transparency about that information,including regular publication, at least weekly, of some of that key information. There is quitea considerable section in this report, to which I would refer you, to explain that in more depth. Senator NASH—Chair, I do have a lot more questions, and I will come back to them ifthere is more time at the end, but I am happy just to ask one more quickly now. In terms ofaccess, there is all the focus on the port facility, but I also have concerns about access at thereceival sites and how that is going to operate, which I think is going to be a key part of all ofit. Can you run me through the numbers of receival sites again. Mr Hadler—There are more than 600 receival sites up country that are owned andcontrolled by the three bulk-handling companies, and 22 by AWB. Senator NASH—What are the current arrangements at, say, a GrainCorp receival site forother traders to come in and use that site? What are the current access arrangements? Mr Hadler—Under the current access arrangements, AWB posts a price at the receival siteand growers have the opportunity to deliver to AWB at that receival site or to deliver to thebulk handler. Senator NASH—Is that by agreement, though? And does that work in reverse for theAWB site? Mr Hadler—Yes; and, yes, it is by agreement. But I would have to say that the agreementshave not worked very well under the current regime. Senator NASH—What concerns me is that there is nothing I can see in the legislation toprovide for any kind of guarantee for these other traders—who are going to provide thecompetition—of ongoing access to all of those receival sites that are currently held by thegrain handlers. Mr Hadler—That is correct. One of the key principles of this bill is to provide that freeraccess, and there is probably a need to look at that in more detail. Senator NASH—But am I right that in the current legislation there is no provision at allfor any kind of access guarantee at the receival sites? Mr Hadler—That is correct. Senator NASH—Thanks, Chair. CHAIR—Senator Nash, once again you have got me—I fell for it again: one became five.Senator Siewert. RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  16. 16. RRA&T 12 Senate Thursday, 27 March 2008 Senator SIEWERT—Senator Nash has just covered part of what I want to cover about thereceival points. We have not got your submission yet, so if you have covered this in yoursubmission I apologise. In your report, Mr Bartos, you make some important points aboutinfrastructure. Do you think the legislation should be amended to cover the receival points? Mr Hadler—Yes, we do. Senator SIEWERT—So, requirements for access provisions at receival points. Whatabout transport infrastructure? You go into that as well; I think it is conclusion 2 that talksabout infrastructure. My understanding from what you say in your report is that you do notclass that as being as important as some of the other infrastructure. Is that correct? Mr Bartos—Only in the sense that the rail transport has a substitute in road. It is not aperfect substitute. In economic terms, there will be an element of monopoly rent that controlof the rail infrastructure will allow people to extract, up to a limit, at which point it iseconomic for road to substitute. So there is at least that possibility of substitution. But thereare concerns and we have raised them in our report. For example, in Western Australia, thereare reports we received during the course of our project that CBH might have an exclusive railhaulage agreement and also own the ports and also own the up-country receival sites. Thatmeans it would control every aspect of the supply chain, which might give rise to concernsabout competition in the west. Senator SIEWERT—So you have said, yes, you think the legislation should be amendedfor receival points. Should there be something in the legislation around transportinfrastructure? Mr Hadler—Yes. We make a specific recommendation in our submission, based on thework done by the Allen Consulting Group, that the legislation should look at prohibitingvertical integration right throughout the storage and handling supply chain. That is clearly anissue that the ACCC will need to keep a close look at. Senator O’BRIEN—If I can jump in there, how do you use this legislation to regulate thetransport sector when the transport sector is not owned by the infrastructure owner? That is apretty basic question. The legislation is only going to regulate those who seek accreditation.The operators of the railways will not be doing that. Mr Hadler—That is a good point. It is only in consideration where an accredited companyunder this legislation seeks to have an exclusive rail agreement that provides verticalmonopoly dominance. If this legislation cannot cover it then I think the ACCC clearly needsto have a greater look at it. Senator O’BRIEN—Under current legislation? Mr Hadler—Yes. Senator ADAMS—I would like to make a comment on that. I think when we go toWestern Australia the committee will be hearing from CBH about their new solution called‘grain express’. Certainly, the paper I have here in front of me does spell out a lot of theconcerns that people have. I will not pre-empt what they are going to say in Western Australia,but they have certainly come up with some very good ideas as to how they can be fair withaccess at receival sites and at the ports. RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  17. 17. Thursday, 27 March 2008 Senate RRA&T 13 Mr Hadler—AWB has not seen full detail of the proposed grain express model and how itmight work. We are only responding here to industry information. If greater informationcomes out that dispels concerns about those issues then that would be an importantdevelopment. Senator SIEWERT—I want to touch on a couple of the issues that you have mentioned. Iam sorry we have not got the submission yet. There are a number of points that you havementioned, and I want to take them further because we are trying to see whether thislegislation is adequate or not. You talk about transparency and publication of information; thatcomes up in a number of submissions and you have touched on it again. Do you believe thatthe legislation goes far enough, or are there changes to the legislation that are needed to dealwith the issues that you have raised about transparency and access to information? Mr Hadler—As a whole, I think the legislation is necessary and appropriate, but it maynot be sufficient in some areas. Our submission identifies some potential gaps, particularlyaround bulk-handling information, information at port and the industry good services. Thereare some areas that are not sufficiently covered at the moment. Senator SIEWERT—Our job is to look at the legislation to see whether it is adequate orwhether there are gaps or unintended consequences. What you are saying, if I understandcorrectly, is that you do think there are amendments that are needed to the legislation to dealwith