1998

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

SENATE

WHEAT MARKETING LEGISLATION AMENDMENT BILL 1998

EXPLANATORY MEMORANDUM

(Circulated by authority of the Minister for Primary Industries and Energy,
the Hon John Anderson MP)

THIS MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY THE HOUSE OF REPRESENTATIVES TO THE BILL AS INTRODUCED

WHEAT MARKETING LEGISLATION AMENDMENT BILL 1998

GENERAL OUTLINE

1.	The Australian Wheat Board (AWB) restructure from a statutory marketing authority to a grower owned company is being implemented by a two stage process of legislative change to the Wheat Marketing Act 1989 (WMA) which currently governs the AWB's operations as a statutory marketing authority.

2.	In the first stage which was undertaken in 1997, amendments to the WMA have, as a transitional arrangement, enabled the AWB to establish a wholly owned subsidiary company (nominated company A) with 2 subsidiaries (nominated companies B and C) to conduct its grain marketing and financing functions from June 1998. Company A is the "parent company" providing financing and other services to its subsidiaries. Company B will be responsible for all matters related to pooling of wheat of the 1997‑98 and subsequent seasons. Company C will undertake domestic trading of grains and other non‑pool commercial activities not handled by the "parent company".

3.	During the transitional phase which ends on 30 June 1999 the only remaining functions of the statutory AWB are to control exports of wheat, manage the Wheat Industry Fund (WIF) and its investments, and finalise pre‑1997‑98 wheat pools.

4. This Bill will put in place the final phase of the Government's agreement to industry proposals for the grower owned company structure to operate from 1 July 1999. At that time, Companies A, B and C will cease to be owned by the AWB and will become grower owned. The Bill makes consequential amendments to the WMA and the Wheat Marketing Amendment Act 1997 (the 1997 Amendment Act). The main items in the Bill relate to: 

•	establishment of the wheat export monopoly mechanism 

•	transfer of WIF to Company A and conversion to B class shares

•	transitional matters arising from cessation of current statutory wheat marketing activities and transfer of assets, liabilities and other matters from the AWB and its nominated companies to grower owned and controlled companies A, B and C on 1 July 1999.

5.	The Bill provides for the establishment of the Wheat Export Authority (WEA) on 1 July 1999 with functions to control exports of wheat, to monitor Company B's performance in relation to the export of wheat and to examine and report on the benefits accruing to growers from the performance of Company B. Company B is given the automatic right to export wheat for five years from 1999 through the Bill.

6.	The WEA will be initially funded from money of the AWB retained for this purpose when other AWB assets are transferred to Company A.

7.	A National Competition Policy review of the wheat legislation will be held in 1999‑2000. Provisions for continued funding of the WEA will be developed in consultation with industry before the expiry of Company B's export monopoly in 2004.

8.	The Bill also provides for the WIF to be transferred from the AWB to Company A to form its capital base from 1 July 1999. Persons who held equity in the WIF immediately prior to its transfer will receive B class shares in Company A in proportion to that equity.

9.	The WIF component of the levy on wheat sales will cease from 30 June 1999. Any outstanding amounts will continue to be collected by the Commonwealth and paid to Company A for subsequent issue as B class shares to the relevant levy payers in accordance with provisions in its Memorandum and Articles of Association (M&As). Regulations will determine when this transitional process will cease, which is expected to be no later than 9 months after 1 July 1999.

10.	The issue of A class shares to growers, giving them controlling rights over Company A, will be handled through the M&As of the company.

11.	Companies A, B and C will commence operations on 1 July 1999 with M&As as determined by the Minister. These will reflect the Grower Corporate Model developed by the industry for the restructure of the AWB and agreed to by the Government. Any subsequent changes to the constitutions of these companies will occur in accordance with the provisions in their M&As.

12.	From 1 July 1999 the Government's underwriting of new borrowings by Company A will cease and all provisions in the WMA related to marketing and financing of wheat and grains by the statutory AWB or its subsidiary companies will be terminated. The Bill provides for transitional arrangements to finalise pools and the Government's underwriting liability and for regulations to be made as necessary to cover these and other transitional matters including staffing and taxation.

