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1
Sugar Industry and Other Legislation Amendment Bill
(No. 2) 2003
SUGAR INDUSTRY AND OTHER
LEGISLATION AMENDMENT BILL (No. 2)
2003
EXPLANATORY NOTES
General Outline
Short Title
The short title of the Bill is the Sugar and Other Legislation Amendment
Bill (No. 2) 2003.
Objectives of the Legislation
The major policy objective of the Bill is to implement regulatory change
in the sugar industry to promote productivity, efficiency and innovation.
Reasons for the policy objectives of the Bill
The Queensland Government has reached the conclusion that reform of
the industry's regulatory structure is a necessity to create a business
environment that will promote the productivity gains essential for
sustainability. The Sugar Industry Act 1999 is hindering the industry from
making the changes it needs.
Comprehensive details of the Government's policy and its understanding
with the Commonwealth Government on the matter and the background to
it can be found in the Government's Policy Paper "Sugar the way forward,
A Statement of the Queensland Government's Position on Regulatory
Reform of The Sugar Industry" which will be tabled in Parliament at the
same time as these Explanatory Notes.
In general, over the past 12 months, several commissioned studies of
significant weight have been prepared regarding the impact of the Sugar
Industry Act 1999 on the industry's competitiveness, productivity and
future viability. These studies are:
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Sugar Industry and Other Legislation Amendment Bill
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· The Independent Assessment of the Sugar Industry (the
Hildebrand Report), commissioned by the Commonwealth
Government;
· "Cleaning up the Act: The Impact of Changes to the Sugar
Industry Act 1999", by the Centre for International Economics
(the CIE Report) commissioned by the State Government; and
· "Review of Constrains on Industry Competitiveness and
Innovation" by Boston Consulting Group (the Boston Report),
commissioned by the Queensland Cane Growers Organisation.
The CIE Report, commissioned by the State Government concluded that
the legislation should be changed in three areas:
· CPA system: removal of legislation underpinning cane
production area (CPA);
· Statutory Bargaining System: removal of statutory bargaining;
· Acquisition of Raw Sugar for the Domestic Market: provision
for exemption from vesting for domestic use of raw sugar whilst
retaining the export single desk.
The way in which the policy objectives are to be achieved by the Bill
This Bill will implement the changes that CIE identified as crucial for
the industry's future. The Act will be renamed the Sugar Marketing Act
1999, to reflect the move from an industry-wide regulatory scheme to a
system establishing a single marketer for raw sugar exports. The
amendments being made by the Bill are:
· Removal of Cane Production Area System
The Bill will seek to remove the concept of Cane Production Areas from
the Act. Formerly known as Assignment, CPAs are, in effect, a licence
allowing a grower to grow cane and supply a particular mill (to which the
grower is "assigned").
The Bill will also remove restrictions on growers being able to transfer
from one mill to another. To remove one of these ties and not the other
would be to unbalance the system and prejudice one side of the industry.
· Removal of the Statutory Bargaining System
The statutory bargaining system provides that a negotiating team, elected
on a one grower-one vote system, negotiates a collective cane supply and
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Sugar Industry and Other Legislation Amendment Bill
(No. 2) 2003
processing contract with the mill. This contract is binding on all holders of
CPA. It is possible to have an individual agreement with the mill outside
the statutory collective, but the mill suppliers' committee is entitled to
know all the terms of this agreement, save the price for cane, and may take
court action where it perceives the individual agreement to impose a
significant adverse effect on growers supplying to the collective. This
process has been identified by CIE as the key restriction in the Act on
productivity gains.
· Creation of cane supply and supply contracts
The Bill supports competitive and market forces to drive positive
outcomes and trends for the sugar industry. The Bill allows growers to
freely engage in the market for the supply of their cane. Importantly the
Bill also enables growers to participate in "opt in" collective arrangements
with millers, as well as other interested third parties. Parties to cane supply
agreements are provided with scope to participate in more than one supply
agreement. Removal of the existing and onerous statutory bargaining
system will result in industry participants benefiting from greater freedoms
to direct and control their own interests.