this issue around information accessibility. Mr Hadler—Correct. Senator SIEWERT—You spoke about the ABS and the WEA having ultimateresponsibility for provision of information. You are saying that ABS should be the collectionpoint, whereas the WEA should be the body responsible for ensuring that the information isaccessible and transparent. Mr Grebe—And timely. Senator SIEWERT—Yes, and timely. That is a good point—it is no good getting theinformation six or 12 months down the track. Mr Hadler—That is correct. Mr Grebe—In our submission we recommend that this information be posted daily forreceival or weekly for shipping stem. But it has to be in such a way that you can make acommercial decision around it—proactively rather than after. Mr Hadler—We apologise for the late delivery of the submission. As you can see it isquite comprehensive, and it did take some time to pull the detailed analysis together. Weapologise that you could not get it before this morning. We would be pleased to answer anyother questions at a later date. CHAIR—We are scheduled to be back in Canberra on 22 April. Senators may wish to readthe submission and we may call you back on that day. Mr Hadler—We would be pleased to do that. Senator SIEWERT—It would be an excellent idea to have you back on the 22nd. There isa lot of detail here—you have supplied substantive information, which I think is very useful. RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  18. 18. RRA&T 14 Senate Thursday, 27 March 2008The growers put on notice to us a series of questions yesterday, and I would like to be cheekyenough to hand them over to you. Rather than taking up time—I know we have only 10minutes left—I am wondering whether you could look at, in particular, the Queenslandgrowers’ questions. They actually gave us a list of unanswered questions on notice, and now Iwant to chuck them back to you and get your opinion as well. Could you look at those andgive us some feedback? That would be very much appreciated. Mr Hadler—We would be pleased to do that. Senator McGAURAN—From yesterday’s hearings and from your own submission, it isquite clear that this legislation is going to spin on access—its success or failure will dependon access to the ports for open and fair competition for the benefit of the growers. We allagree on that. Is it possible for investment at the ports for storage? Is there room for newplayers? Is there anything in your own business plans for that? Mr Hadler—I think the reality is that we have a surplus of storage and handlinginfrastructure. What we really need is better access to the existing infrastructure. There is a lotof capital tied up in the current industry—probably too much given the structural changes inthe industry. And the existing storage is not in the right place. There might be some scope fornew investment in new infrastructure in some areas, but in overall terms we have more thansufficient infrastructure and the key issue is fair access to that infrastructure. Senator McGAURAN—So AWB does not have its own plans to invest in infrastructure? Mr Hadler—Not at this stage. If we were precluded from fair access then a contingencyplan would be to look at establishing our own port infrastructure if that was allowed by stategovernments. This is an important point for the committee to understand: dual infrastructureis currently prohibited in practice if not under law at a state government level. Senator McGAURAN—What is? Mr Hadler—Dual port infrastructure. Senator McGAURAN—That sounds anticompetitive. Mr Hadler—In practice they are also discouraging road competition to rail, either throughpolicy or through legislation. Senator McGAURAN—What does the competition policy say about that? That issomething we have not drilled down to, obviously. Mr Hadler—It is an issue that I think the committee should look at. Senator McGAURAN—Indeed. Nevertheless, in this transitional period your owncompany has made significant steps to prepare for the new competitive world. If this newlegislation were stopped in the Senate, would you be capable of reverting to being the soleexporter, creating a pool? Mr Hadler—I think the genie is out of the bottle; I do not think we can put it back in. Senator McGAURAN—You are not capable, or you do not want to? Mr Hadler—I think it is not commercially feasible for AWB to go back to the oldarrangements. Let us remember the default set of conditions is a national pool—not a single RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  19. 19. Thursday, 27 March 2008 Senate RRA&T 15desk—with bulk permits and deregulated bags and containers. It would not be commerciallyfeasible to manage under those arrangements. Mr Grebe—What you are reverting to, Senator, is the 2007 Wheat Marketing AmendmentBill, where the veto will transfer from the minister to the regulator, but there have not beenadditional legislative measures introduced that would spell out how the regulator would applythat veto, and that is the missing part of the picture at the moment. Senator ADAMS—I would like to pick up on that. You spoke about the default position. Itis very important; I do not think a lot of people understand what happens on 30 June if thislegislation does not go through. Would you like to expand a little on what you said before? Mr Grebe—The original 2006 Wheat Marketing Amendment Bill and then the 2007Wheat Marketing Amendment Bill temporarily transferred the bulk of veto powers to theminister with a sunset clause. Subsequent amendments moved to the 2007 amendment billmean that the veto cannot return to AWB—it either goes to a new entity, which wasforeshadowed by the previous government, or it returns to the regulator, to the authority. Whatwas always intended under the previous government’s policy is that there would be additionallegislation required in 2008 to give effect to those policy directions, and part of that wouldthen have been the conditions under which the regulator would have approved permits. At thetime it was stipulated that they would be things like the lockout of a market and thedevelopment of a new market. That additional certainty, which we state is missing at themoment, was always going to be required if we were to default back. It is an incomplete set ofarrangements. Mr Hadler—It is also important to understand that under that default scenario there wouldbe no probity or governance requirements for the issuing of permits. It would be a veryincomplete set of arrangements. Senator ADAMS—Thank you. You spoke about the risk of the wheat industry forming anASIC group. Would you like to expand on that? Mr Hadler—As I said before, the current bill provides a lot of scope for the currentregulator, the Export Wheat Commission, to develop the regulations and the processes foraccreditation and revocation. On the basis of a presentation to the grains industry last week bythe EWC, there is potential for a heavy handed approach to regulation to be developed by theregulator, which would be inconsistent with the light touch intent of the legislation. Senator ADAMS—Something that arose yesterday and seems to be a big problem is thefact that, with a deregulated market and accredited marketers, Australian wheat may be beingbartered by two companies dealing with the same buyer and pushing the price down. Couldyou give us some examples of that? Mr Hadler—That can happen under the current arrangements. With the regulation of bagsand containers, and bulk export permits, wheat can go out in competition with wheatmarketed by the pool. I think it is a bit of a furphy—the potential is there for it to alreadyhappen. At the end of the day good quality wheat and the best commercial offer for growerswill be the order of the day. RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  20. 