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House of Assembly - Fifty-Second Parliament, Second Session (52-2)
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CO-OPERATIVES NATIONAL LAW (SOUTH AUSTRALIA) BILL

Second Reading

Adjourned debate on second reading.

(Continued from 20 February 2013.)

Ms CHAPMAN (Bragg—Deputy Leader of the Opposition) (11:03): I rise to contribute to the debate on the Co-operatives National Law (South Australia) Bill 2013 and indicate that the opposition will be supporting this bill. In essence, this is one of a number of pieces of legislation that has had its genesis in a national meeting, and the intergovernmental agreement between our federal and other state colleagues in government has determined that we have a national law to replace our existing cooperative legislation.

It never fills me with joy to know that we are agreeing to enter into the arena of national law under the universal promise that this will provide consistency, simplicity and more efficient provision of service and regulation, only to find that that does not occur. Usually, the greatest defect in this type of approach does not come from those who attend the ministers' meetings at the various heads of government meetings; usually, it is well intentioned and with the recommendation of those who advise them from their departments, and they have assurances that the implementation of a uniform law will provide the streamlined simplicity and efficiency that is promised.

However, it seems to me—and I place this on the record, as I often do when the Attorney-General comes in here to tell us of the meetings that either he or his predecessor have had on these occasions with the promises of benefits that are to flow—that all too often we find that they are more expensive and more cumbersome in their application than has been promised.

It does not ever fill me with joy that we come into this house to consent to government legislation, or even to debate on occasions where clearly there are dangerous implications to oppose, that we are doing so in the full expectation that all that which is promised in the second reading speech by ministers, in this case minister O'Brien, will in fact come to pass. However, we live in hope that at least there are elements of this which allow for some acquiescence from the opposition on this legislation.

The Australian jurisdictions that permit incorporation of cooperatives as legal entities have been developed under legislation which is based on a 1996 standard provision developed by the Standing Committee of Attorneys-General, and legislation differs slightly in each of the jurisdictions. It is fair to say that the Co-operatives National Law, whilst it intends to create a level playing field, clearly has some deficiencies for states such as ours, where there are fewer than 60 cooperatives.

The history of cooperatives in our state is one I think worthy of considerable recognition because largely they have been developed to assist those in primary industries. A number of producer co-ops have developed over the years; some have passed their use-by date or developed into other models, including corporations, and are regulated under different regimes of legislation. I suppose that in a legislative sense and in a regulatory sense they have matured into more sophisticated structures because largely this occurs when there has been a diversification of enterprise within those cooperatives that is beyond what they were originally established for.

Secondly, if they have been trading over the border in their operations, in many ways it has been important to tap into other corporate structures that are available. Obviously, there are some taxation implications, and there is certainly a very high level of regulatory obligation in a number of other structures, not to mention all the legal fees to establish them, to dissolve them or to transfer them. Sometimes the development into the other more sophisticated structures has been impeded by the very cost of transfer, stamp duty implications and the like.

In South Australia, it is fair to say that, relative to the rest of the country, we are on a fairly small scale. I am advised that there are about 60 in South Australia. I think in the second reading speech the minister indicated that there were fewer than 60 in South Australia.

Mr Whetstone: There are 57.

Ms CHAPMAN: There were 57 identified in the second reading. I am reliably advised by the member for everything to do with the River Murray, the member for Chaffey, that there are 57. That information, together with the fact that only eight of them, according to the minister, are actually cooperatives that are registered in South Australia but were based interstate, means that essentially 49 South Australian co-ops survive today that are South Australian grown, so to speak.

The extraordinary extra number of these co-ops that operate in the Eastern States, I do not doubt, resulted in there being the push for national regulation. That is usually the case, where the beneficiaries of national regulation are those who sit in the Eastern States. For the 49 South Australian home-grown co-ops, I can say to you in all confidence on behalf of the opposition, we take with a pinch of salt the promises of simplicity and cheapness that are supposed to come with this, and the ease of operation, but nevertheless, we accede to the government's promises in this regard that there will be some benefit in that consistency.

I think it is fair to say that we are certainly advised that those in the representative industry, in their consultations, have been supportive of the principle of a national legal approach. We were told that the government did put the bill out for a brief period, but in any event, the minister had highlighted that the government had written to both the Law Society and the SA joint Legislative Review Committee of the three accounting bodies; that is, the SA joint Legislative Review Committee provided comments which are being considered in respect of the national regulation.

It seems—or at least, we are told—that stakeholders have no objection or there has been no identified objection. I am not certain whether that is because they have simply received a bundle of information and have not yet put in any contribution, but I will say this: it is often not the envelope with which a proposal is being presented but of course it is the detail in the regulation to come.

