A Fairer Deal for the Dairy Industry

Doorstop Interview

Transcript - Bonalbo - 22 July 2004

LATHAM:         I want to thank Tom for his hospitality here today. We’re going to head up the hill and enjoy some home baked food, which sounds great. We’re also setting out, with Gavan and Kevin here today, our plan to change the balance of market power in the dairy industry. Dairy deregulation has produced some anomalies. The farm price for a litre of milk has dropped by 20c but consumers have only enjoyed 5c a litre gain. So there’s 15c a litre that’s basically gone missing and it’s a product of an imbalanced market where Australia has the most concentrated retail grocery market in the Western World, the big two – Coles and Woolies – have got 76 per cent market share.

It’s lopsided market power at the moment so we’re announcing reforms to the Trade Practices Act that would even out the market, make fairer arrangements; and fairer market arrangements are the key to a fairer price for the farmers while also maintaining gains for consumers. So we’re setting out the mandating of the code of conduct and better mediation proceedings where there’s a dispute about pricing and also giving farmers the power to bargain collectively so they can get together and have fairer market power and a fairer price for their product.

Also, we’ve got changes to the Trade Practices Act that would give the ACCC stronger power against the creeping acquisitions where Coles and Woolies take over the independent retailers one by one.   We’d be outlawing predatory pricing under Section 46 of the Trade Practices Act and, as Gavan mentioned earlier on, greater transparency and the pricing and reporting so that we know what's actually going on in this industry. So it’s a good package to have a fair market; it gives a fair price to the dairy farmers. It also ensures that the consumers get a fair go as well.

We want to put the pressure on the retail grocery and the wholesale section that’s been eating up the gain of deregulation so that we can have a fairer market, fairer prices and sustainable agriculture in this country. We’ve got to do something right now to make these rules fairer so we’ve got a dairy industry in the future. It’s the best way to go changing the rules like this, and this is going to be a big priority for a Federal Labor Government.

JOURNALIST:     Do you think this will anger the big grocery chains?

LATHAM:         They need to recognise that they’ve had the strength of market power – 76 per cent market share for the big two is the most concentrated retail grocery sector in the Western World, and why is it that Australia is so out of step? It is time to change the balance of market power, get fairer arrangements in place and produce a fairer price for produce and the dairy farmer.

JOURNALIST:     Have they had it too good for too long, the big two?

LATHAM:         They’ve been too big for too long, I think that’s the issue – 76 per cent market share is the biggest and most concentrated market in the Western World. They’ve been too big for too long. When you see the squeeze on the farm price, a drop of 20c a litre for milk, but only a 5c a litre gain for consumers something has gone wrong in the market arrangements – too much power concentrated with the wholesalers and the retailers. We’ve got to even that out to give the farmers a fairer go while maintaining decent gains for consumers.

JOURNALIST:     What would you like to see that 76 per cent come down to; what would be more reasonable?

LATHAM:         Something below that is obviously more desirable. As you even out the market power, you give farmers a better chance to get a decent price for their produce and you give consumers the sort of gains that they were promised prior to deregulation.

JOURNALIST:     Is 50 per cent of the market still too much?

LATHAM:         I’m not getting into specifying a level. It’s a market; it’ll find its own level over time. The role of government through the Trade Practices Act is get the rules right, and the rules at the moment are wrong. The rules have facilitated a big market share for the retail grocery section, unfair prices, radical fall in prices for farmers, with only a small fraction of those falling prices passed on to consumers. So the rules are wrong at the moment and the role of government is not to sort of mandate or control the market arrangements but rather get the rules right and that’s what we’re aiming to do through these changes to the Trade Practices Act.

JOURNALIST:     [inaudible] collective bargaining changes arrangements compared with what the Government announced a month ago in their response to the industry report?

LATHAM: The Government has been very slow in making these changes. We’ve been advocating collective bargaining for quite some time. It’s the one part of this package the Government says they’re supporting but they've been very slow to legislate. We want to see them support the rest of the package; there’s another seven or eight measures there that need to be supported as a package. Collective bargaining is important but all those other changes are needed to the Trade Practices Act to get it right. Collective bargaining will make progress but we need all those other initiatives to actually get a fair market arrangement that delivers a fair price for that agricultural sector.

JOURNALIST:     With regards to the [inaudible] code of conduct the fruit and veg wholesalers say that regulation has been in place already and has failed. Do you know of those examples and are we going backwards in a sense?

LATHAM:         It’s a voluntary code; we want to make this a compulsory mandated code with better mediation proceedings under the ACCC. When combined with these other changes to the Trade Practices Act this is a great leap forward for the farm sector, for horticulture, dairy and other industries. It’s a great leap forward right across the farm sector and, as a package, I’m confident we’ll get the rules right, we’ll get fair market trading arrangements and we’ll get a fairer price for produce.

