Move to reverse CBH exemption

28 Nov, 2014 03:00 AM
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Senator David Leyonhjelm.
I’m not going to bring it to a vote until next year, so there’s plenty of time for discussion
Senator David Leyonhjelm.

CO-OPERATIVES like Western Australia's CBH will not be treated any differently under a new disallowance motion on the wheat port access code introduced by Senator David Leyonhjelm.

Senator Leyonhjelm sparked controversy earlier this year when he used a disallowance motion to attempt a reversal of increases to the mushroom, onion and mango levy. His motion was eventually withdrawn but resulted in the establishment of a current federal Senate inquiry into all agricultural levies, questioning their efficiency returns.

Senator Leyonhjelm said his latest political manoeuvre was aimed at reversing CBH’s exemption from the mandatory code of conduct governing port access arrangements for bulk wheat exports, recently introduced by the Coalition.

Agriculture Minister Barnaby Joyce and Small Business Minister Bruce Billson signed off on the code following tough and lengthy negotiations with various farm bodies and stakeholders, ahead of its September 30 implementation deadline.

The regulations took another step towards deregulating the wheat export market and contained three key elements: a three-year review, an exemption for co-operatives, and growers having a “seat at the table” during dispute arbitration.

Senator Leyonhjelm’s disallowance motion was introduced into the Senate on Monday and is expected to be voted on next year.

The new Senator said he was previously under the impression he could only disallow the entire regulation.

He said he spoke to Labor Shadow Agriculture Minister Joel Fitzgibbon and was told that if the whole code was disallowed the regulations would revert to the previous situation “which was even worse”.

But he then discovered he could move to disallow a certain section of the regulations, “which I’ve now done”, he said.

CBH 'anti-competitive'

Senator Leyonhjelm said he strongly disagreed with the new regulations allowing provisions for the Agriculture Minister to exempt co-operatives from the code, namely CBH.

“The minister has claimed co-operatives are different and can do more or less what they like because the profits are returned to their members,” he said.

“But the reality is CBH has been dragged into the Federal Court for being anti-competitive.

“CBH also have a massive monopoly in Western Australia where it’s hard for any new competitor to get established.

“Bunge are operating now at the Bunbury Port and is the only real competition but they are at a substantial disadvantage.

“The new code is basically a lessening of the ACCC (Australian Competition and Consumer Commission) obligations and it’s an intermediate stage prior to full deregulation,” he said.

“There is also an argument that GrainCorp is still too big to allow full deregulation, so that’s why this code is being imposed.

“But the point is this – GrainCorp is nowhere near a monopoly and CBH is a monopoly.

“If we’re going to have a code governing port access for GrainCorp it should absolutely apply to CBH, but the Minister has given himself the power to exempt CBH.”

Senator Leyonhjelm said his disallowance motion would seek to remove the Minister’s power to exempt co-operatives from the code and make CBH subject to the same conditions as GrainCorp, “no more; no less”.

“That’s all I’m intending to do,” he said.

“I put the motion in this week and I’ve talked to Labor about it and hopefully they’ll support me.

“I’m not going to bring it to a vote until next year, so there’s plenty of time for discussion.

“I haven’t talked to the other crossbench Senators as yet apart from Bob Day (Family First) who supports me, and he co-signed the disallowance.”

CBH still restricted: Billson

Mr Billson said the code’s co-operative exemption did not allow a blanket exemption from broader competition laws, such as ACCC scrutiny.

“That (exemption) still doesn’t mean CBH has a licence to do as it pleases - there are still general market disciplines that CBH will have to honour and respect,” he said.

“In relation to conduct at ports, pricing and scheduling, availability of capacity and looking after and ensuring grain producers were taken care of, I think it’s perfectly reasonable to conclude, as Barnaby has, that the co-operative should be well placed to do all those things.

“(But) heaven forbid, if CBH isn’t behaving itself well or is engaged in some kind of anti-competitive conduct or something that’s detrimental to consumers, then the commission still has its broader toolkit, but in relation to CBH’s port operations.”

Mr Billson said overall the final code provided a good outcome, recognising various degrees of maturity and competitive conditions at various individual ports in different parts of the country.

“We had to find something that had the nimbleness and utility to work well for all stakeholders, bearing in mind the ground conditions are quite different in different ports and the (varying) contestability on different ports,” he said.

“We’ve managed to navigate that and come up with a good outcome that has an eye to the various legitimate ambitions of a range of stakeholders.

“There’s no single shared view because there’s no single homogeneous condition in the marketplace, so we needed to find something that had the dexterity to cope with all of those different dimensions and yet still encourage people to invest and have a go.”

Mr Billson said in developing the code, he and Mr Joyce agreed it would be unreasonable to expect the regulator to form a view on the state of competition and the conduct of participants through the prism of the participants’ organisational structure.

“The organisational structure can add to or make more likely the kind of virtuous conduct we hope for, but doesn’t guarantee it,” he said.