20. RRA&T 16 Senate Thursday, 27 March 2008 Senator ADAMS—Are you putting forward a submission to the Wheat Industry ExpertGroup? Mr Hadler—Yes, we have submitted to the expert panel the Allen Consulting Group reporton the industry good services. We know that it is not a specific issue for this committee, butwe have attached that report for the consideration of this committee as well, because of theoverlap. I will ask Mr Bartos to briefly touch base on his report on that issue, if we have time. CHAIR—We have two minutes left, Mr Bartos. Mr Bartos—In that case I will just note that we cover all of the industry good services thatare currently provided and look at the rationale for each—whether there is a market failure ornot for each of those—and analyse them in depth. I refer you to that, and I would be happy ifthe committee secretariat wants to ask questions about it offline. Mr Grebe—One of the other things the report touches on is future industry good services,and that is where we touch on information access. Some of these were applicable under theold arrangements, but under new arrangements we will need to look at other things. Senator FISHER—Mr Hadler, you have expressed your view that the accreditation andrevocation requirements of the bill are intended to be a light touch to replicate the SouthAustralian barley model but in effect they can be interpreted and in your view are likely to bea more heavy touch. Mr Woods gave evidence yesterday—we do not have the Hansard, so Imay not be quoting him correctly—and my notes say that he said the accreditation andreporting requirements body will not be monitoring what individual exporters will be doing,like AWB currently does. That is somewhat at odds with your prediction. Do you have acomment on that? Mr Hadler—I might ask Mr Grebe to comment on the briefing provided by EWC lastweek. He attended that briefing, so he will be able to give you a better idea of the potentialrisk that we are talking about. Mr Grebe—One of the risks here is that in South Australia there is a very general test thatis applied quite subjectively by ESCOSA about whether you are a fit and proper person. Oneof the risks is that, the more specifics that are included in the legislation, the more complianceand technical breaches will occur. What is unclear at the moment in this legislation is whichway it wants to go. I think to be a light-touch regulatory approach it would potentially need tojust rely on broader principles. I think that at the moment there is uncertainty within theindustry and within the regulator in particular about what exactly their role is, particularlyaround things like the monitoring and investigative role—that is, whether they are simplythere to give initial approval and then, beyond that, it is up to each individual company as tohow they then conduct their business. Certainly at the moment it is not clear whether theyhave that ongoing investigative or monitoring role or it is simply an initial approval process. Senator FISHER—Thank you, Messrs Hadler and Grebe. CHAIR—Mr Hadler, Mr Grebe and Mr Bartos: thank you very much. Proceedings suspended from 10.01 am to 10.14 am RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  21. 21. Thursday, 27 March 2008 Senate RRA&T 17MORTIMER, Mr David Kenneth, Executive Manager, Food and Agriculture Division,Department of Agriculture, Fisheries and ForestryPHILLIPS, Mr Russell, General Manager, Wheat, Sugar and Crops Branch,Department of Agriculture, Fisheries and ForestrySHEALES, Dr Terence Charles, Chief Commodity Analyst and Manager, AgricultureBranch, Australian Bureau of Agricultural and Resource Economics, Department ofAgriculture, Fisheries and ForestryCROSBY, Mr John Roger, Chairman, Wheat Industry Expert Group CHAIR—I now welcome officers of the Department of Agriculture, Fisheries and Forestryand the representative of the Wheat Industry Expert Group. I remind senators that the Senatehas resolved that an officer of a department of the Commonwealth or of a state shall not beasked to give opinions on matters of policy and shall be given a reasonable opportunity torefer questions asked of the officer to superior officers or to a minister. This resolutionprohibits only questions asking for opinions on matters of policy and does not precludequestions asking for explanations of policies or factual questions about when and howpolicies were adopted. Officers of the department are also reminded that any claim that itwould be contrary to the public interest to answer a question must be made by a minister andshould be accompanied by a statement setting out the basis for the claim. Does anyone wishto make a brief opening statement before we go to questions? Mr Phillips—During the recent election campaign the government detailed its wheat-marketing policy in the document Australian wheat export marketing and summarised it againin the document Labor’s plan for primary industries. I have copies here if you would likethem. The main objectives of the policy as detailed in Australian wheat export marketing,page 8, include greater selling options for growers, more cost efficient marketing services,additional transparency of price and cost information, long-term transition of industrydevelopment functions to industry control, reduced risk compared with a single buyer, and theopening up of new markets for the sale of Australian wheat. The policy sets out the maincomponents for implementing these new arrangements, such as the accreditation scheme. The department is now implementing the government’s policy. This includes preparing thenecessary legislation, providing advice to the government as needed, liaising withstakeholders on the development and operation of the new arrangements and managing themachinery-of-government issues associated with all legislation. We are managing the processto meet a 1 July 2008 commencement date for the new arrangements. The key steps in thatprocess from here on are the public comment period on the exposure draft of the legislation,and that period closes on 3 April; this Senate inquiry; finalisation of the report by the industryexpert group, chaired by Mr Crosby, on the delivery of industry development functions underthe new arrangements; consultation with industry over details of the accreditation scheme,which is to be a legislative instrument under the proposed act; selection of members forappointment to the new regulator, Wheat Exports Australia; refinement of the draft legislationin the light of comments received on the exposure drafts; and the introduction of the bills intoparliament during the winter sitting period. RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  22. 