This morning, I heard from stakeholders who read regulations in another piece of legislation that we have recently passed only to find that, yes, truly, the devil is in the detail and that in that instance the regulations allow for a greater class of persons to whom the law will apply without the protection of professional indemnity insurance and/or necessary training, qualifications or experience that are expected on the original class that we debated here in the house.

I do not need to go into the detail of the legislation. I just make the point that it is not an uncommon occurrence that we argue about the envelope and then we find that, when the regulations come out, a very different story and a different picture emerges. Rest assured that the opposition will be looking out for the regulations as will, I am sure, other stakeholders, in particular, the 57 cooperatives in South Australia that will be obliged to operate under a new national regime.

When they come complaining on some of the regulations, which inevitably they will, it is usually the cost first, because in relation to the promises of having a streamlined system with a cheaper registration process, if it does occur for the first year, it usually evaporates within the second or third year and we find that there is an overload of financial and workforce obligation that is necessary to comply with the new system.

In any event, I note for the record that the government had decided to go through the model that is to apply to this national regulation. There are different ways that this can be done, including by ceding power from one jurisdiction to another. In this instance, the Co-operatives National Law has been enacted in New South Wales. The inter-government agreement allows South Australia to either have enacting application of laws legislation to apply the New South Wales law as amended from time to time as the law of South Australia, or to enact mirror legislation. The government here has made the decision not to cede the South Australian parliament's legislative power to New South Wales, which I wholly support, by enacting laws of application legislation. So, that is what we are doing here today.

Can I say that I and I am sure a number of members here have co-ops in our own electorates which have made a very valuable contribution to South Australia's history and industry, and primary industry in particular. I have an electorate which covers geographically a large slice of the Adelaide Hills, and I have people within my electorate who provide both membership and produce to a number of co-ops. This includes the Ashton Co-op, which for those who are familiar with the Adelaide Hills is a co-operative which seeks to provide refrigerated storage largely for the apple and pear industry. That has had a very important history in South Australia for a very important industry. Neighbouring me is the Lenswood Co-op. There is also one at Balhannah and there is also one at Paracombe. They are four of the important co-ops in the Adelaide Hills to which I have members who make a contribution.

Essentially, they have historically been developed to provide a storage facility. I am not sure of this but I expect that, with the advent of refrigeration, this enabled the safe storage of produce to enable it to be kept fresh for market. As with a lot of inventions, it is too expensive for one grower to install all of that on their own property, so they establish a co-op to acquire the capital asset to provide the new piece of technology, in this case, to store their apples and give them a longer life for them to be drip-fed onto the market and presumably provide the growers with a good income. As I say, they play a very important part in history. They are a fairly simple structure to the extent of the membership obligation, and they serve usually a quite specific charter and purpose.

It concerned me, for example, that under this government the co-operatives again became a sort of place of plunder, if I can describe that as such. Let me explain. Primary industry providers do pay a lot to live, sometimes in significant isolation, sometimes with all the services that we enjoy in a direct urban environment not available, and usually with higher costs of add-on for their production, whether it is fuel or equipment that they require. The apple and pear industry and the horticulture industry are no exceptions. I am sure other members will tell me of examples in their own electorates where the significant extra costs for the producers are an ever-spiralling problem, but never has this been more so than under this government.

The example I give you is that the Ashton Co-op, which operates with its members to enable it to provide refrigeration services for the member entities—I just highlight here we are talking about the sheds and equipment that are built on one single holding, into which all of the other producers put their produce and which are then transported to market or to wholesale outlets—under this government was assessed for the purposes of paying land tax.

The minister on duty today was also a former Treasurer, so I am sure land tax is dear to his heart. But here is the truth of it: why is it that, for a co-op in South Australia that has been established for the single purpose of being a necessary part of the chain of production for primary industry, which has no direct sale role other than to simply package and store on the premises, land tax should be applicable to that property? It has no independent enterprise, no incoming venture and no income opportunity.

Some other co-ops have developed what we call a cellar door or a retail outlet from their premises and they are land tax applicable, and under our current rules I would have no objection to that; I think that is reasonable. They would change their status. They are no longer just a storage entity. They become a multifaceted industry in that sense for providing the retail outlet and a sales opportunity direct to the tourist or the local community. It is not unusual that we see that primary industries are adding on enterprises and income opportunities. Good luck to them. Sometimes they attract new sets of rules and that is quite reasonable in a number of cases.

My understanding is that the Balhannah co-op—I am sure that the member for Kavel would be familiar with this, and I am sure he is listening intently somewhere to this contribution—has also had a very important history—

Mr Gardner interjecting:

Ms CHAPMAN: The member for Morialta may also be very familiar with the Balhannah co-op.

Mr Gardner: Like the Lenswood people, mostly from my electorate.