The supply contract framework, underpinned by a commercial reality,
will be supported by a dispute resolution process that is consistent with
major regulatory reform. The processes of mediation and arbitration on the
terms of supply contracts may be engaged at the election of the parties or in
accordance with the dispute resolution framework for commercial disputes
consistent with the Commercial Arbitration Act 1990.
· Provision for exemption from vesting of Sugar where it is
intended for domestic use
Queensland's single desk marketing arrangements for raw sugar,
operated by Queensland Sugar Limited (QSL), is created by compulsory
acquisition - the Act vests ownership of all sugar, upon manufacture, in
QSL. The amendments will provide a scheme for exemptions, a
transparent and accountable process involving an independent third party
(the Sugar Industry Authority) with the power to grant exemptions from
vesting. The criteria for granting an exemption are framed so that,
providing an applicant can demonstrate the applicant has a domestic use,
the applicant will receive an exemption. The Authority is not given a wide
discretion. This is important to provide confidence for mills and others
investigating alternative uses that their applications will be "as of right"
provided they can demonstrate a domestic use. The system would be
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Sugar Industry and Other Legislation Amendment Bill
(No. 2) 2003
deliberately separated from QSL, because it is a competitor in the domestic
market.
Alternatives to the Bill
There are two alternatives to the current Bill, those being:
· no change; or
· "targeted" deregulation.
Full discussion of these alternatives to the current Bill is included in the
Government's Policy Paper "Sugar the way forward, A Statement of the
Queensland Government's Position on Regulatory Reform of The Sugar
Industry" which will be tabled in Parliament at the same time as these
Explanatory Notes.
The "no change" option is considered an unacceptable option because
CIE show that when the correct analysis is undertaken, growers end up
being $46,000 better off per farm with regulatory change than without;
instead of a -37% gross operating surplus, growers improve by 87%.
Crucially, mills move from loss to gain.
"Targeted" deregulation runs the strong risk of slowing the rate of
change in the industry to the point where it is not able to meet the
challenges of low prices and increased international competition.
Estimated costs for government implementation
It is not anticipated that there will be any administrative cost to
government for implementation of the Bill.
Consistency with fundamental legislative principles
It is arguable that there are some departures in the Bill from fundamental
legislative principles. Any such departure has occurred in the context of a
tension between the fundamental legislative principles outlined in the
Legislative Standards Act 1992 and the need to urgently implement reforms
to the sugar industry in order to ensure that it has an economically viable
future.
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Sugar Industry and Other Legislation Amendment Bill
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Clause 28 - proposed new section 237 - Collective contracts
New section 237 authorises the making of collective supply contracts
under the Act for the purposes of the Trade Practices Act 1974 (Cth) where
they are made between a group of growers and a mill owner who are within
the same region.
The definition of "region" in inserted new section 237 could be
considered a "Henry VIII" provision. Allowing the word "region" to be
prescribed under a regulation enables the Act to be amended by
subordinate legislation. However the ability to prescribe a region in this
way is considered necessary and justified. Flexibility in prescription
enables Government to allow the authorisation to work according to
circumstances required by industry. The "regional" relationships between
groups of growers and mill owners are not necessarily fixed or
ascertainable at any one point in time.
Clause 33 - proposed new sections 386, 387, 390, 391, 407 and 408 and
Clause 37 - proposed new sections 413 and 414--termination of
appointment without compensation
New sections 387, 391, 408 and 414 relate to the termination of
appointment of members of cane production boards, mill suppliers'
committees, and negotiating teams without the payment of compensation.
All these bodies are part-time bodies. In each case the amount of sitting
fees paid to the members is low and designed merely to compensate the
members for the time the member is absent from normal employment.
Since termination of this appointment means that the members will no
longer need to be absent from normal employment, compensation for loss
of the sitting fees is not justified.