22. RRA&T 18 Senate Thursday, 27 March 2008 The draft bills, which are available on the department’s website, specify the key elementsof the proposed arrangements and include the creation and composition of the new regulator,Wheat Exports Australia; the powers for Wheat Exports Australia to make the accreditationscheme; the power for Wheat Exports Australia to grant, suspend and revoke an accreditation;the power for Wheat Exports Australia to place conditions on an accreditation, including somemandatory requirements; the power for Wheat Exports Australia to audit an accreditedexporter at any time; the power for Wheat Exports Australia to demand information fromaccredited exporters; the exemptions from requiring accreditation for the first three months ofthe new arrangements—that is, up until the end of September this year; the power for theminister to direct Wheat Exports Australia to undertake an investigation into a matter that heor she considers necessary; the requirement for port terminal operators to provide access totheir port terminal facilities if they wish to become an accredited exporter; the requirement forWheat Exports Australia to report to growers and the minister on the operation of the scheme;and the penalties that will apply for breaching the legislation. That concludes our openingstatement. CHAIR—Thank you, Mr Phillips. Senator ADAMS—Firstly, there has been quite a lot of comment as we go through onaccess, of which you would probably be aware. It is not so much the access to ports as theaccess to inland terminals and the problems associated with that—that is, they are owned bythe three major players rather than by other private organisations. Could you comment onthat? I have to be careful, because we cannot ask policy questions, but, as far as thedepartment and the legislation go, it really does not spell out this. Would anyone be able tocomment on that? Mr Phillips—What the legislation does is reflect an access requirement for where there areperceived to be bottlenecks in infrastructure. In the case of the up-country storage and also theup-country transport, they were not seen as being the same bottlenecks in the system that maybe able to lead to a restriction of competition. As was pointed out by Mr Bartos, on thetransport side of things, rail is substitutable for road and vice versa—maybe not perfectly, butthey are substitutes. Up-country storage does not have the same barriers to entry as portterminal facilities. For example, there is adequate land. The cost to build up-country storagefacilities is not as great as what it is at, say, the port terminals. The legislation focuses onwhere there is the perception that there may be a bottleneck that could potentially restrictcompetition. Senator ADAMS—Another issue that has arisen is regarding accreditation and that it mustbe for a company. A number of private growers have spoken to me about this and arewondering just how they can cope with that and what their situation would be. Could youexplain that in more detail? Mr Phillips—At the moment, it has been drafted so that the accreditation process will beapplicable to companies that are subject to Australian law. That has been done for two majorreasons. The first is to ensure the enforceability of the act by making sure that whoever hasaccreditation has a presence in Australia and is subject to Australian law. The second is that,in drafting the legislation, we were relying on certain constitutional powers for the right of theCommonwealth government to make laws in this area. It has been drafted around two arms: RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  23. 23. Thursday, 27 March 2008 Senate RRA&T 19the export powers arm and the corporations powers arm. Some of the other legal entities inAustralia, such as cooperatives, are not actually under Commonwealth Corporations Law;they are under state laws. To give another constitutional base to the legislation, the use ofcorporations was included. Whilst there are some cooperatives, such as CBH, many of themalso have corporations as subsidiaries. For example, CBH applied for its permits to exportwheat to Indonesia in the name of AgraCorp, one of its corporations. Senator McGAURAN—Will that exclude applications for accreditation from formationsother than companies? Mr Phillips—At the moment, the way it is drafted, it is companies. We have receivedsubmissions already relating to the possibility of allowing others to become accredited, andwe are examining that possibility. Senator ADAMS—On accreditation, we have had comments today regarding the SouthAustralian accreditation system, which some organisations considered to be adequate—theythink the accreditation system described in this legislation is possibly a little cumbersome—and the fact that a number of the companies that are already accredited in South Australia willbe possible applicants for accreditation under the new legislation. Could you comment onthat? Mr Phillips—The South Australian system was set up with a very clear statement that itwas seen as a stepping stone to full deregulation of the barley industry. It is beingadministered by the Essential Services Commission of South Australia with that in mind. Thearrangements we have here are not seen as that. But, if you like, the essential basis of the testin both instances is similar—that is, ‘Is the person fit and proper to be accredited?’ Ourlegislation spells out a few more of the things that must be included in that assessmentprocess. There is scope in the South Australian legislation for it to be as fulsome—if not morefulsome—if they chose to administer their system in that way. Our draft legislation has thesame fit-and-proper-person test and spells out in more detail some of the things that must betaken into account by the regulator. Senator ADAMS—If this legislation is not passed by 30 June, what will the process willbe from then on? Mr Phillips—If nothing has changed between now and the end of June, then what happenson 1 July is that the minister’s current power to grant or refuse applications for export permitswill lapse and the Export Wheat Commission will become the sole determinant of whether ornot an export permit should be issued. The test it will have to apply is the one in the existingact, which is whether or not the application for a bulk permit will complement the objectivesof AWBI in running the national pools or whether it develops niche markets. Senator ADAMS—After 30 June, would AWBI, as a company, be forced to run a nationalpool? Mr Phillips—The legislation will still require them to run a pool. The way the currentlegislation is drafted is that they have that obligation until their exemption from acquiring anexport approval from the Export Wheat Commission occurs. There is one section of the actthat basically says it is illegal to export wheat without the approval of the Export WheatCommission. That prohibition does not apply to AWB. That is one part of the act. In another RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  24. 