David Littleproud’s promised changes to the sugar industry’s code of conduct are eagerly awaited
The code was intended to neutralize the power of sugar mills which were seen by cane growers as having too much power over contract prices and making excessive profits from processed cane.
The code gave producers access to mandatory pre-contract arbitration, which the mills said would kill any new capital investment in the sector.
The Queensland Productivity Commission and the Federal Productivity Commission both agreed that the pre-contract arbitration clause would kill investment.
Essentially, the code was an insurance policy against the repeal of state legislation imposed by the Queensland Parliament with the backing of former Labor and Independent MP Billy Gordon.
The Sugar Industry (Real Choice in Marketing) Amendment Act 2015 gave sugar cane growers a choice of where sugar was marketed. This law has not been repealed.
The Department of Littleproud and the Treasury undertook a statutory review of the Code in 2018.
This recommended modifying the wording of the pre-contractual arbitration clause in order to avoid the unintended consequence of opening up all the mill’s sources of income to producers’ claims.
Currently, the mills take around a third of the cane supplied to them and are entitled to the mill’s revenues from molasses, bioethanol and electricity.
A joint press release by Littleproud and National Liberal Party MP Ken O’Dowd in December 2018 said the government accepted this recommendation and would make the change.
The press release stated, “The code will also be amended to clarify that pre-contract arbitration applies only to raw sugar and no other products obtained from sugar cane.”
Three years later, Littleproud has made no announcement about changes to the code amid suspicions in the industry that some bargains have been struck behind closed doors.
Additionally, the government has not released the post-implementation review of the code which was expected to be completed by April 2019.
The Office of Best Practices Regulation said in May this year that the post-implementation review had not been published and therefore the code was “non-compliant”.
If Littleproud were to go ahead with the promised changes to the code, it would be a red rag for a bull for Christensen, who prides himself on supporting sugar cane growers.
Palmer, Hanson and Katter would also add up, given the feverish atmosphere in Far North Queensland following Prime Minister Scott Morrison’s backing for net zero emissions by 2050.
Morrison was the treasurer when the sugar industry code was introduced and is said to have supported an amendment to the code to remove the pre-contractual arbitration clause.
But the last thing Morrison wants is another fight with his cabinet colleagues over an issue that could threaten the coalition seats in Far North Queensland.
Another twist on this classic protectionist movement in Queensland is the Australian Competition and Consumer Commission’s repeated misrepresentation in its annual reports that it is the sugar industry’s code enforcer.
There is talk in the sugar industry that the ACCC wants the power to change regulations under the Competition and Consumer Act without parliamentary scrutiny.