Ms CHAPMAN: And the Lenswood people, yes. So, an excellent member for Morialta who is following this debate with interest. My understanding is that Lenswood has a primary classification and the Balhannah co-op had an exemption for a period of time, and they were given that under former treasurer Foley. However, once they changed to become a retail store as well their exemption concluded and they were not permitted to have it in the future. I think there is a good argument to say that that is one of the sacrifices they have to make.

It completely confounds me as to why any government would be so brutal in its attempt to try to harvest money from industries under pressure, particularly when primary industries are supposed to have an exemption from land tax, and impose this on the Ashton co-op. If the present Treasurer (who is also the Premier) is listening to this debate, I urge him to do something about it.

I was very concerned to hear recently from members in the primary industry area that they are worried about what other areas might be plundered by this government. We certainly hope that, if they are considering any broadacre tax, they make sure that they brief themselves on the absolute devastation that would have not only on South Australian primary producers but on the value of assets—the run-on sales and the plummeting of the significant income-earning assets of this state. It is not comforting to know that, even at the level of the co-ops—in this instance I refer to the Ashton co-op—the government is so intent on insisting that there be a harvesting of money from these co-ops. It does not give me any comfort to know that they are not going to have any relief.

It does concern me that, in light of that, the government seems to be ignorant—if not their intention—of how difficult it is for these co-ops to operate as it is, and having to pay state taxes. It does not fill me with confidence that they are really familiar with what we are about to receive at a national level and what extra overburden we might have to face and members of the co-op may have to suffer. It may well raise the question on behalf of the remaining co-ops in South Australia as to whether they remain in the structure.

The application of national regulations, when they come into effect, certainly look pretty onerous to me. We are about to pass a piece of legislation which is about two centimetres thick and for what is currently under our cooperatives legislation, under the Co-operatives Act of 1997 (which will be repealed under this bill) it does not fill me with confidence that there is going to be such a heavy blanket of regulatory obligation imposed on the cooperative members.

Nevertheless, they will no doubt make a decision about whether they dissolve or whether they regroup or re-establish in some other entity. I certainly hope that they are not forced to go into a corporate veil arrangement, which can provide security but, on the other hand, a high burden of regulatory obligation. A perusal of this bill was enough to make me choke if I was to be a member of a co-op as to the level of regulation that we are about to have to become familiar with—get advice on probably—and then have to make decisions which may have significant restructuring and taxation implications if it was decided it does provide too onerous a burden.

The other thing I make the point of is this: the proposed headquarters for national law is rarely in South Australia. The national rail regulatory scheme which came into effect, I think at the beginning of this year—but after legislation in the last 12 months—does have its headquarters in South Australia. Largely, whilst we have retained state authorities for enforcement purposes in a number of these national laws, they most often park their headquarters in another state.

Sometimes they are in Canberra, but most often they are in another state and that is again nutted out at these national meetings. I think the member for Chaffey is going to be leading the debate on marine reform—a regulation for boats—in our legislative agenda this week and I think, from memory, their proposed headquarters is going to be in Canberra. Canberra is a lovely place but they are not in the real world most of the time. It never fills me with joy to think that we have to do anything about having to rush to Canberra to have to sort out what new forms are going to descend upon us for the regulatory nightmare that comes with that.

In any event, with all of that we will support the bill, but it is with the caveat that we are not confident that we are going to get all of the promises that the state government say that we are going to get. We are satisfied that those who are in the industry have been consulted and we sincerely hope that the government does not try and sneak in further regulation under its subordinate legislation powers which will cripple the opportunities that are so strongly avowed in this legislation by the government.

Mr WHETSTONE (Chaffey) (11:30): I rise to speak on this bill which, in effect, is an intergovernmental agreement under which all states and territories are committed to replace their existing cooperatives legislation with a new national law. In saying that, it is with good reason that I put forward my support for the cooperatives national law, given the major decline in co-ops in this state and particularly in recent years.

As the deputy leader has said, in South Australia we have just 57 registered cooperatives and hopefully such a law will create a more level playing field for the cooperatives to compete alongside other corporate bodies. Recent reviews suggest that current laws place cooperatives at a disadvantage to other types of incorporated bodies, and I hope that informed legislation across Australia will address those types of problems.

In my electorate of Chaffey we have had a long association with cooperatives although, like the South Australian trend, there are not as many around today as there have been previously. In fact, South Australia has one of the oldest Australian cooperative traditions with rural co-ops beginning primarily amongst wheat-growing areas back in the 1800s. Current legislation, which differs across states, means co-ops face a number of potential disadvantages, including a limited means of accessing external funding and a lack of approval to do business across borders. So under this new law, cooperatives will not have to register in multiple jurisdictions to operate across borders and it will reduce financial reporting and auditing requirements, particularly for the small cooperatives.