24. RRA&T 20 Senate Thursday, 27 March 2008part it says that AWBI is required to operate national pools for as long as it holds thatexemption referred to earlier in the act. So, yes, it would still be required to operate a nationalpool. CHAIR—Mr Crosby, would you like to make a brief opening statement as Chair of theWheat Industry Expert Group? Mr Crosby—The Wheat Industry Expert Group was set up about six to eight weeks ago inorder to deal with those functions which used to be called the industry good functions, whichwere carried out essentially by AWB on behalf of AWBI as part of their pool responsibilities.There are 11 of those functions that have been identified by AWB and by other people asbeing the industry good or industry development functions. Our committee has recentlyreleased a paper which covers what we think should happen to those 11 functions and hasmade some other comments as well. That is now out for discussion. The committee has decided that items 1, 6, 7, 8, 9, 10 and 11—this is the order they are inin the paper—are essentially functions which the commercial operators of the industry and thevarious other industry organisations that currently exist will take up or not take up on thebasis of whether they believe they are important. The ones that we feel need to be directed areresearch and development—we have endorsed GRDC as a competent and well-organised partof the wheat industry that needs to remain in that position, and we believe its current funding,which is part government and part industry, is a logical way to go. Point 2 is about variety classification. It is very important for the whole wheat industry thatwe understand which varieties can be sold as what. AWB has been the secretary and theorganiser of that group, and we are suggesting that GRDC should essentially just transplantitself into what AWB did in that committee and make sure that that committee isrepresentative of the industry so that we get a sensible and logical declaration about newvarieties coming into the system as to what they should be allowed to be classified as. The fourth one is about receival standards. We have suggested that NACMA are the logicalbody, in the grains industry generally, to set standard parameters for delivery of grain at siloand standard terminology about those grades and those receivals of grain. They do thatalready in all of the other grains except wheat, and in wheat AWB has done that. We aresuggesting that NACMA are not only well placed but already experienced in how to havestandard contracts and how to describe grades in a standard way. So we are suggesting thatthey should take that over. The fifth one—which we are still seeking advice on—is information. One of the veryimportant planks of a heavily deregulated industry, as compared with what we have had in thepast, is that it is very important that the major industry players and the minor industryplayers—and I mean that in terms of size, not importance—have a reasonably even base ofinformation upon which they can make their decisions about what price they should sell theirgrain at or buy their grain at, whether there is enough to carry through to the next harvest orwhether there is going to be a shortfall, and all those sorts of issues which, in the end,determine the price. We are suggesting that there is an important role in that for ABS, as theindependent collector of information, to be able to publish figures on a regular basis—we aresuggesting monthly. That would spread information across the whole industry on how much RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  25. 25. Thursday, 27 March 2008 Senate RRA&T 21grain is available in the system—not who owns it but how much is there—and thereforepeople could make their own estimates about whether that is going to make up the nextharvest or not. So we are suggesting that that sort of base level of information needs to bemade available to everybody and that ABS is the logical body to collect it because that is itscharter and it has also got the constitutional capacity to ask people and insist that people giveit information. We recognise people like ABARE as having a role in dissemination of a different type ofinformation, particularly making sure that things like the USDA crop reports are available,and also the value-added services which they provide now in terms of information. On top ofthat, again, we have the private providers—the people who actually charge money for theirweekly or monthly newsletters and give advice on what growers should do. One of the veryimportant factors which have occurred in that process in recent times is feedback, particularlyfrom Western Australia but also from South Australia, that a very large percentage of growersnow use a professional adviser to help them with their marketing decisions. That, in anutshell, is where we have got to. Submissions have to be in by the 27th, which is today, andwe have to report back to the minister by, I think, 24 April. CHAIR—If the information is available monthly—which is the expert group’s desire—how will that be forwarded on to growers? Mr Crosby—We have not directly canvassed that issue, except that the current ABSreport—which is only done twice a year—is available on their website. We would suggest thatthere is an information process that has to go on, alongside these sorts of changes that we aretalking about, where organisations such as farmer organisations, AWB, the grain-handlingauthorities and all of the grain marketers need to make sure that that sort of information isavailable. Either it should be on their websites or they should alert growers that that sort ofinformation is available. CHAIR—Currently that information is available, but it is published biannually? Mr Crosby—They do two surveys a year. Yes, it is on their website. They do one in theearly part of harvest, in about November, and they do another one at the completion of harvestin about February-March which is available in early April. That is by request, essentially.They have been requested to do that by various parties in the feed-grain industry. What we aresuggesting is that that needs to be monthly. Senator HEFFERNAN—But they are not obliged to tell, are they? Mr Crosby—Do you mean the ABS or the grain-handling authorities? Senator HEFFERNAN—Is there a legal obligation for the people who warehouse grain tosay what they have in store? Mr Crosby—My understanding from our discussions with ABS is that if ABS asks thenthey have to deliver. Senator NASH—What happens if they do not? Senator HEFFERNAN—Could we ask ABS? Mr Mortimer—We can take that on notice. I think that what Mr Crosby says is— RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  26. 