13.	The Bill also provides that the AWB will be required to complete the transfer of assets (other than retained monies), liabilities, employees and other matters under the 1997 Amendment Act, from the AWB to Company A and/or its subsidiaries prior to that company becoming grower owned on 1 July 1999.

14.	Taken together, these changes will give growers ownership and control of wheat marketing arrangements with the Government's only remaining involvement being the provision of the export monopoly.

FINANCIAL IMPACT STATEMENT

15.	Under the provisions of the WMA, the Government's underwriting of borrowings by the AWB or Company A to finance advance and related payments for wheat delivered for pooling, ceases with the closure of the 1998‑99 and earlier pools.

16.	The Bill will not alter the Commonwealth's contingent liability associated with such underwriting although transitional provisions will allow borrowings to continue until the closure of those pools.

REGULATION IMPACT STATEMENT

17.	The AWB was established in 1939 to control the marketing of wheat in Australia. It has operated under various Commonwealth statutes with details of wheat marketing changing over time, including deregulation of the domestic market in 1989. The most recent legislation is the Wheat Marketing Act 1989. Under that Act, the AWB has the sole right to export wheat. It also has responsibility for the commercial aspects of wheat marketing through operating wheat pools.

18.	Following lengthy discussion, Government and industry have agreed that from 1 July 1999 responsibility for all commercial aspects of wheat marketing will be taken over by a new grower owned and controlled Corporations Law company structure. Consequently, from 1 July 1999, the only ongoing Government involvement (and therefore regulatory impact) in wheat marketing will be in relation to the export monopoly on wheat which will be managed, from that time, by a small independent statutory body.

19.	The international market for wheat is distorted by the interventionist policies of other grain producing countries such as the US and EU which use varying forms of domestic support and export subsidy programs. Aggressive use of these programs can substantially reduce international wheat prices.

20.	The export monopoly, therefore, provides a tool to conduct the export marketing of Australian wheat to maximise the net returns to growers. It is also considered that the export monopoly provides a net benefit to the wider Australian community.

Problem

21.	The Government has a firm commitment for the current term of office to continue the export monopoly and to provide for it in legislation. A mechanism for doing so is required for the period from 1 July 1999. However, such a mechanism should take into account the Government's obligation under the Competition Principles Agreement to review and assess the export monopoly in 1999‑2000.

Options

22.	Options for provision of the export monopoly post 1999 were developed, in consultation with industry, taking account of three key objectives: to provide certainty for a monopoly; to ensure adequate accountability; and to provide a separation of regulatory and commercial functions.

23.	Certainty is important because the Government has agreed that the monopoly will be retained for its current term of office and be provided to the new grower owned company. Industry places great importance on continuation of the monopoly.

24.	Accountability is important because the monopoly is a gift of Government. It will be provided by Parliament through legislation on behalf of the community as a whole. Consequently the community should be satisfied, through Parliament, that the monopoly is used as intended.

25.	Separation of regulatory and commercial functions has been agreed by the Government in the National Competition Policy and related CommonwealthState Agreements and legislation. It is not appropriate that the new company hold regulatory as well as commercial functions.

26.	In this regard, the AWB currently has a policy of also allowing, under permit, other traders to export certain specialty types of wheat (including 'organic' wheat and wheat exported in bags and containers) where these do not pose any threat to the export marketing of pool wheat in bulk. Given the role this policy plays in terms of enabling specialty/niche marketing, continuation of this policy under any new arrangements needed to be considered.

27.	The options considered for providing the export monopoly included:

•	Legislate the monopoly for all wheat exports to the grower company;

•	Legislate the monopoly for bulk wheat exports to the grower company, with a separate mechanism to manage exports by other than the grower company; and

•	Legislate the monopoly to an independent statutory body to manage, with a legislative requirement that wheat export rights reside with the new grower company for a prescribed period.

28.	While each of these options provides certainty in granting the export monopoly in legislation, the first option does not provide for any separation of regulatory and commercial functions and was therefore ruled out.

29.	The second option raised difficulties in providing an acceptable level of accountability and it was therefore excluded as an option.

30.	The third option provides for certainty, accountability and a separation of regulatory and commercial functions. In regards to accountability, one of the specific functions of the independent body would be to monitor the use of the export monopoly.

