CITRUS INDUSTRY (WINDING UP) AMENDMENT BILL

Introduction and First Reading

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for Tourism, Minister for the Status of Women) (15:21): Obtained leave and introduced a bill for an act to amend the Citrus Industry Act 2005. Read a first time.

Second Reading

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for Tourism, Minister for the Status of Women) (15:22): I move:

That this bill be now read a second time.

While Australian citrus accounts for less than 1 per cent of the world's production and South Australia's production is only a small percentage of that, the citrus industry is nevertheless a very important contributor to South Australia's economy. According to the PIRSA 2010-11 Food Scorecard, the industry's gross contribution to food revenue was $348 million, while the value of citrus exports was $51 million (46 per cent of all of South Australia's horticultural exports). Only some 6 per cent of the citrus grown in South Australia is consumed in this state; the rest is consumed interstate and overseas or made into juice.

The citrus industry is a significant employer both on-farm and along the citrus supply chain. Clearly, the benefits of a vibrant citrus industry flow through to communities along the River Murray and to the entire South Australian community. The citrus industry has been in transition for many years in response to both external pressures and market signals. Prior to 1991, the then Citrus Industry Organisation Committee administered an orderly marketing scheme which endeavoured to ensure fair returns for growers. Since then, the industry has been moving away from a highly regulated industry model towards a free market model.

The Citrus Industry Act 1991 created a new body, the Citrus Board of South Australia, that policed provisions in the act and regulations that required registration of industry participants and imposed restrictions on the transport, packing and sale of citrus. The board was also empowered to make certain orders in relation to the marketing of citrus.

In 2001 the review of the Citrus Industry Act 1991, undertaken in accordance with the state's National Competition Policy obligations, revealed that a number of anticompetitive elements required reform. In March 2004, a draft bill to remove the anticompetitive marketing elements and, ultimately, sunset the 1991 act was presented to the industry for comment. However, industry indicated that it wanted to retain some legislation.

In response to this feedback, a further review of the citrus industry's legislative requirements was undertaken. Through numerous industry consultation processes and meetings, the act was completely rewritten and a new act was passed in 2005. While the Citrus Industry Act 2005 retained the board, the Citrus Industry Development Board, the former board's role as a market regulator was abandoned.

The 2005 act intended to provide a fresh emphasis on citrus industry development and align functionality to similar arrangements in other primary industry sectors. However, friction attributable to various stakeholders having conflicting views on the benefits and costs of the arrangements that the act put in place continued, and concurrent changes to citrus industry arrangements at the national level exacerbated competing stakeholder anxieties.

In 2011, following another protracted period of citrus industry discord and disagreement around the effectiveness of the industry arrangements, the government responded to industry calls for intervention and commissioned a retired District Court judge, Mr Alan Moss, to undertake an independent review of the citrus industry structure.

During the course of his examination of the appropriateness and operational effectiveness of the 2005 act and its associated regulations, Mr Moss conducted 62 interviews and received 22 written submissions. He observed that, while there have been pockets of success since 2005 and industry participants have worked hard to achieve useful changes within their respective visions for the industry, progress has been limited and disjointed because the structure of the industry is fundamentally unsound and itself promotes disunity and duplication of effort.

Mr Moss determined that none of the current functions of the board are not already done, or could not be done, by another body. Mr Moss concluded that there is no good reason to retain either the board or the act and urged decisive government action, otherwise the current division in the industry, which he considered untenable in terms of the long-term interests of the industry, would only worsen.

The purpose of this bill is to implement a process to wind-up the board and, in due course, to cause the act to expire. Although the government's preference is for the act to cease as soon as the board is wound up, there is a provision that the minister may require a citrus industry participant to provide periodic returns of information reasonably required for the purposes of the industry. This provision addresses stakeholder concerns that immediate deregulation of the citrus industry may create an information vacuum if the embryonic national industry-funded InfoCitrus project and related initiatives undertaken by the national citrus industry organisation, Citrus Australia Limited (CAL), fall short of industry expectations. A proclamation for the expiry of the act will be made once the government is satisfied that the industry's information needs are being met.

The wind-up of the board will relieve the citrus industry of a regulatory burden that imposes compliance costs in the order of $3.3 million per annum on citrus growers, packers, processors and wholesalers. Mr Moss also identified the need for one strong industry body at the state level with the ability to contribute to and benefit from national citrus industry arrangements. A transition working party, chaired by citrus grower and former speaker of the House of Representatives, the Hon. Neil Andrew, was subsequently established to develop a new industry structure for the citrus industry in South Australia.

The government has accepted the working party's recommendation that the citrus industry establish an advisory committee, to be known as the South Australian Regional Advisory Committee (SARAC), under the auspices of CAL. Processes to establish SARAC have been initiated. There will be up to seven members on the new body, at least four of whom must be citrus growers. Citrus Growers of South Australia (CGSA), the organisation that currently represents the state's citrus growers, has undertaken to dissolve once SARAC is established.

The five-year management plan for the Citrus Growers Scheme established by regulation under the Primary Industries Funding Scheme Act 1998 will be revamped to ensure that those functions appropriate for an industry organisation to undertake are integrated into the management plan. The process of reviewing the plan will include extensive consultation with all industry stakeholders and verification of the proposed contribution rate of $1 per tonne, which was recommended by the Transition Working Party, and industry structure.

Each year, SARAC will submit a business plan that aligns with the management plan for the fund. Funds will be paid to CAL only for the purposes identified in the business plan and will only be spent by SARAC on programs and services that benefit South Australian citrus growers. Currently, citrus growers contribute $3.20 per tonne for oranges and $2.20 per tonne for other citrus to the Citrus Industry Fund administered by the board. Citrus growers also contribute 65¢ per tonne of citrus to the PIFS citrus scheme to support the CGSA.

Under the new arrangements, contributions by growers to support SARAC are expected to be $1 per tonne. To achieve this end, the PIFS citrus scheme will be amended to require these contributions. As grower charges under the Citrus Industry Act will cease, the next saving for citrus growers will be $2.85 per tonne of oranges they produce and $1.85 per tonne for all other citrus fruit they produce. For many growers, these savings will generate very welcome additional cash flow. I commend the bill to honourable members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of Citrus Industry Act 2005

4—Insertion of Part 6, 7 and 8

Part 6—Winding up

28—Winding up

This clause enables the Minister to appoint an administrator to wind up the affairs of the Board and the Fund. No further contributions are payable to the Fund. Any assets and money in the Fund remaining after the winding up are to be applied for the benefit of the citrus industry as directed by the Minister. A winding up report, including accounts audited by the Auditor-General is to be laid before Parliament.

Part 7—Powers of Minister to gather information

29—Powers of Minister to gather information

An ongoing power to gather information from citrus industry participants is given to the Minister. The information is to be passed on to a body that, in the opinion of the Minister, represents citrus industry participants or a class of citrus industry participant.

Part 8—Expiry of Act

30—Expiry of Act

This clause provides for expiry of the Act by proclamation. Immediately before the expiry, any remaining liabilities of the Board vest in the Crown.

Debate adjourned on motion of Hon. J.S.L. Dawkins.