I will touch on the history of cooperatives, particularly in my electorate of Chaffey. I have to declare that I am part of some of the cooperatives up in the Riverland and I have used them for all of my growing life in the Riverland. Particularly the CCW cooperative, the Riverland cooperative, and the fruit cooperatives have played a significant role. If we look back in history, without co-ops there would be no Riverland. We look back more than 100 years ago when the Chaffey Brothers set up the irrigation districts, particularly up in Renmark, they created an opportunity for wealth to be driven through diversity, and that is where the cooperatives played such an important part in bringing the farmers' produce to one central location where it would be processed, graded and put onto horse and cart back then, and taken to markets and some of the distribution centres where it was regarded that, particularly in the Riverland, we were the world leaders in soft fruit and citrus.

The produce that was put to market through the cooperative system was unique, particularly with the diversity that the Riverland cooperatives had. It was not about putting one of the commodities out there for sale or to expose them to a market. It had all forms of the commodities, so it was not just the fresh fruit and citrus but it was also about the dried fruit and all forms of produce on the soldier settlement properties, and it gave a great level of exposure to those farmers who were toiling away growing the produce. It allowed the cooperatives to be able to process it, market it and get it to the mouths that it was destined for.

I will go back to my electorate of Chaffey. Properties near Lyrup and Berri quickly learnt that grouping together and pooling their businesses gave them the ability not only to process the produce but to demand better prices and have greater market power. I think it is demonstrated in any business today that, to have market accessibility, you need to have a large quantity of that product so that you can give consistency of supply and give the market what they want, that is, to fill a shelf for 365 days of the year with one form or another of a product.

Signs of cooperation in the fruit industry became evident in the early 1900s, when the Renmark Fruitgrowers' Co-operative Ltd was established. Later, there was the emergence of the Murray River Wholesale Ltd, which was structured like a co-op and acted as an export arm for the fruitgrowers based in Renmark. The organisation had nearly 30 packing houses located along the River Murray. One of those—the Berri Co-operative Winery and Distillery Ltd—was formed at around the same time and followed in the 1950s by the joining of the Renmark and Berri co-ops, which created the Berri Fruit Juices Co-operative Ltd, to include areas of Waikerie, Loxton, Renmark and Barmera.

There is a famous or iconic brand that came out of that amalgamation of the Riverland town co-ops, which was known as the 'Berri brand'. I think anyone who has flown in a plane has always had the little cup of orange juice, known as the Berri orange juice. Sadly, that brand has moved away from the Riverland and is now in New South Wales. It is an iconic brand that provided recognition for the Riverland that now just has a commercial meaning and does not have any real meaning as to exactly where it came from.

By the 1980s, Berri Fruit Juices had branches in every major city around the country. So, the importance of co-ops is often underestimated, but they do play a key and vital role in regional areas by enabling primary producers to process and market their commodities with that brand recognition. They also contribute to the economic health of the rural and regional communities and used to underpin that economic drive that the region was famous for.

Chaffey has been through hard times, such as the drought, and we have been through a number of droughts over time. The economy is quite fragile, and the forming of cooperatives often gave businesses the boost they needed, but that philosophy has changed. Today, one of the most successful examples of co-ops includes the CCW Co-operative—which I have been a member of—which is the CCW wine supplier in the region. It has been one of the largest cooperatives in the state over many years although, sadly, the pressures the wine industry has been under through drought and export pressures have seen it drop from almost top of the tree in South Australia and nationally down to No. 20 on the cooperatives list.

The CCW Co-operative Ltd is based at Glossop, near the Berri Estates Winery. The concept has been around since the early 1920s but officially began as CCW in the 1980s. It is comprised of more than 600 grape growers and producers who produce over 10 per cent of the total wine grapes in Australia, which amounts to around 55 different varieties of wine grapes. As I have said, they were ranked No. 20 last year of the top 50 Australian cooperatives by annual turnover.

Just to explain how the commodity prices have taken away or given to one of the cooperatives, particularly the CCW, back in 2002 the CCW turned over nearly $150 million. Sadly, when we look back at 2010-11, they turned over a mere $40 million. So, it really does give you a picture of how you can be riding high on the back of wealth in one season and particularly buoyed by the commodity prices, and then with drought, with competition in the export sector and competing with open trade we look at the demise of the finances within that cooperative.

Again, CCW is something that was very dear to my heart—moving to the Riverland 25 years ago. It was about opportunity. The CCW Co-operative gave every grower an opportunity to be a part of an establishment that was a powerhouse in the wine industry. Back in those days, if you had a CCW contract it was worth a lot of money. It was not just about putting your produce into the CCW crushers, or into the Berri Estates' crushers through CCW, it enabled you to go to the bank and use that as collateral because if you had a signed CCW contract, a 15-year rolling contract, it was as good as having double security in your business.