31.	Consequently, of the options considered, only the third option met all three objectives.

Recommended Option

32.	The most appropriate option is to legislate the export monopoly on wheat to an independent statutory body to be known as the Wheat Export Authority (WEA). For an initial period of five years the legislation will provide that the new grower company pool subsidiary has an automatic right to export wheat. Requests to export wheat from other than the grower company (as currently happens) would be managed by the WEA to separate regulatory and commercial functions.

33.	The WEA would be formed by retaining the 'shell' of the existing statutory AWB as a suitably renamed and reshaped independent body. Its functions would be limited to: managing and approving requests to export wheat from organisations other than the pool subsidiary; monitoring the use of the monopoly; and accounting to Government and industry as required on performance of its functions.

34.	The WEA would monitor, examine and report on the benefits accruing to growers from the performance of the pool subsidiary's use of its wheat export rights to ensure that the company was using them in accordance with the intentions of Parliament.

35.	The WEA would be overseen by a small, part‑time Board of five members, comprising government, commercial and grower expertise. Some of the reserves of the current AWB are to be passed to the WEA to fund its first five years of operation. There would also be a fee for processing applications for export consents. Other means of funding the WEA beyond the first five years will have to be examined closer to the time.

36.	Continuation of these arrangements will be subject to the outcome of the NCP review in 1999‑2000.

Impact

37.	Post 1999, growers and other participants in the grains industry will not see significant change from the current wheat marketing arrangements as the export monopoly on wheat will be maintained.

38.	However, from 1 July 1999 the regulatory function of considering requests by companies other than the pool subsidiary to export wheat will be undertaken by the WEA. Decisions made by the WEA will be subject to the Administrative Decisions (Judicial Review) Act 1977, as is currently the case for the AWB.

39.	The costs and benefits of the export monopoly will be assessed in 1999‑2000 when it is reviewed in accordance with NCP.

Consultation

40.	The creation of the WEA to manage the export monopoly on wheat has the support of the Grains Council of Australia, which represents grain growers, and the Australian Wheat Board.

Implementation and Review

41.	The Bill provides for implementation of the recommended option for the export monopoly.

42.	As noted above, the export monopoly will be reviewed under NCP in 1999‑2000. The WEA would operate until any different outcome arising from the NCP review was implemented.

43.	Assuming that the NCP Review in 1999‑2000 recommends continuation of the export monopoly, it is envisaged that before the end of the prescribed five year period in 2004 an export monopoly performance review would be held. Specifically, the review would assess the performance of the pooling subsidiary of the grower company (Company B) in its use of its wheat export rights and advise Government on the future operation of the export monopoly, including whether that company should continue to have special export rights. It is envisaged that such a review would be linked with and possibly combined with an NCP review process. It would be up to the Government to decide who would receive any special export rights beyond 2004 and for Parliament to amend the legislation as necessary.

NOTES ON CLAUSES

Clause 1: Short title

44.	The Act will be called the Wheat Marketing Legislation Amendment Act 1998.

Clause 2: Commencement

45.	The Act will commence on the 28th day after it receives the Royal Assent. However, the provisions for the conversion of the statutory AWB to the Wheat Export Authority (WEA) do not commence until 1 July 1999. At that time the marketing and financing functions of the AWB and Companies A, B and C will be taken over by the grower owned companies.

46.	The repeal of Section 18 of the 1997 Amendment Act, which provided for mobility rights under the Public Service Act 1922 of certain staff transferred from the AWB to Company A during the transitional phase of the restructure, will have effect from 1 July 1999.

Clause 3: Schedule(s)

47.	Clause 3 provides that the amendments or the repeal of Acts specified in the Schedule to the Bill and any other Item in the Schedule will have effect according to the terms of that Item. The Schedule refers to the continuation of the AWB as the statutory Wheat Export Authority (WEA), the repeal of current provisions of the WMA concerning the marketing and financing of wheat by the AWB and its companies, and the transfer of assets, liabilities, rights or employees from the statutory AWB to the new grower companies.