26. RRA&T 22 Senate Thursday, 27 March 2008 Senator HEFFERNAN—I think it is a furphy if you think people are going to breach theirown commercial-in-confidence, when they are competing in the one marketplace, as to whatthey have got and what blends can come out of it—the blending of wheat is important. That isall part of getting a quid. I had better be a bit careful of what I say, but I do not think that is areality. You need a reality check there. Mr Crosby—Senator Heffernan, the point is: what level of information do we think it isimportant to the whole industry to know? We are not suggesting, for instance, that the grade-by-grade break-up of every country silo is known. What we are suggesting is that themarketplace needs to know, within its draw area, the general quantity of wheat that isavailable and the general product that is available for it to purchase. Senator HEFFERNAN—But you would agree that it is in the interests of the marketeersrather than the people who are marketed—in the sellers’ rather than the buyers’ interests—tohave some commercial-in-confidence advantage over their competitors? Mr Crosby—There is absolutely no question about that—absolutely no question— Senator HEFFERNAN—And that would be a reality. Mr Crosby—and that is what we are suggesting is the reason why there needs to be a baselevel of information available to everybody. It is also the reason why we have endorsed afour-point code of practice which has been put together by the major grain handlers, AWB andNACMA. That is in our submission, under point 2. Mr Chairman, do you want me to read thefour points out? CHAIR—We have a copy of your discussion paper. Mr Crosby—Under point 2, you will see four points. Those four points, I am informed bya large number of people that are involved with those organisations, have been signed off atthe most senior levels. CHAIR—I would say for simplicity, Mr Crosby, if you have them in front of you, pleasego through them. We have plenty of time. Mr Crosby—Okay. The first point is:• prominent listing and use of standardised language and means of expressions for all fees, charges and statutory deductions applicable to all types of transactions in material promoting these products to growers … Senator HEFFERNAN—Could you point to where that is in your paper? Mr Crosby—It is on page 7. The second and third points are:• posting on silo boards and on the web, the transparent net return figures for all types of transactions to allow growers to make better informed market decisions;• expression of base marketing costs charged against all types of transactions as either a flat figure per tonne or a percentage of the gross value …And the fourth one is:• reinforcement of current equitable access undertakings for bulk handling and storage facilities and ports, consistent with section 45 of the Trade Practices Act—which is the point that Senator Adams was talking about earlier, in relation to availability ofport space for non grain handlers. Those four points have been agreed to by all of the major RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  27. 27. Thursday, 27 March 2008 Senate RRA&T 23grain handlers and AWB, as a grain handler and marketer, and also NACMA, as therepresentative organisation of all buyers. Senator HEFFERNAN—Can I go back to point 5. By the way, who authored this? Mr Crosby—The committee— Senator HEFFERNAN—No, who actually wrote the report for you—the department? Mr Crosby—Russell Phillips and his team. Senator HEFFERNAN—The department wrote the report and you signed off on it? Mr Crosby—That is right. Senator HEFFERNAN—How did you arrive at this? Did you have a committee meetingand say, ‘We want this, this and this,’ or did they put it forward as a recommended draftreport? Mr Crosby—No—sorry, the first of your two options. We have had now two face-to-facemeetings, and we have one coming up in a couple of days. We have had a phone hook-upessentially every week until two weeks ago. It was not a blank-paper exercise. Senator HEFFERNAN—Yes, I understand that. Mr Crosby—We had as a starting point a paper from AWB, a paper from the Grains PolicyInstitute and a paper from NACMA, all with opinions about what should happen to the 11points. The 11 points, incidentally, are the 11 points which the Wheat Board designated. Welooked at two or three other points— Senator HEFFERNAN—You have done well to get it onto one bit of paper! Mr Crosby—We do have a very good committee. They are very straightforward. Senator HEFFERNAN—Who is on your committee, by the way, just out of interest? Mr Crosby—You are now going to test my memory, without having them in front of me. Senator HEFFERNAN—You have had two meetings. Mr Crosby—Yes. There is Geoff Nalder—they are all Geoffs!—from VFF; Gail Dowie,from Queensland; David Thomas, from South Australia, who is also on the Barley Australiagroup; Graham Shields, from Western Australia, a large wheat grower and also a largemarketer of grain from Western Australia; Dan Mangelsdorf, head of Australian grains— Senator HEFFERNAN—I know Dan. Mr Crosby—and me. Senator HEFFERNAN—When were you presented with this draft report? We got ityesterday. Mr Crosby—We signed off on it at our last meeting and released it on the website on the13th. Senator HEFFERNAN—To go to point 5, on the production, forecast and actual, forABARE: under the new arrangements—this may even be a question for someone else—doyou think it will be possible to collect that information reliably? RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  28. 28. RRA&T 24 Senate Thursday, 27 March 2008 Mr Crosby—Perhaps in the way it is worded it sounds very complex, but in fact the worldaccepts the USDA crop reports as being extremely accurate, and that is the base upon whichthat information is based. Senator HEFFERNAN—Okay, but I do not think that in practice that part of it is going towork. What influences forecasts more these days? With the competing aggressive publiccompanies that will be in the wheat market—and AWB is a classic example of that; as I saidearlier, I thought some of them should get locked up—do you think physical or financial willhave the most influence on the pricing decision at the weighbridge? Do you think—I do—thatfinancial instruments have an increasing role to play? Gold, silver, wheat—it is just anothertradeable commodity, and there is a lot of speculation in the market. How much is thatinterfering with the wellbeing of farmers? Mr Crosby—I think if you looked at the last couple of weeks you would suggest that theinfluence of financial traders has had an amazing effect on commodity markets of all types. Senator HEFFERNAN—So