I say that because you would go to the bank, you would want to borrow money and you were able to borrow money on that CCW contract. That gave you significant bargaining power with your bank manager to increase your holdings, to expand your business, to upgrade your business, to buy your neighbour, and it was a tool that would allow you to expand and give your business much more flexibility.

I will touch on another world leader in cooperatives, Almondco, which was developed back in 1944. Sadly, it moved with the times and the philosophy that moved away from the co-ops and is now an unlisted public company. Almondco is a world leader in a grower group supplying almonds and nut products to that establishment. Almondco is supplied by over 85 per cent of Australia's almond growers and it produces some 100 different almond products. Back in 1994, it produced its first container of export almonds—a great coup back then. We are looking at this year's almond harvest and it is looking at, potentially, exporting over 600 containers. So, it demonstrates where Almondco has come from and where it is headed as a world leader in exporting that product. It has won multiple awards on all export fronts: state, national and international markets, and it is a regional success story.

The member for Bragg, the deputy leader, touched on Lenswood Cold Stores at Balhannah. That is another example of just how successful a cooperative can be in a region, particularly with apples and pears. It enables the coming together of growers to put all their product into a shed and have one packing line, so the economies of scale come into play, and to have one large cold store, and again, that is where the economies of scale come into play. More importantly, it allows the cold stores, or the cooperative society, to go into the marketplace, to go into export markets with a heavy arm of power to give consistency and continuity of supply in the market, particularly when dealing with (sadly) the duopoly that has so much power in our consumer outlets. Lenswood Cold Stores is one of the powerhouses in the apple and pear industry.

Susie Green, the CEO of the Apple and Pear Growers Association, who I have met and spoken to a number of times, supports the co-op system. Sadly, the co-op system has been undermined by, in essence, the fact that a lot of the growers, who have put money into their co-ops over time, through some hardship, through drought, through financial woes, have had to go to that co-op and withdraw their funding. In one way, shape or another that destabilises a co-op, so growers have taken the other model; that is, they have decided to move away and set up their own packing house and do things their own way, and over time that has seen the demise of many of our co-ops.

One thing that I will touch on—and I know that the member for Schubert will touch on it also—is the South Australian CBH, the grain growers cooperative that was a real powerhouse in South Australia over many years. It is still a powerhouse in Western Australia. I notice that the largest cooperative in the nation is the Western Australian Co-operative Bulk Handling grain handling terminals. The Western Australian model really is still a powerhouse within the grains industry. Sadly, in South Australia the growers decided to sell their shares and move away from that cooperative arm, but it is all about progress. Today, a lot of those growers look back at the opportunities that they had with the cooperative bulk handling and see that it was an opportunity that was let go.

Just touching on what I would consider some of the hybrids of co-ops, in Chaffey the irrigation trust has been set up around a co-op model. We look at the packing sheds that we have now that are set up around many growers supplying a particular shed to gain market access, to gain market strength, and they really are what I would consider a hybrid of co-ops. I consider collaborative farming another hybrid of cooperative farming. I know that the Bullaburra group up in the Mallee, the Riverland area, has proven to be a real success story in the Murray Mallee dryland farming enterprises.

It is really a credit to them to show what working collaboratively can mean, and that is really what the co-ops were set up to do: for growers to come together and work collaboratively and work as a cooperative, and it really gave them strength. That was my initiation into farming, marketing and processing, and it really has been something that was a stepping stone for the primary industries, to be a part of markets and get their product processed to market at a competitive rate.

In closing, the bill, as the deputy leader has said, cannot be seen as conforming under a national scale and bowing to our eastern seaboard cousins. It is about giving national recognition to what co-ops are for, and that is to help, particularly commodities and outlets primarily around the regions. Many of Australia's top cooperatives are about primary production. Whether it is about grain, horticulture, viticulture or the fishing industries, or whether it is about the apple and pear industry, those cooperatives can, in one way, shape or form, service the regions in the rural sector. If this Co-operatives National Law (South Australia) Bill can come into effect and be of benefit to the cooperatives that remain, I welcome it. Without further ado, I will wait for the next contribution.

Mr TRELOAR (Flinders) (11:49): I rise today also to make a contribution on the legislation before us, the Co-operatives National Law (South Australia) Bill 2013. As has already been mentioned in previous contributions, this quite significant piece of legislation actually mirrors existing legislation in other states rather than taking on board a truly national approach. I think there is merit in that, in that we as a state will retain some jurisdiction, or some control, over our own destiny, for want of a better term.

Producer cooperatives really became a common form of an organisation particularly in agricultural areas, as has been mentioned already. There are many examples, not just in this state, but right across Australia. They have a long history indeed around the world of agricultural producers particularly coming together in an effort to gain one of two things, and sometimes we are able to achieve both. Essentially, it was a better result for themselves. Often it was to achieve a better price for the produce from their various farms and districts, but it also sometimes gave them greater purchasing capacity for when they went into the marketplace to purchase inputs for their farms.