Clause 4: Definitions

48.	Clause 4 defines the terms used in the Bill. The definition of Fund unit excludes units of equity in the WIF held by the AWB. These units do not represent equity in the WIF and B Class shares will not be issued to the AWB in respect of such units. References to Companies A, B and C refer to those companies of the AWB which have been so declared by the Minister prior to the commencement of this Clause. Company A is the "parent company" providing financing and other services to its subsidiaries. Company B will be responsible for all matters related to pooling of wheat of the 1997‑98 and subsequent seasons. Company C will undertake domestic trading of grains and other non‑pool commercial activities not handled by the "parent company". These companies will become grower owned at the transfer time (defined as the beginning of 1 July 1999) in accordance with provisions in their M&As.

Clause 5: Amendment of constitutions of nominated companies

49.	This clause requires the Minister to determine before 31 March 1999 new M&As for Companies A, B and C which will govern the operations of these companies after growers and WIF equity holders become the shareholders from 1 July 1999. The contents of these M&As have already been agreed by the industry and Government as the basis for the restructure of the AWB.

50.	Subclause 5(3) ensures that the M&As determined by the Minister will be the initial constitution of Companies A, B and C. After the transfer time the constitution of the relevant company will be able to be changed by members of that company in accordance with the provisions in its M&As (subclause 5(4)). The Ministers power in respect of such a determination ceases at the transfer time.

Clause 6: Cancellation of old shares in nominated company A

51.	Subclause 6(1) provides that the 5 shares held by the AWB on behalf of the WIF in Company A will be cancelled immediately before the transfer time so that the new shareholding of that company from that time will only comprise A and B Class shares as intended by its M&As.

52.	Subclauses 6(2) to 6(5) provide that the cancellation of the AWB's shares will have effect without needing to be confirmed by a court and despite anything in the Corporations Law or potential objections from creditors, who do not have to be given notice of the cancellation.

Clause 7: Issue of B Class shares to holders of Fund units

53.	Subclause 7(1) provides that all persons who held equity in the WIF immediately before the transfer time, as determined under the provisions of the WIF Regulations, will receive one B Class share in Company A for each unit of equity held. The definition of 'Fund unit' in the Bill excludes the AWB from receiving B Class shares for those units held as 'tradeable stock' (ie as a result of previous cashout, buyback arrangements or vesting of unallocated units in the AWB). Upon transfer of WIF assets to company A on 1 July 1999 (Item 23 of the Schedule refers) all units in the WIF will be extinguished.

54.	Subclause 7(2) provides that each B class shareholder is taken to have consented to become a member of Company A. The M&As of this company set out the rights of B class shareholders. The shares will be issued as fully paid and B class shareholders will not incur any initial financial liability. It is intended that B Class shares will be listed on the Australian Stock Exchange as soon as practicable after 1 July 1999.

55.	Subclause 7(3) protects the issue of B class shares from legal challenge.

56.	Subclause 7(4) provides that further issues of B Class shares may be made in accordance with Company A's M&As. It is intended that B Class shares will be issued for any late levy payments received after the initial issue of B Class shares (Clause 8 refers).

Clause 8: Payment to nominated company A in respect of final levy payments

57.	The 1997 Amendment Act provides for the imposition of the WIF component of the wheat levy to cease on 30 June 1999. However, given the provisions of the levy collection legislation (the Primary Industries Levies and Charges Collection Act 1991) and past experience it is expected to be some time after 30 June 1999 before all wheat levies imposed before that date, and any associated late payment penalties, are remitted to the Commonwealth.

58.	Subclause 8(1) provides for any such receipts by the Commonwealth to be paid to Company A after 1 July 1999 when the WIF (which was managed by the then AWB) will cease to exist. A 'cut off' date for receipt of this levy will be set by regulations. It is expected to be no later than 9 months after 1 July 1999.

59.	It is intended that after the initial issue of B Class shares based on WIF equity as at 30 June 1999, further B Class shares will be issued to the relevant levy payers for any subsequent levy received by Company A, in accordance with provisions in the M&As of the company.