where is there much danger from the financial marketsbecause of the way they have now built the market? The fertiliser thing is a really goodexample. I am interested, by the way, if Mr Brian Packer, who was here yesterday, islistening—I will be giving him a ring. We have got an inquiry into fertiliser, becauseobviously there is some cartel behaviour in fertiliser and chemical. But do you think that oneof the greater concerns for Australia’s farmers is not only their inputs—and the higher theirinputs, the bigger the risk? I have seen the bullshit Incitec Pivot have put out telling thefarmers they can afford to pay more for the super because they are getting more for the wheat.But the financial risk is higher, the higher your inputs, if you have a failure—you would agreewith that? Mr Crosby—It is self-evident that if the cost of production per hectare goes up then therisk of failure gets higher. Senator HEFFERNAN—So how much greater risk under the present proposed legislatedauthorities will be playing into the hands of the commodity traders rather than the physicalmarketers? Mr Crosby—Perhaps I could seek a clarification from Senator Sterle. My job in this— Senator HEFFERNAN—I am not necessarily directing it to you; I can direct it towhoever would like to step up to the plate. Mr Crosby—The point I would like to make is this: my job in this is as chairman of agroup which is looking after a specific part of the non-legislative part of the industry. I am afarmer with 35 years knowledge and interest in the industry, as Senator Heffernan is— Senator HEFFERNAN—It looks a bit like that. Mr Crosby—and I am in the difficult position where that is not something that we coveredhere. CHAIR—Mr Crosby, I think very clearly your expertise is sought as to the bill that is infront of us. Mr Crosby—Okay. RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  29. 29. Thursday, 27 March 2008 Senate RRA&T 25 CHAIR—I know Senator Heffernan has a passion for all things farming, as most of us do. Senator HEFFERNAN—So who is going to answer the question? I have just had aninteresting discussion with some of the people downstairs on wool. Australia’s wheat growersare passionately concerned about where they are being taken—and a lot of blokes who grow200 or 300 acres of wheat haven’t got time to be mucking around in financial markets andgoing to meetings like this. How much extra influence from speculation in commodity tradingis their future going to be dependent on? Mr Mortimer—I think Dr Sheales from ABARE might be able to give some comment onthat question. Dr Sheales—I cannot answer all your questions, obviously, but there are a couple ofthings. First of all, on this point 5 that you raised, on the transparency issue: it is absolutelyessential to the well functioning of the market that it is transparent, that people do have anidea of how much grain is around. We do not need to know how much each individual traderhas, but we need to know how much is in the country. We went through a lot of thisdiscussion in the last two years with drought and worries about supply. Senator HEFFERNAN—Yes, I appreciate that. Dr Sheales—What ABS can do and have done is aggregate. They collect data from a rangeof participants and then aggregate it up so it cannot be identified with a single player. So, forexample, if there are two players in one state, they will not even provide the aggregated databecause, if you provide that, clearly both players know how much the other has got. So thereis that sort of proviso on what they do. The other thing is that my understanding—and this isjust my understanding—is that, while they have compulsion over traders to provideinformation, I think they are fairly reluctant to do that. They would rather it be a goodwillexercise, for obvious reasons. Regarding the crop forecasting, a whole range of organisations put out crop forecasts.ABARE is obviously one, but some private sector organisations put out forecasts. Statedepartments of agriculture put out forecasts on crops in their own states, and the USDA alsoputs out crop forecasts for Australian crops. So there is a range of information out there that iscontinually being fed out. In our case we typically put it out once a quarter, but if things aredifficult, as they were in the last two years, we will put it out more often to try to informparticipants in the market about what we at least think is happening. So I am of the view thattransparency is an important issue that has to be dealt with. Senator HEFFERNAN—More driven by good will than— Dr Sheales—It is not up to me to say how you drive that, but it is in the interests of anefficiently functioning market, which everyone— Senator HEFFERNAN—We are all likeable rogues in the market! CHAIR—I would ask Mr Crosby as the expert to quantify that statement! Mr Crosby—It is a very important issue that is being raised. But there is one point: I havenow spent a significant amount of time speaking to all but one of the major grain handlersabout market information because of their sensitivity to dispersing information that theymight see as an advantage to them commercially. They have come out with that four-point RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  30. 30. RRA&T 26 Senate Thursday, 27 March 2008statement because they have, I think, in all fairness to them, recognised that, whilst they dohave a significant information advantage over potentially a number of other players in themarketplace, they are also themselves caught by the bits of information they do not know. Ihope I am not off the mark here, but one of the points made to me by the chief executive ofGrainCorp was that they only hold 55 per cent of the storage capacity in the eastern states.The rest is held by other people. So their greatest problem is in understanding what is in theother 45 per cent. Senator HEFFERNAN—That is right, and that is why I think this four-point statement isjust a meaningless motherhood statement. The first point is: ‘Prominent listing and use ofstandardised language’—I mean, der! I want to ask Dr Sheales to continue on the line ofmarket influence, because a lot of Australia’s farmers are seriously and passionately worriedabout their future. A series of things are bothering them—and certainly these changes and thevoyage, as they see it, into the unknown. A lot of people, like me, are not up to date with thelatest global technology and into financial instruments and markets. I just wonder how muchwheat growers’ destiny in terms of the commodity pricing has been taken away by the greaterspeculators in the commodity traders. There is obviously money going into commodities nowfrom currency for a safe haven. In the future, how much do you think our future will dependon those markets? Dr Sheales—That in fact has always been the case. In a certain sense that has nothing to dowith whether or not we have single desk export marketing. This is the marketplace we aredealing with and people have