Against the Grain

The single desk is dead policy walking, despite the support not only of its natural and traditional champion, the National Party, but also of the Liberal Party and, less predictably, the Labor Party.

At the political level, moving away from the single desk is difficult because of the number of small but   vocal wheatgrowers who fear the alternative of an open market. We will not see the major Parties moving on the issue in the short term; nor will they allow themselves to be portrayed as over-reacting to the findings of the Cole inquiry.

Their motivations are different: the Coalition is anxious to avoid an accusation that the inquiry was a mistake because it brought on the demise of an Australian rural icon; Labor’s target is the Government, not the single desk, and the objective is to link Ministers with the kickbacks.

However, pressure to get rid of the single desk will come increasingly from wheatgrowers who see their returns eroded by the policy.

Already, the longstanding Western Australian objections to the monopoly are gaining increased coverage. Wheat farmers in Western Australia have been developing specialised, sophisticated wheats catering for specific markets Asian noodle makers, for example or have developed large and sophisticated operations that could manage their own export deals. Many of these growers believe they can get a better deal without AWB.

Against The Grain by Stephen Bartos, published by UNSWPress

One of the difficulties in the debate has been an assumption fostered by uninformed media coverage that wheat is a uniform bulk export. Different wheats have different milling characteristics, and wheat can be of higher or lower quality depending on protein, gluten, moisture and other determinants of grade to say nothing of the quantity of unwanted foreign matter such as rocks, rats or alleged iron filings. The growers of higher-quality wheat have for decades been unfairly treated by a monopoly that brings together wheats of uneven standards in the one shipment. (AWB does offer different grades, but not as finely graduated as some growers can supply.) They will now find a voice.

As the economist AS Watson points out, pooling restricts growers’ business opportunities. Improved communications have given growers access to information that helps counter some of the ‘market failures’ that led to the creation of the Wheat Board. And when the market in domestic wheat was deregulated in the face of opposition from grains industry organisations the outcomes were much better than feared. This is a familiar pattern: deregulation of grains storage, handling and transport after a royal commission report in 1988 was also resisted, and has proven to be a success. The same can be expected in relation to the single desk although this is little consolation to the government that bites the bullet on the issue, because there will be an outcry in the short term.

The Oil-for-Food scandal has made AWB a magnet for adverse publicity of any sort changes in governance arrangements, pricing decisions and problems in marketing have all attracted media criticism. This will continue to make AWB a target for dissatisfied grower groups, and add to pressure on the Government to remove its export monopoly.

Given its limitations, the Cole inquiry will almost certainly be just the beginning of the inquiries into the AWB scandal. But the evidence shows that the Government will do all it can to block any inquiry that seeks to examine the role of Ministers.

There is little prospect of a parliamentary inquiry or a broader royal commission. It is in the Government’s interests to restrict the debate to the question of wrongdoing by AWB and not to examine the broad issues of agripolitics and networks of influence. More detail might emerge via Senate Estimates hearings, but even that may be in doubt.

Relying on what it suggested was a ‘convention’, the Government decided to prevent public servants from answering questions about the AWB affair in the latest round of Estimates hearings because the Cole inquiry was still underway. Until now, however, there has been no convention that issues before a royal commission or an inquiry with royal commission powers could not be the subject of Estimates questions.

To justify its stance, the Government turned to the previous Government’s decision to bar questioning on the controversial Coronation Hill mine as a precedent. That was something Labor had claimed was under Cabinet consideration, and that assertion was contested; but regardless of whether it was before Cabinet or not, there is indeed a convention that matters before Cabinet are not discussed in the Estimates hearings. It is not an exact precedent, though, because nothing the Cole inquiry is looking at has been claimed to be currently before Cabinet.

We need to go back another decade or more to find a closer precedent, a situation where a government barred public servants from answering questions about matters of historical fact related to government actions. That, too, was under a Labor government. The Whitlam Government stopped Treasury officials from answering questions about the ‘loans affair’ although there was a factual record of events that might have been revealed by such questions.

Describing the affair as ‘extraordinary and reprehensible,’ Opposition Leader Malcolm Fraser decided to block the supply bills, which eventually led to the downfall of the Whitlam Government an eventuality the current Government presumably doesn’t want to emulate. There is no indication that the AWB scandal is anything like as close to Ministers as was the loans affair so why the Government chose to take the same approach to Senate questioning is a mystery. Asserting such a convention only makes the Government look like it has something to hide.

In what appeared to be an attempt to get around the restrictions on his inquiry and on other avenues for disclosure, Commissioner Cole asked public servants to volunteer information. While it is politic for the inquiry to make a call like this, public servants know that if they did come forward with information they would be subject to pressure from their Minister, the Prime Minister and ministerial staff pressure conveyed down the line via their Departments. Volunteering information to assist the inquiry would effectively mean their careers would be dead.

But in Senate Estimates hearings the situation is rather different instead of volunteering information, public servants are required to respond to questions. This is why putting public servants on the spot and taking them through an Estimates hearing is likely to be more effective at extracting information than the Commissioner’s calling on them to commit career suicide.

The Government has indicated that questions about the AWB affair will be allowed at Estimates hearings following the conclusion of the Cole inquiry. However, there are other grounds on which the Government might still prevent questions. It could, for example, argue that the affair is subject to further court proceedings in Australia, the United States or elsewhere. If this or some other pretext is used, then AWB is off the table for the remainder of this decade at least. This would be unprecedented but given the Government has a majority in the Senate, there is nothing to prevent it from taking such actions.

Experience shows that Estimates hearings can have an even greater capacity to extract the truth about administrative actions than special-purpose inquiries. Many of the most telling observations about the ‘children overboard’ affair came not from the Senate’s inquiry into ‘a certain maritime incident’ but from the subsequent Estimates hearings.

But it is still an inadequate substitute for a special-purpose reference. Estimates will only be able to get to the role of public servants and the information they have; broader interests will not be canvassed. Further inquiries may be too much to hope for from the Government, but they would certainly assist Australia to learn the lessons from the affair. There is a strong public interest in the broader governance issues being dealt with properly. If they are not, Australia is at risk of repeating the AWB scandal in other industries.

This is an edited extract from Against the Grain: The AWB Scandal and Why it Happened by Stephen Bartos. (UNSW Press) RRP $16.95. This is a Briefings title, a series of book-length current affairs essays published by UNSW Press.