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Wheat export system outdated, says author

Published on 15 November, 2006, Last updated at 00:37 GMT

By Michelle Gratton

THE single desk system of exporting Australia's bulk wheat is "dead policy walking" because the Cole commission has revealed how out of date a monopoly created in 1939 is today, a book on the AWB oil-for-food scandal concludes.

But any move away from a monopoly system will be difficult because AWB is the "buyer of last resort" of wheat, writes Stephen Bartos, former deputy secretary of the federal finance department and now director of the National Institute for Governance.

The future of the single desk, which is operated by AWB, will be decided after the Government receives the Cole report this month. It is already dividing ministers, with Treasurer Peter Costello very critical.

Under its legislation AWB, as buyer of last resort, must accept any wheat that meets its minimum requirements. Small wheatgrowers, including those growing lower-quality wheat, can be expected to strongly resist any moves to change the monopoly, Professor Bartos writes. "There is no economic case for having a buyer of last resort, but there is a political one," he writes in Against the Grain., published next week. "It is the AWB's quid pro quo for its government-supported monopoly.

"If the single desk goes, the rationale for maintaining a buyer of last resort goes too, and the Government knows it will be under pressure to compensate growers who claim to be disadvantaged by any changes."

On the other hand, the pressure to end the single desk will come increasingly from those wheatgrowers "who see their returns eroded by the policy". West Australian growers who have developed specialised wheat for specific markets and believe they can get a better deal without AWB have been vocal in opposition.

The key lesson from the AWB affair "is that transparency is the best defence against corruption - transparency to auditors, media, the public, regulatory bodies and parliament or shareholders. AWB lacked that transparency," Professor Bartos writes.

He says that if the Government wishes to avoid another AWB scandal, it needs not only to reform the regulatory body, the Wheat Export Authority, which has few teeth, "but also to consider other companies with monopoly or market power derived from government legislation, and ensure that the monitoring and supervision are both strong and transparent".

There were warnings of AWB's corruption from at least 2000, but ministers and staff continued to accept AWB assurances.

The Cole inquiry has been restricted to questions of illegality, leaving the broader questions of the operation of the wheat-marketing system to one side.


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