Clause 9: Continuation of Commonwealth underwriting of borrowings

60.	This clause provides that borrowings of Company A which were approved by the Minister to finance pool related payments for wheat of the 1997‑98 and 1998‑99 seasons will continue to be underwritten by the Commonwealth until the closure of those pools, in accordance with the provisions of Section 78 of the WMA and any related provisions, despite the repeal of that Section or related provisions (eg definitions of borrowings) after the transfer time (Item 15 of the Schedule refers).

61.	To enable Company A to finance outstanding borrowings for the 1997‑98 and 1998‑99 pools pending their closure it will be able, as a transitional measure, to make new borrowings or rollover existing borrowings after 1 July 1999. Such borrowings would only be made in accordance with a previous approval under Section 77A of the WMA as if that Section and any related provisions (eg definitions of borrowings) had not been repealed. Subclause 9(2) provides that borrowings by Company A in respect of these pools, whether new or replacement borrowings and whether made before or after 1 July 1999, would continue to be underwritten until the closure of the respective pools, in accordance with the provisions of Section 78 of the WMA and any related provisions as if those provisions had not been repealed.

Clause 10: Cessation of mobility rights

62.	The effect of this Section is that where an employee of Company A, B or C had return rights under Division 2, 3 or 4 of Part IV of the Public Service Act 1922 or under the Officers Declaration Act 1928 immediately before the transfer time, those rights are terminated at the transfer time. This reflects that Company A will no longer have a connection to the Commonwealth after the transfer time.

Clause 11: Regulations

63.	Clause 11 provides for the Governor‑General to make regulations prescribing matters required or permitted to be prescribed by the Bill, or necessary or convenient for carrying out or giving effect to the Bill when it is enacted.

64.	Subclause 11(2) provides for the regulations to cover matters of a transitional nature to ensure a smooth changeover from the statutory wheat marketing arrangements by the AWB and its subsidiaries to a grower owned company structure.

65.	Subclause 11(3) specifically provides that regulations can be made for transitional or saving matters related to the operation of the Privacy Act 1988 or the Freedom of Information Act 1982, the rights and entitlements of employees of the AWB or of Companies A, B or C, or in relation to taxation liabilities of the AWB, Companies A, B or C or other persons. For example, it is expected that the regulations could address matters related to withholding tax liability of the AWB, Companies A, B or C or other persons in respect of those borrowings made by the AWB as the deemed agent of Company A, prior to the commencement of Section 22 of the Wheat Marketing Amendment Act 1997.

SCHEDULE 1‑AMENDMENTS

Wheat Marketing Act 1989

66.	Item 1 amends the long title of the Wheat Marketing Act 1989 (WMA) to reflect the limitation of the legislation to export control rather than wheat marketing.

67.	Item 2 repeals the original commencement provisions of the WMA when it became law in 1989. This section of the WMA has no ongoing effect and also refers to provisions which are to be repealed by the Bill.

68.	Item 3 repeals the current definitions in Sections 3 and 3A of the WMA and replaces them with definitions relevant to the functions of the WEA. The WEA is referred to as the Authority in the WMA as amended by the Bill.

69.	The definition of the Grains Council provides that if the Grains Council of Australia no longer exists another body representing grain growers could be prescribed for the purposes of the WMA.

70.	Item 4 repeals Parts 2, 3 and 3A of the WMA which refer to the objects and functions of the AWB, membership, corporate planning, and the establishment of Companies A, B and C during the arrangements pre‑1999. These Parts are no longer relevant from 1 July 1999.

71.	Item 4 also inserts a new PART 2‑The Wheat Export Authority

Division 1‑Establishment and Functions

72.	The new Section 4 of the WMA provides for the AWB to continue as a legal entity but to be known as the "Wheat Export Authority". The Commonwealth Authorities and Companies Act 1997 will apply to the WEA. However, it is not intended to prescribe the WEA as a statutory marketing authority under that Act. Section 25B of the Acts Interpretation Act 1901 sets out how references to a body which has changed its name are to be handled.

73.	The new subsections 4(2) to 4(4) provide that the WEA will be constituted as a body corporate, that judicial notice is to be taken of its common seal, and that the Chairperson can sign documents on behalf of the WEA.