“So what we’ve said, given that there’s a lot of support for co-operatives, if there’s a matter of policy and the agricultural minister wanted to recognise the virtues of co-operatives, well let’s make that possible as a policy decision by the minister responsible for the sector.

“That’s a political call and he’s made that call and I think it’s a reasonable call.

“That’s an entirely different proposition than saying to an independent economic regulator like the ACCC that you deem something to be true without actually carrying out the analysis.

“It was about making sure that decision landed in the right place and the accountabilities attached to it were appropriately carried by the person making the decision and that’s the outcome we’ve come to.”

Mr Billson said he was an “unashamed fan of co-operatives” but that view can’t cloud his ministerial judgment.

“I think co-operatives are a wonderful mechanism to build a shared purpose between market participants that are strengthened and enhanced by their collaborative effort,” he said.

“I think it’s a great model.

“From my point of view, my passion for that organisational structure can’t cloud my judgement as a minister.

“For me it’s not the structure of the organisation it’s the conduct that matters.

“I’m of a mind that you’re more likely to get grower responsive conduct through a co-operative but you can’t guarantee it.”

Mr Billson said having a timely mandatory review after three years was important to allow government to “take stock” of the market conditions and examine the conduct and extent of choice and competitiveness at various ports and the upstream and downstream services.

He said the review would ensure the grains industry and particularly growers had a range of options and were being looked after, in light of changing circumstances.

Mr Billson said the Australian grains industry contained “two very different voices from different sides of the coast”.

“Our job was to add another voice in there to be as harmonious as the Bee Gees, mindful there are very different voices from different sides of the continent,” he said.

“I think we’ve come up with something that ... brings together and harmonises those different voices as best we can, but also says 'let’s check how we’re going', mindful of those different views and different takes, on what’s happening in the market and what will happen in the future.”

FarmOnline
Colin Bettles

Colin Bettles

is the national political writer for Fairfax Agricultural Media
Date: Newest first | Oldest first

READER COMMENTS

Just a Farmer
28/11/2014 9:38:28 AM

Senator David Leyonhjelm why don't you poll us Western Australian farmers in what we want with CBH, instead of injecting your eastern state view onto us. You may find out that we are happy with how CBH is preforming.
chainsaw
28/11/2014 1:06:38 PM

Don't worry JaF, none I know of here in the east think his way and I believe its a PGA mindset. We only wish we had the same.
Independent Farmer
28/11/2014 2:13:58 PM

CBH management has little regard for the prosperity of farmers in WA. The evidence from the Federal Court case is compelling and highlights the political privilege which has been granted to CBH by the National led coalition. The exemption only helps CBH to continue hitting growers with higher charges than would otherwise be the case under competition, which has now been symbolically eliminated. Well done David, this will be hugely embarrassing for the Liberals and exposes their continued stupidity of following the Nationals on grain issues.
x
28/11/2014 4:15:19 PM

I F , no one in WA is forced to utilize CBH. take a good look at mainstream logistics costs on the East Coast and compare on a Like for Like basis. 80% plus of WA growers support CBH.If the multinationals feel disinfranchised then put the money on the table ( Like Bunge) and build in WA
torobrook
28/11/2014 5:57:07 PM

X dont know what you are smoking. If you want your grain transferred onto the blue water and shipped then it has to go through the CBH system. There is no like with like comparison with the east.80% support for CBH . Not long ago it was claimed that there was 80%support for the single desk and that therefore this was a reason for its retention. Who cares now. The system is brilliant and fully accepted. And dont worry the multinational money is coming and out the window goes the current shareholders equity. The disciples need to wake up.
Deregul8
29/11/2014 11:06:56 AM

Any comparison to the East Coast represents that of a simpleton argument. 9/10ths of Australia population lives East hence there is little to export in drought years. In WA 90% of crop is exported. We should have the world's cheapest storage and handling logistics costs, instead we are lumbered with some of the most expensive. And that is with Asian flour mills profits subsidising us (cough cough!)
X Ag Socialist
29/11/2014 11:08:19 AM

If you want your grain transferred onto the blue water and shipped then it has to go through the CBH system. That is not correct Torobrook and you know it .
x
29/11/2014 4:46:00 PM

Toro. Put in some on farm storage and access Bunge and /or the domestic market and/or CBH. I have and have the option of choice.
cmt
30/11/2014 6:58:20 PM

David Leyonhjelm is just an ideological, egotistical politician who places his view of what is best for voters anywhere, ahead of any wishes the voters may have. He has an ideology on most things and couldn't care less about voters wishes. If his way suits you, you are lucky, if they don't well damn you then, is his attitude.
mark2
1/12/2014 2:36:24 PM

D8, it doesn't matter whether its a drought year or not, our handling costs have gotten much more expensive and the job is much more fragmented with duplicated infrastructure all over the place particularly on farm. busting up your cooperatively owned handler will not put dollars in your pocket.
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