Politics, not reason
Fear of competition is a poor basis for policy
AUSTRALIAN wheat exporter AWB Ltd has in recent years proved itself incapable of managing the nation's wheat pool. Put aside for a moment the fact it funnelled money to Saddam Hussein in the lead-up to the Iraq war, that it sought to mislead the Howard Government about this, that it deceived the UN, and that it probably put the lives of Australian soldiers at risk by bolstering Saddam's regime in a time of war. From a purely business point of view, AWB has been unable to provide the benefits it claims. A report by the Wheat Export Authority last month found that small Australian companies which sell wheat in bags, as opposed to bulk, achieved better prices than AWB last year. Payments to farmers during the past financial year may have been as much as 8 per cent lower than expected.
The non-negotiable fee that AWB charges for its services -- about $60million a year -- is extraordinarily high, especially when, as this year, the harvest is small. The obvious solution is to take the right to manage the national pool away from AWB and allow other companies to export wheat. Australian grain growers would then be able to do as all other businessmen do: sell their product to whomever they choose, at whatever price and paying whatever fee they consider reasonable.
Instead, the cabinet and the Coalition are at war over the issue, a sure sign that politics, not reason, is at play. The Nationals do not want to scrap the single desk because they fear a backlash from growers -- there are about 30,000 of them -- in an election year. The party seeks to preserve one of the last vestiges of agrarian socialism, not for its economic benefit but for political gain. Federal Agriculture Minister Warren Truss has said that AWB deserves a second chance because it has cleaned up its act since the Iraq scandal.
But the issue is wider than AWB. The wheat marketing system itself is under review. In an effort to buy time, John Howard sent businessman John Ralph around the nation last year, seeking the views of grain growers. He duly delivered his report, which is believed to say that most growers would like to keep the single desk system. This is an instinct based on fear of competition -- a poor platform on which to build policy.
There is no place for monopolies in modern economies. It is preposterous to force dynamic young grain growers in Western Australia to sell only to AWB -- or, indeed, to any company granted the exclusive right to export the nation's pool of wheat -- at whatever price is offered, and to pay whatever fee is imposed on the transaction regardless of performance.
The Prime Minister has said he will deliver an outcome that is in the interests of wheat growers. That can only mean complete deregulation. Grain growers deserve the freedom to enter a free market -- the freedom to prosper, or if it be the case, to fail.
Fear of competition is a poor basis for policy
AUSTRALIAN wheat exporter AWB Ltd has in recent years proved itself incapable of managing the nation's wheat pool. Put aside for a moment the fact it funnelled money to Saddam Hussein in the lead-up to the Iraq war, that it sought to mislead the Howard Government about this, that it deceived the UN, and that it probably put the lives of Australian soldiers at risk by bolstering Saddam's regime in a time of war. From a purely business point of view, AWB has been unable to provide the benefits it claims. A report by the Wheat Export Authority last month found that small Australian companies which sell wheat in bags, as opposed to bulk, achieved better prices than AWB last year. Payments to farmers during the past financial year may have been as much as 8 per cent lower than expected.
The non-negotiable fee that AWB charges for its services -- about $60million a year -- is extraordinarily high, especially when, as this year, the harvest is small. The obvious solution is to take the right to manage the national pool away from AWB and allow other companies to export wheat. Australian grain growers would then be able to do as all other businessmen do: sell their product to whomever they choose, at whatever price and paying whatever fee they consider reasonable.
Instead, the cabinet and the Coalition are at war over the issue, a sure sign that politics, not reason, is at play. The Nationals do not want to scrap the single desk because they fear a backlash from growers -- there are about 30,000 of them -- in an election year. The party seeks to preserve one of the last vestiges of agrarian socialism, not for its economic benefit but for political gain. Federal Agriculture Minister Warren Truss has said that AWB deserves a second chance because it has cleaned up its act since the Iraq scandal.
But the issue is wider than AWB. The wheat marketing system itself is under review. In an effort to buy time, John Howard sent businessman John Ralph around the nation last year, seeking the views of grain growers. He duly delivered his report, which is believed to say that most growers would like to keep the single desk system. This is an instinct based on fear of competition -- a poor platform on which to build policy.
There is no place for monopolies in modern economies. It is preposterous to force dynamic young grain growers in Western Australia to sell only to AWB -- or, indeed, to any company granted the exclusive right to export the nation's pool of wheat -- at whatever price is offered, and to pay whatever fee is imposed on the transaction regardless of performance.
The Prime Minister has said he will deliver an outcome that is in the interests of wheat growers. That can only mean complete deregulation. Grain growers deserve the freedom to enter a free market -- the freedom to prosper, or if it be the case, to fail.
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