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2019
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
SAVING AUSTRALIAN DAIRY BILL 2019
EXPLANATORY MEMORANDUM
(Circulated by authority of Senator Hanson)
SAVING AUSTRALIAN DAIRY BILL 2019
OUTLINE
Dairy farmers have been leaving the industry since it was deregulated in 2000. At that time
the population of Australia was around 19 million people and the dairy industry produced
close to12 billion litres of fresh milk a year. Nearly twenty years later Australia's population
is over 25 million and milk production has fallen to 8.8 billion litres a year.
In the past twelve months we have lost 500 dairy farmers with the number of largely family
owned dairy farms standing at just 5200. We are in real danger of losing access to fresh milk
and becoming reliant on milk powder imported from another country.
The Australian Competition and Consumer Commission (ACCC) reported on the plight of
the dairy industry in 2018 and found significant bargaining power imbalance between the
farmer and the milk processor. Currently there is no legislative control over the price milk
processing companies pay farmers for their milk. The ACCC has no powers to regulate the
dairy industry, although the New Zealand Commerce Commission carries out a statutory
review of both the milk price manual and the milk price calculation.
The purpose of this legislation is to ensure the viability of the dairy industry through the
introduction of three measures. Firstly to task the ACCC with establishing a base or
minimum price for the milk fat and protein content of milk produced on the farm in each milk
region or specified area. Dairy production systems vary between milk-producing regions with
seasonal milk production systems common in South Australia, Tasmania and Victoria while
in Queensland, northern NSW and WA farmers tend to use year-round milk production
systems. These variations reflect different levels of rainfall, types of pasture and geographical
influence and all these factors and others will be considered in determining a minimum or
base farm-gate price for milk.
The second purpose is to introduce a mandatory code to replace the voluntary Food and
Grocery Code of Conduct and to expand that Code to include the whole supply chain for
dairy products, which will include a code of conduct to regulate the relationship between the
dairy framer and the processor. The third purpose is to make a referral to the Productivity
Commission.
NOTES ON CLAUSES
Clause 1: Short Title
1. This Act is the Saving Australian Dairy Act 2019.
Clause 2: Commencement
2. The substantive provisions in the bill will commence the day after Royal Assent.
Clause 3: Schedules
3. Each Act specified in a Schedule to this Act is amended or repealed as is set out in the
applicable items in the Schedule. Any other item in a Schedule to this Act has effect
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according to its terms.
Schedule 1--Milk Prices
Competition and Consumer Act 2010
Item 1 - Milk prices
4. This item inserts new Part VIIB--Milk prices into the Competition and Consumer Act
2010 to provide for a base price or minimum price of milk to be set by the ACCC by
specified area or milk region. The ACCC will determine by legislative instrument the base
milk price for each dairy season by specified area. New section 95ZRD makes it an offence
for a processor or first purchaser to enter into an agreement to purchase milk for less than the
base price. This offence will attract 2000 penalty units.
Schedule 2--Encouraging competition in the food and grocery industries
Competition and Consumer Act 2010
Item 1 - Productivity Commission inquiry
5. This item inserts new section 46AA into the Competition and Consumer Act 2010
which requires the relevant Minister to establish an inquiry by the Productivity Commission
into the effectiveness of the amendments made by Schedule 1 of the Bill in relation to milk
prices. The inquiry must also consider whether a divestiture regime should be introduced in
legislation.
6. The intent of this item is to determine the best way to implement a legislative regime
which would allow a court to issue divestiture orders to corporations in the food and grocery
industries and to consider whether this would encourage greater competition, particularly in
relation to the dairy industry.
7. The item requires the Productivity Commission to hold hearings, submit a report and
make recommendations in relation to the inquiry (new subsection 46AA(2)).
8. The item also prevents the Minister from terminating the inquiry before the
Productivity Commission has provided its report to the Minister (new subsection 46AA(3)).
Item 2 - Mandatory Dairy Code of Conduct
9. This item adds a new subsection 51AE(3) into the Competition and Consumer Act
2010 which requires that a mandatory industry code be established for the food and grocery
industry which will include the supply chain from the farm-gate to the supermarket shelf in
respect of the dairy industry.
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Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Saving Australian Dairy Bill 2019
This Bill is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011.
Overview of the Bill
The purpose of the Bill is to ensure the viability of the dairy industry through measures which
will regulate the industry.
Human rights implications
This Bill does not engage any of the applicable rights or freedoms.
Conclusion
This Bill is compatible with human rights as it does not raise any human rights issues.
Senator Hanson
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