Most co-ops in Australia are small organisations, and they tend to have a really quite defined life cycle. Cooperatives come out of necessity when producers or purchasers come together to achieve, as I said, a better price or a better result for themselves, and they gradually grow and have a contribution over time from their members. What seems to happen is that ultimately those members at some point attempt to realise the investment that they have into that cooperative and often they become more commercial entities. Either the cooperative itself winds up or it becomes a more commercial entity and they issue shares and the value of that capital is realised.

My understanding is that this legislation has not been reviewed since the mid-1990s, so we are getting on towards 20 years since this legislation has been reviewed. It is probably high time that it was done. Interestingly, the cooperative model is one that is mirrored around the world. In fact, I noticed way back in 2002, when I was doing my Nuffield scholarship and travelling extensively, that cooperatives have been a tool used by producers and purchasers, especially in country areas but not just there, right across the world: in South-East Asia, in Europe, and in North America.

Similar models were set up to achieve that good result. In fact, probably the most famous trading hall of all, the Chicago Board of Trade, was set up initially in the middle of the 19th century when wheat growers and corn growers in the US discovered that they were all arriving in Chicago on the same day with their harvest, looking to sell it. When there is an oversupply of a particular commodity going into a finite market, then of course the price is going to drop, so the farmers, producers and businessmen in Chicago set up the Chicago Board of Trade whereby that product, that is wheat, corn, other forms of grain, and pork bellies, interestingly enough—I am not exactly sure what a pork belly is, but they are still traded; maybe one day we will find out—

Mrs Geraghty: Only if they are free range.

Mr TRELOAR: Only if they are free range. Well, of course, they all are in this state. However, it really was an effort by those producers to try to regulate in some way the prices they received for their produce. That was mirrored somewhat in Australia during the 1930s, when the wheat single desk came into being. It was really as a result of the Depression and the low prices that that brought about. Remember, of course, we live in a world that is awash with agricultural products.

We talk about the mountains of dairy products that existed in the European common market in the 1970s and the efforts that were made to stabilise the prices received and to give the producers a fair price. Not all schemes were successful, but it is about managing the price received and ensuring that producers remain viable over the long term. As I said, essentially, there is plenty of agricultural produce in the world, there is plenty of food in the world, and it is about managing the distribution of that.

Interestingly, in my own town of Cummins on the Eyre Peninsula in the 1930s, a cooperative grew out of those low grain prices that were being seen during the Depression. The Cummins Milling Company was established by a group of local wheat growers who were looking to add some value to their product, and a flour mill was established way back in the early 1930s. In fact, quite extraordinarily, this still exists today.

It is now a small family business and still mills flour. A few years ago, there were only 29 flour mills left in Australia, and I suspect there are probably even less than that now, and it is one of those 29. It continues to mill flour and provide processed stock feed into the local market, so congratulations to them on a good business. But, it was a cooperative effort in the first instance.

I spoke about the wheat single desk. That was an effort by wheat growers who came together and, in fact, it was ultimately national legislation that compelled wheat growers to pool their product. What that meant was that all growers right around Australia delivered into a pool, and that was sold by one body over time to achieve the average price, and return that average price. In fact, every grower received the same price. It has been labelled various things over the years, including 'agrarian socialism', but it was a good thing at the time.

Ultimately, we saw the demise of that not too many years ago, for better or for worse; free market forces took hold, and we now live in a different world. My grandfather would tell the story of how he would take wheat down to the railway siding during those years. At best, there would be two buyers present at the siding, and often there was only one buy present.

So, of course, the one price on offer was what the grower took on that particular day. Once again, at harvest time, you needed to sell. That cooperative effort that led to the wheat single desk was a good thing in its time. Barley also came under single desk legislation for a time, and that too has ultimately wound up.

As the member for Chaffey mentioned—and I am sure the member for Schubert will also touch on this—probably the most famous cooperative effort here in South Australia was South Australian Co-operative Bulk Handling. What that did, in essence, was build and manage the silo and bulk grain storage complexes right across this state.

South Australia came to bulk handling relatively late. There were bulk handling facilities right across the prairies of Canada and North America, and in other states here in Australia, many, many decades before it finally came into being here in South Australia. Eventually, in the 1950s, the farmers came together in a cooperative effort to begin building silos and storage facilities across the state.

I understand the ports were the first to be built as terminal facilities: Wallaroo, Port Lincoln and Port Adelaide. I think Nantawarra was the first inland silo receival point, and so it grew. I do not know how many silo facilities the cooperative finished building or handling, but it certainly would have been in excess of 100 delivery points around the state.