JOURNALIST:     It won’t increase the price for farmers with regard to administrative costs for the wholesale sector?

LATHAM:          Farmers can't do any worse than the current arrangements and we’ve got to undertake these changes to get them a fairer go in the future. The farm sector, I believe, through you, Gavan, have been consulting and they’ve been saying these are good changes, desirable changes, and they want to see them legislated as quickly as possible.

O’CONNOR:       The farm sector has been very strong on support for a mandated retail grocery code. We’ve given it to them. The Government’s been very weak in their response to the Buck report. If you go to the Queensland and New South Wales industries, particularly in horticulture, they support very much the arrangements that we intend to put in place.

JOURNALIST:     [inaudible] would you like a more direct prosecuting mechanism?

COOPER: It’s a step in the right direction. For four years we’ve been languishing without virtually any direction at all legislative wise. It’s a step in the right direction.

JOURNALIST:     [inaudible] being forced; do you think, or too much left in the hands of mediators and intermediaries?

COOPER: I think it has to be enforced. It really has to – otherwise we aren’t going to have an industry. The average age of our dairy farmers in NSW is 57. We are not seeing any young farmers coming into the industry. If you go to a bank now, you couldn’t borrow any money. Yes, one of the worst things of this dairy deregulation is that we’ve lost a whole generation of young farmers. They’re completely gone. That’s the cruellest part, you know, about the whole thing.

JOURNALIST:     [inaudible] Mr Latham, have you had much to do with farms?

LATHAM:         I was schooled on one.

JOURNALIST:     Were you?

LATHAM:         Yes, at Hurlstone Agricultural High School. That’s where I did my secondary schooling and we did farm stays. That was a great way to get through the secondary school system. We did a farm visit in February, I think, coming through this region as well on the bus trip so it’s good to be back.

JOURNALIST:     So you’re comfortable amongst the cows?

LATHAM:         Very comfortable. I said here in February, you know, part of the schooling was to do pregnancy tests on dairy cows and all that was a great learning experience.

JOURNALIST:     Just on your health policy yesterday, it seems to have [inaudible] some money for that policy about Medicare hot lines and co-located GPs with emergency departments is actually less money than what you were promising a year ago when Julia Gillard first announced the policy. It’s going to ramp up [inaudible] for $60 million in the final year [inaudible]. This policy that you announced yesterday is only $80 million over four years; why have you allocated less money to that?

LATHAM:         I think you’ll find there’s $68 million new money that’s part of that policy and that’s for the hot line and for the incentive payments for the accredited GPs out of hours clinics. So it’s an extra commitment that we’re making.

JOURNALIST:     Did you decide that the original policy though of 100 Medicare teams was too expensive? Was the [inaudible] razor gang involved in that?

LATHAM:         No, that hasn’t been the process at all. We’re committed to the Medicare teams; we’re committed to the co-location and yesterday we funded the hot line and the incentive payment for the accredited clinics to make sure that there are more of them around the country and they’re better staffed. There’s an extra financial commitment in the policy yesterday and we’ll keep about the task of expanding our health funding commitment.

JOURNALIST:     When Kim Beazley promised a national 24-hour Medicare hot line in 2001, he said it was going to cost $77 million over four years. Your pledge yesterday was only for $20 million over four years. How you can run this national Medicare hot line for almost a quarter of the price?

LATHAM:         It doesn’t mean it’s any less effective. We’re looking to provide a good national hot line service and when it’s teamed up with the extra Medicare staff – the salaried doctors and nurses in the Medicare teams and the extra money for accredited services – its extra provision of the vital access to
GPS out of hours. Overall, the package is an expansion of services and goes way beyond the Howard Government’s commitment, which has been a small number of pilot schemes in Perth. 

JOURNALIST:     Mr Latham, Olympic Australia is not sending armed guards with our athletes to Athens this year. Do you think we should send armed guards with them?

LATHAM:         The Olympic team and the Government, of course, would be acting on the security advice so it’s not for me to second-guess that advice. I just hope and trust that the advice is being followed and all the security arrangements that are needed for the Athens Games will be in place. I’m advised that the role of NATO in the provision of security services is crucial. It’s giving people involved with the team confidence that the Greek officials are taking all the steps necessary. Of course, acting on security advice we want the Australian administration to take all the steps that are needed to guarantee the safety of our athletes, the spectators – and everyone is hoping for the best under the circumstances.

JOURNALIST:     Mr Latham, the Carr Government announced today some changes about [inaudible] sulphur content in petrol. What’s your reaction to that?