74.	The new subsection 5(1) provides that the WEA's functions will be to control the export of wheat from Australia, to monitor the export performance of Company B including to examine and report on the benefits to growers of the performance of Company B in exporting wheat. This is a consequence of that company having an automatic right to export wheat under the proposed new section 57(1A) of the WMA (Item 9 of the Schedule). The WEA will be responsible for the issue or non‑issue of export consents to persons other than Company B seeking to export wheat. Its monitoring role will not involve oversighting the financial and marketing operations of Company B which are the responsibility of Company B's directors.

75.	The new subsection 5(2) will give the WEA powers to do all things necessary or convenient to be done to undertake its functions.

Division 2‑Membership

76.	The new subsection 6(1) provides for the WEA to comprise 5 persons. There is no board which is separate from the Authority. This is the same arrangement as for the AWB although the number of members is less. All members will be appointed by the Minister for a maximum term of 3 years and hold office on a part time basis (new subsections 6(4) and 6(5)).

77.	It is expected that the person appointed as the Chairperson will have agribusiness or commercial skills and that the Minister would consult interested parties, including the Grains Council, on this appointment. The Bill also provides for the Minister to choose and appoint an independent person, additional to the Chairperson, as a member of the WEA. It is expected that the appointee to this position would have business and commercial skills, or expertise in marketing or finance, to ensure the proper balance of experience and expertise on the WEA. A government member will also be appointed to bring a public and Government policy perspective to deliberations of the WEA.

78.	Two members will be nominated by the GCA for appointment by the Minister. A new subsection 6(2) of the WMA provides that at the time of their appointment one of these members is to be a resident of either Western Australia or South Australia and the other a resident of either New South Wales, Victoria, Queensland or Tasmania. In considering the nominations from the GCA the Minister would need to be satisfied that the potential appointees had the necessary experience and expertise to make a positive contribution to the operations of the WEA.

79.	A new subsection 6(3) of the WMA provides that the appointment of the members nominated by the GCA is valid despite any defect or irregularity with the nomination or appointment.

80.	A new subsection 6(6) of the WMA is inserted to provide that the WEA can continue to carry out its functions and exercise its powers even if there are vacancies in its membership.

81.	New Sections 7 and 8 provide for members to resign or for the Minister to terminate appointments under certain circumstances. These are similar to the provisions for current AWB members under the WMA.

82.	The effect of the new Section 9 is that the remuneration and allowances of members as holders of public office, will be set by the Remuneration Tribunal. In the absence of such a determination remuneration and allowances can be prescribed.

Division 3‑Meetings

83.	The new Section 10 sets out procedures for meetings of the WEA, based on those currently in place for the AWB. Subsection 10(3) provides that 3 members constitute a quorum. Under the Acts Interpretation Act 1901 meetings can be held by telephone or other means.

Division 4‑Finances

84.	The WEA's operations for the five years that Company B will hold the automatic right to export wheat will be funded from monies which will be retained by the AWB (which becomes the WEA under new section 4) and not passed to Company A. This money is likely to come from current reserves held by the AWB and not from open pools or the WIF (Item 23). It is estimated that the WEA's costs will be no more than $1.2 million per year. The Minister will determine the amount to be retained at least three months before the commencement of operations by the WEA.

85.	The export monopoly arrangements will be reviewed before 2004 and it is expected that funding arrangements for the WEA beyond that time would be settled in the context of the outcome of that review.

86.	The new subsection 11(1) provides that the WEA can only expend money in the performance of its functions under the WMA or for payment of remuneration and allowances for members. In addition, the WEA will, subject to any Ministerial guidelines in place, be able to reimburse the Grains Council for reasonable expenditure it incurs in connection with those meetings at which the WEA is required to report (the new Section 15 refers). Surplus money of the WEA can be invested in accordance with the relevant provisions of the Commonwealth Authorities and Companies Act 1997 (new subsection 11(2)).

87.	The new Section 12 will provide that the WEA cannot borrow money without an approval from the Minister. Such an approval could set limits or exempt certain transactions eg use of credit cards and other day to day operations.

88.	The new Section 13 specifies that for the purposes of the Commonwealth Authorities and Companies Act 1997 the financial year of the WEA will commence each 1 October. This will align the financial year of the WEA with that of Company B for ease of monitoring and reporting.