I mentioned earlier that cooperatives ultimately run their course, and have quite a predictable life cycle. Many studies have been done, in fact, on the life cycle of a cooperative, and South Australian Co-operative Bulk Handling was very typical of that. Ultimately, the growers, through their board, decided to realise the capital that was held within that cooperative, and they privatised, commercialised and issued shares.

Of course, once shares are issued, the dynamics of the organisation change, and what was a cooperative where all growers took a share in both the input and output held some value; the shares held some value and could be bought and sold. There were predictions at the time that, ultimately, growers would lose control of their organisation and, in fact, that is what happened of course. It happened much more quickly than anybody actually foresaw and, as the member for Chaffey quite rightly pointed out, growers lost control of what was their own organisation, but, at the same time, capital was realised. I can inform the house that that capital, once realised and once cashed, certainly funded a lot of retirements and a lot of business expansion; and it also allowed some growers to continue in the industry, to continue farming, it was that critical.

That particular entity has changed owners a number of times since. The South Australian cooperative bulk handling organisation became AusBulk as a listed entity. It was ultimately taken over by ABB, which was formerly the Australian barley board, and another in its first days' cooperative effort. It was bought by Viterra and is currently owned by Glencore. It has gone from grower ownership through to Australian ownership, through to Canadian ownership and, finally, to be owned by a company that is based in Switzerland.

We can debate for many hours whether that has been a good thing or a bad thing but it is the reality in a globalised world and, as I said, cooperatives have a long history. I am hoping that this legislation allows for those co-ops that wish to continue to do so. I believe they still have a role in our modern economy and, even though the number is declining—and no doubt some co-ops right at this moment are discussing and deciding their future, and probably will choose either to wind up or to take on a more corporate structure—I have no doubt that new co-ops will spring up to achieve exactly what all co-ops have intended to do, that is, achieve a better result for its members.

In fact, in recent years we have seen on Eyre Peninsula an organisation known as Free Eyre established to do just that, and grain growers across Eyre Peninsula—it is not compulsory, of course, because those days have gone; there is no legislative requirement for growers to be involved as there once would have been—who choose to do so can become members and seek to get a better price for their grain.

Interestingly, I touched on my Nuffield scholarship earlier in this contribution. The state annual general meeting and conference day is coming up this week in Adelaide, and I will be opening that particular event. Invariably, when Nuffield scholars head off, they are looking at one of two things: either they are looking to gain an insight into their practical efforts and increase the productivity in their business in their field or they are looking to achieve a better price for the product they produce. Essentially, when you boil it down, every producer ultimately wants one of those two things—usually both.

The trend continues. We will seek to achieve better prices in whatever way we can and cooperatives certainly will play a role in that. We have heard today not just about the grain industry but also about the importance of co-ops in the dairy industry. Also, the member for Chaffey mentioned how important they have been in the Riverland (his neck of the woods) amongst the fruitgrowers, and in those early days—

Mr Whetstone: And the fishing industry.

Mr TRELOAR: And the fishing industry also, indeed; thank you, member for Chaffey. Of course, that is a very important industry in the electorate of Flinders. The fishing industry also came together in an effort to handle the catch and achieve a good result. We do support the legislation. It will bring it up to date and, in fact, mirror what happens in other states. I think that is a good thing. It refines the opportunities for co-ops to exist, and in a world where often the concentration is on consumers rather than producers, in these days when the ACCC and such organisations spend a long time ensuring that consumers are looked after, I think co-ops also play a role in ensuring that producers have the opportunity to get the best result for themselves. Thank you, Mr Speaker, for allowing me to make this contribution and I look forward to further contributions.

Mr VENNING (Schubert) (12:05): I certainly appreciate the opportunity to speak on this bill because I have had a passion about and been associated with cooperatives most of my working life, and I think it is very appropriate that we are discussing this legislation here today. I just want to give very briefly a bit of history about two of our most successful cooperatives in this state as proof to everybody that they can be set up and, if properly set up, that they can really work.

South Australia's largest company over the years was South Australian Co-operative Bulk Handling, and it worked extremely well. Of course, we know the history: this house changed the legislation and then it was gone. South Australian Co-operative Bulk Handling (or SACBH as we have affectionately known it) was established in 1954, after much lobbying, to facilitate the transition from bag handling to the bulk handling of grain, and it was demutualised in 2000. A group of forward-thinking farmers approached government seeking assistance to move the state's handling of wheat and barley from the labour-intensive back-breaking use of bags into the modern era of bulk handling, and it expanded to be the major grain storage and handling business in South Australia and probably Australia.

SACBH operated under the Bulk Handling of Grain Act 1955 from this house, and it guaranteed the company exclusive franchise as the state's sole bulk handler. We gave it a huge opportunity, and I have to say that the company was very appreciative and able to be very successful. I express more than a casual interest in this matter because my father was chairman of the company for many years; indeed, my brother Max is part of the history because he was chairman of SACBH until they moved into the name AusBulk, so he was champion of that as well. This company has affected many Australian families and certainly mine.

