NSW LIBERAL Democratic Senator David Leyonhjelm has introduced a disallowance motion into the Upper House to try and reverse the federal government’s sugar marketing code of conduct.
The code of conduct was introduced earlier this year amid an ongoing dispute to try and break the deadlock between sugar cane farmers and foreign owned marketer Wilmar on contractual arrangements for marketing this year’s crop.
It was described at the time by Federal Treasurer Scott Morrison as “light touch” regulation, “but at the same time it gets the result”.
Senator Leyonhjelm said he didn’t expect a vote would be held on his new disallowance motion until September, at the earliest.
“I am moving today to disallow the regulations which contain the code – Labor will support me,” he said to Fairfax Agricultural Media.
“Today is the last day we have for introducing the disallowance and we then have 30 sitting days before it has to be decided.
“It won’t be voted on until next month, at the earliest.
“Scott Morrison said it’s a light touch code but I don’t think it is.”
Senator Leyonhjelm said he needed Labor, the Greens and five of the cross-bench Senators to vote with him, to succeed on the motion.
He said he hadn’t done the numbers on the disallowance yet as it was “one step at a time”.
However, he said the Liberals were ambivalent about it because they didn’t want to disappoint their National Party base.
“One Nation wanted them to do it and so did the National Party,” he said.
“The Labor party is opposed.”
Senator Leyonhjelm said other crossbencher Senators like former Liberal Cory Bernardi, Derryn Hinch and the three Nick Xenophon members could be convinced.
Agriculture and Water Resources Minister Barnaby Joyce played a leading role in the code’s implementation and brokering negotiations behind the scenes, citing escalating frustrations at the inability of producers and Wilmar to strike an agreement without the need for government intervention.
But it also saw a strong stand from Queensland Nationals MP George Christensen where he potentially may have crossed the floor to support a vote backing a code.
Mr Joyce’s office has been contacted for comment on the disallowance motion.
But Queensland Nationals Senator Barry O’Sullivan said “disappointingly”, the decision to introduce this disallowance motion was “inconsistent with the evidence from one of the longest and most thorough Senate inquiries in the past four years of parliament”.
And he said some of these inquiry hearings were attended by hundreds of canegrowers.
“Every action was taken to avoid introducing a mandatory code of conduct,” he said.
“But after significant consultation with industry and a series of genuine attempts to find an alternative resolution the code was the only remaining solution to provide certainty for the 4000 canegrowers across our state and the dozens of sugar towns that rely on this crucial industry.”
The Senate Rural and Regional Affairs and Transport References Committee’s inquiry into sugar marketing arrangements reported in mid-2015 and recommended a mandatory sugar industry code of conduct be implemented via appropriate stakeholder consultation.
But Senator Leyonhjelm said the code introduced by the Coalition in early April contained elements that were “anti-free trade, anti-free market and anti-everything except maintaining a growers’ cooperative socialist nirvana”.
“For example one of the purposes of the code is to guarantee the growers’ choice of the marketing entity,” he said.
“That is basically just saying where Wilmar owns the mills in an area it’s not acceptable for the growers to basically have no other option but to sell their sugar to Wilmar.
“They have to be also able to sell it into their little socialist collective and Wilmar says ‘you can stick your socialist collective - it has no value from our point of view - so we don’t want to be part of it.
“But the farmers say ‘We like our socialist collective’ and that’s what it amounts to and they say ‘we’ll get lower prices’ but there’s no evidence for that.
“They also say ‘We like to be in control’ but they’re not really in control so all of their arguments are piss-weak and I don’t have any sympathy for their complaints.
“If they want control over their marketing they always have the option of hiring a truck and sending their crop 300 kilometres down the road to a mill that sells into the socialist collective, if they don’t like Wilmar.
“But that’s their choice, if they want to, rather than force distortion of the market by saying ‘we need choice’.”
Senator Leyonhjelm said he spoke about the sugar marketing code with Treasurer Scott Morrison and “he wasn’t very enthusiastic; it was the politics that was forcing it”.
He said he’d also discussed it briefly with Finance Minister Mathias Cormann and he’s “not very enthusiastic about it”.
“The Liberal Liberals are on my side but this is being led by the Nats and One Nation has had some influence on it,” he said.
“There are some Liberals, in the Queensland LNP who are also sympathetic to this.
“There are a number of seats along the cost of Queensland where sugar growers are very rowdy and it scares the sitting members that they’ll lose their seat unless something is done about it.”
Productivity Commission’s report “scathing” of sugar industry
Senator Leyonhjelm said the Productivity Commission’s report into agricultural red tape was “scathing” of the sugar industry.
“They’ve introduced a code of conduct for sugar marketing and I’ve tried my best to stay out of the argument about because I regard the sugar industry, as second only to rice, in terms of its agrarian socialist inclinations,” he said.
“The old joke about capitalise your profits and socialise your losses isn’t even a joke in the sugar industry.
“As soon as there’s a down turn in sugar prices they run off to the government saying ‘save me’.
“Both governments have a history of propping the industry up for political reasons, especially the conservatives, and they spent hundreds of millions of dollars on restructuring to deregulate the sugar market a decade ago or thereabouts.
“Recently the Productivity Commission absolutely lambasted the sugar industry for its inability to adjust to normal market forces.
“Wilmar has purchased a number of mills, the farmers have decided the sky is going to fall in because their marketing co-op is not the only way of selling sugar and they want their little social collective to be involved and have kicked up such a big fuss and the government, for purely political reasons, acquiesced and introduced this code.
The Commission’s report said the re-regulation of sugar marketing in Queensland had the stated objective of allowing sugar cane growers more choice in who markets their sugar.
“However, the regulation restricts the marketing choices of sugar millers when they should have the property rights over the sugar that they crush”.
“There is no market failure (or other reasonable objective) to justify the re-regulation,” it said.
“The evidence also suggests that the growers’ preferred choice of marketing arrangements is likely to reduce the productivity and profitability of the industry (by constraining investment and structural adjustment).”
The report also critical of Queensland Sugar Limited (QSL) being granted charity status in late 2015.
“Its stated charitable purpose is to ‘promote the development of the Australian sugar industry’ and support its ‘long term prosperity and sustainability’ for the benefit of the ‘general community in Australia’,” it said.
“However, QSL’s main activity is exporting raw sugar for the commercial benefit of 14 mills and around 3600 commercial sugarcane farming businesses in Queensland.
“QSL’s charity status provides it with tax concessions that benefit a small number of commercial milling and farming businesses (which affects the competitive neutrality of the market) in an industry which has cost Australian taxpayers almost $2 billion since 1990.”