Division 5‑Miscellaneous

89.	A new Section 14 provides for the WEA to employ staff on terms and conditions it determines.

90.	The new subsections 15(1) and 15(2) require the WEA to consult with and report to the Grains Council whenever its Annual Report or an Interim Report under the Commonwealth Authorities and Companies Act 1997 is tabled in Parliament. Subsection 15(3) requires that, in addition to the above reports, the WEA must report at least every 6 months to the GCA and may arrange to report more frequently. The new Section 11 provides for the WEA to reimburse the Grains Council for reasonable expenditure it incurs in connection with those meetings at which the WEA is required to report.

91.	These provisions reflect that the WEA is accountable to both Parliament and also has a responsibility to keep the peak body representing the grains industry informed of the exercise of the export monopoly.

92.	A new Section 16 provides that the WEA must prepare an operational plan and give it to the Minister before the start of the Authority's financial year. The Chairperson must also inform the Minister about any changes to the plan or matters that could affect the WEA being able to act in accordance with its plan. The Minister may issue guidelines to assist the Chairperson in deciding on what matters regarding the plan should be brought to the Minister's attention during a financial year.

93.	Item 5 amends the heading to Part 4 of the WMA to reflect the role of the WEA.

94.	Item 6 repeals the heading to Division 1 of Part 4 of the WMA to reflect the amendments to Section 57 of the WMA and the provision of a right to export wheat to Company B.

95.	Item 7 removes the reference to the AWB as being the sole exporter of wheat as a consequence of the cessation of the AWB's marketing functions from 1 July 1999.

96.	Item 8 substitutes references in paragraph 57(1) (a) to reflect that the WEA now holds this power.

97.	Item 9 inserts a new Section 57(1A) which gives Company B the right to export wheat without a consent from the WEA for 5 years from 1 July 1999. This is consistent with Government policy on the export monopoly.

98.	Assuming that the NCP Review in 1999‑2000 recommends continuation of the export monopoly, it is envisaged that before the end of the prescribed five year period in 2004 an export monopoly performance review would be held. Specifically, the review would assess the performance of the pooling subsidiary of the grower company (Company B) in its use of its wheat export rights and advise Government on the future operation of the export monopoly, including whether that company should continue to have special export rights. It is envisaged that such a review would be linked with and possibly combined with an NCP review process. It would be up to the Government to decide who would receive any special export rights beyond 2004 and for Parliament to amend the legislation as necessary.

99.	Item 10 substitutes references in subsection 57(3) to reflect that the WEA now holds this power.

100.	Item 11 inserts three new subsections to the WMA regarding the giving of consents by the WEA to export wheat.

101.	The WEA must consult Company B about all requests for consent to export wheat. In the case of proposed exports in bulk, ie other than by means of bags or containers, a consent may not be given unless nominated company B has first approved the export. This requirement supports the automatic right given by the Bill to Company B to export wheat and reflects the importance of bulk exports in the overall marketing arrangements. Pending a decision by Parliament whether Company B should continue to have special export rights after 1 July 2004 (see Item 9) these provisions will cease from that date (new subsection 57(3C)).

102.	In issuing consents, the WEA will need to take account of guidelines to be issued by WEA and developed after consultation with Company B (new subsection 57(3E). These guidelines could reflect the current policy of the AWB in granting consents, eg whether the wheat is of a type not normally included in pools, such as organic wheat.

103.	Applications for consent must be accompanied by a fee, prescribed in regulations, to meet the costs of the WEA in processing the request, including consultation with nominated company B (new subsection 57(3D)).

104.	Item 12 substitutes references in subsection 57(4) to reflect that the WEA now holds this power.

105.	Item 13 inserts a new subsection 57(6) which has the effect of taking the specific activities of Company B in exporting wheat under the monopoly arrangement, and the actions of that company regarding export consents under Section 57 of the WMA, outside the scope of Part IV of the Trade Practices Act 1974. The automatic export right and the requirement that it agree to exports other than in bags and containers, given to Company B by this Bill, mean that it will have a considerable degree of market power. By providing that Company B's activities in exporting wheat, as well as that company's actions under or for the purposes of Section 57, are specifically authorised for the purposes of Section 51 of the Trade Practices Act 1974, this subsection will ensure that those actions will be disregarded in deciding whether the company has contravened Part IV of that Act. These provisions do not give Company B exemption from other Parts of the Trade Practices Act 1974 nor do they extend the authorisation to Company B's actions in connection with or related to exporting wheat, for example storage and handling of export wheat.