On 6 October 2000, SACBH underwent a restructure and a name change, and it changed from a membership-based organisation to a company limited by shares. Some would say that this was the beginning of the end and when you started to pull the cooperative down. It became AusBulk and merged with multiple other grain-based companies. From the 1950s to the 1970s, there was stability with statutory controls; in the 1980s, market deregulation and rising costs; in the 1990s, restructure and the first non-grower board member; and in 1999 ABB Grain and AusBulk were established. It then specialised in the logistics of the storage and handling of grain and other dry bulk facilities, grain marketing and grain processing, particularly malt barley.

The main thing was that this company was owned by the growers who all had shares in it. We all put money in and you could take the money out, but very few of us did until the end; in fact, I think I got my last payment only a few months ago. We put in what we called tolls, and for every tonne we delivered we paid a toll to the company and everybody, whether they be the wealthy growers or the poor growers, shared in the success of this company. It is sad to see what has actually happened with it today, but the co-op and the principles of the co-op do work; maybe they do not go forever, but in this instance it certainly did.

I want now to turn to another very important co-op to South Australia, and most members would know this company, that is, the Eudunda Farmers Co-operative, and anybody living in country South Australia would remember it with a lot of affection. This is a prime case of the principles incorporated within a co-op working with great success for its shareholders and South Australia, particularly in country South Australia. The co-op was established on the principles of the Rochdale Society in 1895 by drought-affected farmers at Eudunda as a group of traders in firewood. They met in a hotel, and they went on to become a powerful force in the retail industry Australia wide.

If you know Eudunda like I do, you would know that in some years it can be quite drought affected and, as a result, can go through harsh times, and the farmers there certainly are very resilient and they do not waste; they are very resourceful people. These farmers used mallee roots as a means of getting ready cash. As the 1890s depression deepened, the storekeepers who were acting as middlemen refused to pay in cash; instead, the value of the wood was to be taken in goods.

The first meeting was held in December 1895 at the Eudunda Hotel. The owner of the hotel, Mr E.A. Mann, was to become part of the society's board of management. The constitution and rules were adopted in January 1896. Thomas Roberts suggested that they trade directly on the Adelaide market in order to obtain the best price possible per ton. When this suggestion was agreed to, a committee was established and a city representative appointed.

An office was opened in the industrial building in King William Street, Adelaide. Rapid expansion saw the need for a centrally located warehouse in support of their growing number of retail stores. Leaving the King William Street office in 1921, the society moved into warehouse space in Blyth Street, off North Terrace, just across the road from here. Here they remained until around 1936. Pressure because of space constraints led to another move to an even larger warehouse next door east of Holy Trinity Church on North Terrace. The North Terrace warehouse and office complex served the society from 1936 until 1984. Operations then left the city for North Terrace, Kent Town.

While this venture was successful, farmers wanted more from their organisation. They decided that profits derived from firewood sales would be used to obtain assets in the form of stores, enabling the sale of general household goods and farm requisites, and so the cooperative was established. In February 1897, they purchased their first store, a weatherboard store, weighbridge and 25 acres of land at Sutherlands, of all places. If you know your history, Sutherlands is a very small town not far from Morgan. Other stores followed in the next few years, often in response to local demands.

The success of Eudunda Farmers Co-op was never in doubt. Trading was continuous, progressive, and the co-op remained in a solvent condition, paying good dividends to shareholders. The expansion would see branches opened in over 40 towns. The co-op converted to a public unlisted company in April 1990. This crystallised the level of shareholders' funds, and the share capital could no longer be withdrawn in cash on demand. The growth of the society continued over the years to the present time. The old business is now part of the IGA Group.

So, co-ops have been a very vital part of South Australia's economic and social fabric. I think the principles of co-ops do work and are necessary, but I have to say that it is all about leadership and management. With the right people in control in leadership and management, because you have all the shareholders wanting to have their say (they do have their money in there after all), they have an important part to play today. All I can say is that the history of South Australia will reveal that they have certainly been a very important part of this state. I support the legislation.

The DEPUTY SPEAKER: If the minister speaks, he closes the debate. Minister, you wish to close the debate?

The Hon. L.W.K. BIGNELL (Mawson—Minister for Tourism, Minister for Recreation and Sport) (12:13): Yes; thank you, Mr Deputy Speaker.

Bill read a second time.

Third Reading

The Hon. J.R. RAU (Enfield—Deputy Premier, Attorney-General, Minister for Planning, Minister for Industrial Relations, Minister for Business Services and Consumers) (12:14): I move:

That this bill be now read a third time.

Bill read a third time and passed.

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