to manage that. I would like to go back to one small point,which is usage of what has been AWB as the manager of the single desk. In the farm surveythat ABARE does—we do an annual survey of grain growers and all other broadacrefarmers—we took the grain growers and split them up between the smallest third, a middlethird and the biggest third. Amongst the small producers, in 2005-06, which was the last yearwe had a big crop across the country—the second biggest ever— Senator HEFFERNAN—Three years ago? Dr Sheales—Three years ago; I will leave out the two drought years. We only know onedrought year, and I do not think that is relevant to thinking about how they might behave in anormal situation. The second biggest crop ever was 2005-06. In New South Wales only 11 percent of the smallest growers sold wheat or delivered wheat to AWB. It varied a bit betweenstates. New South Wales was the lowest. The highest was in South Australia, where 68 percent delivered their wheat to AWB. The others were all in between. Across Australia as awhole, only about 28 per cent got delivered, of the small growers. If you go to the big end ofthe scheme of things, the biggest growers, about 67 per cent across Australia delivered toAWB. Senator HEFFERNAN—What is a small grower? Dr Sheales—I can tell you how much on average across Australia. The smallest thirddelivered 156 tonnes of wheat. The largest was about 2,350 tonnes. So there is a bigdifference. CHAIR—Dr Sheales, could you table that information for the committee? Mr Mortimer—We are happy to get the agreement of the minister to provide that. RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  31. 31. Thursday, 27 March 2008 Senate RRA&T 27 Dr Sheales—We can do that. CHAIR—Take it on notice. Mr Mortimer—Yes. Senator HEFFERNAN—Part of the voyage into the unknown for Australia’s farmers is tounderstand what has been going on. A lot of blokes simply do not have time to get their mindsaround all this stuff. Senator Nash, I am sure you would agree. Senator NASH—Exactly right. Dr Sheales—Certainly in my mind, the bottom line is that we have had a very activederegulated, unregulated, domestic market for some time now. Senator HEFFERNAN—There is no question that the domestic market has worked well. Dr Sheales—By and large, as a general comment, people are pretty familiar with operatingin that environment. It is not their entire business, but they are pretty familiar with it. Senator HUTCHINS—Dr Sheales, you used the terminology ‘small grower’ and ‘largegrower’. Is that a statistically consistent definition? If you had used those terms five yearsago, would they be comparable now? Dr Sheales—The average wheat-growing operation has got larger over time. Senator HUTCHINS—So, in five years time, if someone looked at the Hansard and wastrying to compare, would they be comparing apples with apples? I just want to know whetherit is a consistent definition, that is all. Dr Sheales—It is consistent in that we collect the information on a consistent basis.Clearly, if you just took the total spectrum and said that one-third of the growers are thesmallest and there is another third who are the biggest and the others are in the middle, that isa consistent approach. But bear in mind that over time wheat-growing businesses and grain-growing business, like the rest of farming, are getting larger. You have to keep that in mind. Senator HUTCHINS—I just want to be clear that you can actually measure that fromperiod to period. Whatever the consistent figure is, can you define it? That is all I aminterested in. Dr Sheales—That is not a problem. Bear in mind that the tonnages would be different. Senator HEFFERNAN—Yes. A big wheat crop last year might have got 2,000 tonnes, Ican tell you! Dr Sheales—Exactly. Senator HEFFERNAN—Then there is the manipulation of the GM argument when wehave had two or three seasonal failures in canola, compared with overseas growers. Anyhow, Iwill not get into that. Senator ADAMS—With the amount of grain delivered to AWB, you would then have totake into account Western Australia versus the eastern states, with the eastern states havingtheir domestic market and Western Australia having nowhere else to go. Do you differentiatebetween them? RURAL AND REGIONAL AFFAIRS AND TRANSPORT
  32. 32. RRA&T 28 Senate Thursday, 27 March 2008 Dr Sheales—Yes, we do. We have figured out a breakdown by state from our surveys here.In Western Australia in 2005-06, because it was the biggest year in recent times, a bit over 70per cent delivered to AWB. Senator ADAMS—Where else do they go? At that time they could not go anywhere. Dr Sheales—Clearly, it was going somewhere. Senator ADAMS—We will not go there. Dr Sheales—The sorts of questions we would ask would not go to the specifics of: ‘If youdid not sell to AWB, who did you sell to?’ Senator HEFFERNAN—Do you track the double accounting? For instance, two or threeyears ago we had a wheat inquiry and we discovered that about a million tonnes had beenpurchased in the cash market by AWB Ltd and, for whatever reason, delivered back into thepool. Do you account for that? Dr Sheales—No, we do not. We are dealing with growers themselves. We are askinggrowers, ‘Who do you actually sell this to?’ So in that question you raised they would havesaid that they had sold to AWB. What AWB did with it after that we do not know. Senator O’BRIEN—And the 30 per cent in Western Australia might have been 20 per centbuying at a lower price, at a cash price—but more than 80 per cent of pool estimate—and thenselling it later. Dr Sheales—Conceivably someone could have bought it off a producer, for example, andthen resold it themselves to AWB. Senator O’BRIEN—That is right. Dr Sheales—That is quite possible, but we cannot track that. Once it leaves the farm thereis no way we can track that sort of thing. Senator HEFFERNAN—I am still wondering about this. Under the deregulated market,which obviously is ahead of us, is there a greater risk of manipulation? In the purest offorms—some years ago before the corporatisation of AWB and all the conflicting positionsthey had to deal with—is there the potential for financial instruments to interfere with thephysical market more now? Dr Sheales—Clearly, as I referred to earlier, there are a lot of players out there affectingquality markets. Senator HEFFERNAN—So there are no added dangers under these deregulated markets? Dr Sheales—No, I would not think there would be any. Senator HEFFERNAN—Mr Crosby, in your advice to the government have youidentified a process to deal with potential facilitation in the market—that is, graft? Mr Crosby—No. Senator HEFFERNAN—Let us be very blatant about this. We are dealing with aggressivepublic companies who will do whatever it takes—and there are some fantastic examples ofthat all around the planet. In competing to avoid collusion at the bridge or monopoly—it is RURAL AND REGIONAL AFFAIRS AND TRANSPORT

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