LATHAM:         My reaction is to have a look at the announcement and find about more about sulphur content in petrol. We’ve become experts about the ethanol issue but sulphur is a new one. So let me have a study about that and I’ll get back to you.

JOURNALIST:     Mr Latham, can I ask a question?

LATHAM:         How are you going there? Come on through – don’t let all of these big metropolitan journalists [inaudible] out of the way. You’ve got a bad treatment out the back there, haven’t you?

JOURNALIST:     Welcome to Bonalbo.

LATHAM:         It’s great to be here, thanks.

JOURNALIST:     I would just like to ask you: Cardinal Pell was in Lismore recently and he said the policy of the Catholic Church was not to support the invasion of Iraq but now that our troops are there he feels that we should stay. I just wonder what your reaction to that is.

LATHAM:         Labor's commitment is to the rebuilding and reconstruction of Iraq through the processes of the United Nations. We’ve outlined the nature of our policy in recent times and we’ll be sticking by that.

JOURNALIST:     So you feel our troops should stay there do you, sir?

LATHAM:         No, our policy is to assist the reconstruction of Iraq with a number of aid measures, customs services, health, provision of staff, provision of personnel to back up the UN protective force and also the role that planes and ships have been playing under Operation Slipper. We’d have the troops under Operation Catalyst – those who were part of the Coalition invasion of Iraq, we’d have them back in Australia by the end of the year.

JOURNALIST:     And the reconstruction would just happen without the troops?

LATHAM:         The reconstruction is set out in our policy that was announced two Mondays ago so you will see the commitment there. It’s a $75 million funding commitment and there’s personnel that’s being allocated – 20 or 30 non-combatant personnel – to assist the UN protective force.

JOURNALIST:     Okay. In recent polls it seems that the elderly are moving slightly away from supporting Labor. Why do you think that is? What is about the elderly voters that you might be losing at the moment?

LATHAM:         These polls come and go and I think the one you’re talking about had to be corrected in the newspapers. But I’m not here as an election analyst; I’m here as an advocate of policy – better dairy policy, you’ve mentioned Iraq, there’s been mention of health policy. I’m here advocating Labor policy rather than as a commentator, analyst, looking at the ins and outs of decimal points in polls.

JOURNALIST:     I’m just interested because in our region in the Northern Rivers, of course, we have a really high proportion of older people and it seems to be the place that people – we’ve got a little bit of cow stuff happening!

LATHAM:         Yes – that’s great!

JOURNALIST:     Older people tend to move here, they migrate here so –

BELL:   Can I say something on my doorknocking about that – and that’s that older people are really concerned about not getting health care. One of the lowest bulk-billing rates in the whole of Australia, older people not being able to get dental care since the Howard Government came in, and Labor is about turning that about so we might have a national poll but the poll from my doorknocking is that the older people are generally behind us.

LATHAM:         Yes, all families need better health care but for senior citizens the fall in bulk-billing is a real concern as is the absence of a National Dental Program. Kevin experience is matched right around the country where senior citizens, who’ve served this country well, deserve a National Dental Program. We’ve got more than 500,000 Australians on waiting lists just to get their teeth fixed up.

BELL:    Most of them elderly.

LATHAM:         We want to establish a National Dental Program, lift the bulk-billing rate, and we’ll be making further announcements into the campaign about aged care and public hospital support as well, so that whole package of health care is particularly beneficial for our senior citizens.

JOURNALIST:     Hospital support for the Lismore region?

LATHAM:         Well, we’ll have a nation wide policy and of course that will be good for all regions around the country.

BELL:   We’ve got an older farmer here today who complained about the fact that he couldn’t get access to good dental treatment and good dental services. We’ve got a policy that will address that.

LATHAM:         He’s been waiting 10 years to get his teeth fixed up; is that what he said Tom?

COOPER:         Yes, 10 years.

JOURNALIST:     What do you think would be a really good project that would attract people in the Northern Rivers to vote for Labor? Do you have any sort of a vision [inaudible?]

LATHAM:         We don’t [inaudible] in the way you’ve described. I mean, our approach is to build up lifestyle and quality of services in country Australia – and health and education is particularly important. We’ve got a policy here today to help the dairy industry and we’ve got other initiatives to help with agriculture, so the economic growth is important but the country towns, in particular, and all the families, rely on quality health and education services. So, whether its restoration of bulk-billing, out of hours GP services, National Dental Program, the initiatives we’ll be announcing for hospitals and aged care, or its our early Reading Program or our fairer funding system for schools, expansion of TAFE and university – all those things are vital to the prosperity and success, the quality of life, in country Australia so that’s the approach we’re taking.

[Ends]