The government has already conducted an ACCC inquiry into the dairy industry. We've received those recommendations back. The most significant of the recommendations is the establishment of a mandatory code of conduct for the dairy industry.
Senator HANSON (Queensland) (14:38):
My question is to the minister representing the Minister for Agriculture and Water Resources, Senator Canavan. Fodder shortages caused by drought will lead to an increase in food prices, but the price of home-brand supermarket milk will not rise because Coles and Woolworths control 80 per cent of the domestic dairy market. It's not a monopoly but a duopoly. These two companies buy fresh milk below the cost of its production by threatening milk processors with the removal of their other products from supermarket shelves—products like cheese and yoghurt. In a cynical move, Coles has pledged interest-free loans to farmers and Woolworths is spending $1.5 million supporting the Buy a Bale initiative. But, at the same time, these two giant companies undermine dairy farmers by not paying a fair price for fresh milk. Will the government refer the conduct of Coles and Woolworths to the ACCC on the basis of their anticompetitive conduct in the dairy industry?
Senator CANAVAN (Queensland—Minister for Resources and Northern Australia) (14:39):
I thank Senator Hanson for that question. It is a very important question about the plight of dairy farmers in this nation. The short answer to Senator Hanson's question is that the government has already conducted an ACCC inquiry into the dairy industry. We've received those recommendations back. The most significant of the recommendations is the establishment of a mandatory code of conduct for the dairy industry. The government is currently considering that recommendation. We are moving forward with it. I thank and congratulate the Australian Dairy Farmers organisation for, I think in the last week or two, coming behind and supporting that mandatory code of conduct. So we will be acting soon on the recommendations of that report.
I would also like to take this opportunity to point out the number of other things the government has been doing to assist Australian dairy farmers in recent years. We've provided significant direct assistance to the dairy industry, both in response to the crisis in Victoria in recent years, when milk contracts—
The PRESIDENT:
Senator Hanson, on a point of order?
Senator Hanson:
My question was to refer the conduct of Coles and Woolworths to the ACCC because of their anticompetitive conduct in relation to threats to the dairy farmers to take their products from the shelves. There was no reference to that whatsoever.
The PRESIDENT:
Senator Hanson, that was the end of a very long question. As long as the minister is directly relevant to part of the question asked, I am not in a position to instruct him how to answer the question. I've been listening carefully to the minister. You've reminded him of the end of your question. I believe he is being directly relevant to the question. Do you want to make another submission, Senator Hanson?
Senator Hanson:
Yes, I do. My question was the relevance of the conduct of Coles and Woolworths to the ACCC on the basis of anticompetitive behaviour.
The PRESIDENT:
I have ruled. Please resume your seat. You had a lengthy introduction to that question leading up to that part at the end of it. As long as the minister is directly relevant to part of your question asked, he is in order.
Senator CANAVAN:
We have conducted an ACCC inquiry into the dairy industry, but it's not the only thing that we've been doing, because we do think that some of the issues faced in the dairy industry require more immediate action. That's why we've provided $579 million of assistance through the Dairy Support Package. We've also provided drought assistance to 600 dairy farmers across Australia. We've conducted the ACCC inquiry. Also, in terms of the anticompetitive conduct issues that Senator Hanson has raised, we have strengthened the Competition and Consumer Act through the addition of the effects test, which is something that the Queensland Dairyfarmers' Organisation specifically asked for and fought for, and I recognise their work for that. Greater action is able to be taken against processors or retailers in the sector thanks to the government's actions in strengthening competition laws.
The PRESIDENT:
Senator Hanson, is there a supplementary question?
Senator HANSON (Queensland) (14:42):
Dairy farmers in Queensland now have less than three months of feed in their sheds. What additional financial support will the government provide to make sure that not one single dairy family has to send its whole herd to the slaughterhouse, given the government has looked the other way while Coles and Woolworths used their market power to destroy the dairy farming sector?
Senator CANAVAN (Queensland—Minister for Resources and Northern Australia) (14:43):
I fundamentally reject that suggestion from Senator Hanson that the government has looked the other way. We have not looked the other way. As I mentioned in my first answer, the effects test that the government introduced was fought tooth and nail by Coles and Woolworths, who have teamed up with the Labor Party to try and stop it. Big business was all over there on that side of the chamber; the big telecommunication companies, the big banks, Coles and Woolworths were all opposed to that. It was over on this side that we stood up for small businesses and farmers of this country to strengthen our competition laws and get the effects test through, and that happened. It was one of the most significant changes to competition laws in this place for decades, and it's something that this government put in place. So that is fundamentally wrong.
In terms of the fodder storage, the government has allowed for immediate deduction depreciation on fodder storage for farmers, including dairy farmers. We are providing a substantial $1.8 billion worth of assistance to drought affected farmers, including the 600 dairy farmers I mentioned earlier as well.
The PRESIDENT:
Senator Hanson, is there a final supplementary question?
Senator HANSON (Queensland) (14:44):
In Queensland, we have gone from 1,500 dairy farms to about 385 since the year 2000. It costs about 58 cents a litre to produce a litre of milk in Queensland, and in Victoria the break-even cost is about 42 cents. What are the reasons which prevent the government regulating the dairy industry to guarantee a minimum farm gate price for fresh milk, a price paid to farmers to at least guarantee the cost of milk production plus a small profit?
Senator CANAVAN (Queensland—Minister for Resources and Northern Australia) (14:44):
As I've mentioned, what we believe on this side is that we have strong competition to allow small businesses and farmers to get a fair return for the work they do. That includes making sure that larger businesses cannot act in a repetitive and strong anti-competitive way, so we have strong competition laws to do that. That's why we've referred these matters to the ACCC, it's why we're moving a mandatory code of conduct forward and it's also why we established the effects test under competition laws. It's also why the agriculture minister is open-minded to the suggestion of having a temporary levy to help dairy farmers. We have spoken to retailers about this. If retailers are supportive of a levy, and we're having constructive discussions, the Minister for Agriculture has indicated he would potentially take that forward to provide temporary relief to farmers. But the best thing we can do for farmers is have strong competition in the marketplace to provide them a good return over time.
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