106.	Item 14 repeals those sections of the WMA relating to the pooling and payment for wheat delivered by growers to the AWB or Company B before 1 July 1999. From that time statutory marketing will be replaced by fully commercial arrangements through the grower companies or other marketers and traders.

107.	Items 15 and 16 repeal those parts of the WMA which are no longer relevant following the cessation of the AWB's current functions, including management of the WIF, from 1 July 1999. A new Division 4 in the WMA provides for financial matters associated with the WEA. Clause 9 of the Bill contains transitional provisions to continue borrowings by Company A in respect of pools of the 1997/98 and 1998/99 seasons, and underwriting of those borrowings until such pools are closed.

108.	A new Section 84 is inserted in the WMA to require Company B to purchase all wheat offered to it for inclusion in a pool operated by that company, provided the wheat meets the standards set by the company. Those standards would include standards relating to the quality of the wheat. Company B will be required to pay a price which is calculated by reference to the net pool return for the particular pool in which the wheat is included. The constitution of Company B will require that it be managed with the objective of maximising the net return to growers who sell wheat into the pools run by the company. This obligation to purchase wheat is a consequence of Company B holding an automatic right to export wheat under the proposed new section 57(1A) of the WMA (Item 9 of the Schedule). The requirement will no longer apply after Company B's automatic right to export wheat ceases from 1 July 2004 (new subsection 84(3)).

109.	Item 17 continues the provision of the WMA that contracts entered into by trading corporations for export or interstate trade are not rendered unlawful by any prescribed State regulations relating to the marketing of wheat or the storage, handling and transport of grain. The removal of the reference to the AWB reflects that its successor, the WEA, will no longer be involved in grain marketing nor will it be a trading corporation.

110.	Items 18 to 21 repeal those parts of the WMA which are no longer relevant following the cessation of the AWB's current functions.

Wheat Marketing Amendment Act 1997

111.	Item 22 repeals Section 18 of the Wheat Marketing Amendment Act 1997 (the 1997 Amendment Act) so that from 1 July 1999 Company A will no longer be considered a Commonwealth authority for the purposes of Part IV of the Public Service Act 1922. The mobility rights of employees transferred from the AWB to nominated company A will cease once that company becomes grower owned on 1 July 1999 (see also Clause 10 of the Bill).

112.	Item 23 adds new Sections regarding the AWB's transfer powers and the transfer of WIF assets.

113.	A new Section 18A compels the AWB to divest itself of all assets, liabilities, rights or employees in accordance with Part 2 of the 1997 Amendment Act prior to 1 July 1999. However, subsections 18A(2) and (3) require the AWB to retain an amount of not more than $6m as determined by the Minister, to fund the operations of its successor, the WEA. This money is likely to come from current reserves held by the AWB and not from open pools or the WIF. This amount has been estimated as sufficient to cover the WEA's expenses such as Board costs and remuneration, staff, accommodation and reporting activities, including reimbursing the Grains Council for reasonable expenditure it incurs in connection with meetings at which the WEA reports.

114.	Grower funding of the WEA is consistent with the current arrangement under which the cost of the AWB's export control and monopoly activities are met by growers through deductions from their net pool returns.

115.	A National Competition Policy review of the wheat legislation will be held in 1999‑2000. Provisions for continued funding of the WEA will be developed in consultation with industry before the expiry of Company B's export monopoly in 2004.

116.	A new Section 18B provide for the WIF and any investments and assets of the WIF to become assets of Company A on 1 July 1999 without any conveyance, transfer or assignment. Company A will become the AWB's successor in law in relation to the WIF assets (subsection 18B(2)) and the provisions of the 1997 Amendment Act regarding stamp duty, registration of land transfers and transfer of legal proceedings will apply (new subsection 18B(3)).