New sections 386, 390, 407 and 413 relate to the termination of
employment of any employees of cane production boards, mill suppliers'
committees (with the exception of mill suppliers' committees that are
corporations where the employees remain employees of that corporation),
and negotiating teams. The new clauses provide that those employees will
be entitled to the same rights given to an employee whose employment has
been lawfully terminated under the Industrial Relations Act.
Whilst the Sugar Industry Act enables cane production boards to have
employees and arguably enable the other bodies to have employees,
government enquiries have revealed that none of them has any employees.
Clearly any of the bodies may elect to employ someone between now and
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Sugar Industry and Other Legislation Amendment Bill
(No. 2) 2003
the commencement of these provisions on 1 January 2004. If that occurs
the termination provisions will apply. Under these circumstances
compensation for affected employees is not considered appropriate because
it will have been publicly known before commencement of their
employment that the bodies will be terminated on 1 January 2004. Those
employees would therefore have been on notice when they took the job that
their employment would be terminated on 1 January 2004.
New Clauses 107U and 107V - Rights and liberties of individuals
(maximum penalties)
Very high penalties have been included in the Bill for offences against
the new provisions enabling exemptions from vesting for domestic use of
sugar. These offences relate to commercial dealings, which could
potentially involve large shipments of sugar worth a very significant
amount of money. It is essential that these penalties are high in order to
offset the potential profits that might be made illegally trading sugar on the
export market.
Clause 34 - New sections 393, 394 and 395 - (Abolition of existing cane
production areas), clause 35 - New section 398 - (Termination of
existing supply agreements) and new section 399 - (Undecided
applications taken to have lapsed) - Deprivation of right to own
property and fair compensation
The removal of the cane production area system (CPA) by new section
393 will take away a statutory form of property - the individual CPA. New
subsection 393(3) specifically states that no compensation is payable to the
holder of the CPA. New sections 394 and 395 provide that no
compensation for undecided applications relating to CPA and terminating
any process commenced relating to expansion of CPA. However, CPA
were issued at no cost, their value is minimal and there is little current trade
in CPA. It can also be anticipated that since mills will still require cane for
crushing the CPA system is likely to be replaced by a similar contractual
right of access to mill crushing capacity, as in New South Wales. The value
of the land held by growers on which cane is grown is also likely to
continue to reflect the value of CPA.
By virtue of new section 399 supply agreements will be terminated and
applications to variation of existing applications to vary a collective
agreement will be terminated without payment of compensation.
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Sugar Industry and Other Legislation Amendment Bill
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Termination of the contracts is necessary because the reforms initiated by
the Bill would remove the bodies who would have been empowered to take
action under the agreement, such as mill supplier's committee and
negotiating teams making the contacts meaningless and unenforceable.
Whilst the contracts are terminated, no property rights have been deprived
because growers still retain the right to negotiate for sale of their sugar crop
and mill will retain the right to purchase the cane once a new contract is
negotiated. It should also be noted that there will be very few, if any
collective agreements affected by this clause as the majority are negotiated
annually.
CONSULTATION
· Community
Extensive consultation has occurred with all sectors of the industry on
the issue of industry change. Comprehensive details of that consultation
can be found in the Government's Policy Paper "Sugar the way forward, A
Statement of the Queensland Government's Position on Regulatory Reform
of The Sugar Industry" which will be tabled in Parliament at the same time
as these Explanatory Notes.
· Government
There has been extensive consultation between the Departments of
Primary Industries, State Development, Premier and Cabinet and
Queensland Treasury in the development of the Bill.
RESULTS OF CONSULTATION
· Industry
General
The results of consultation with each sector of the industry are
summarised in the Government's Policy Paper "Sugar the way forward, A
Statement of the Queensland Government's Position on Regulatory Reform
of The Sugar Industry" which will be tabled in Parliament at the same time
as these Explanatory Notes. In general it is apparent that the majority of
economic weight (in terms of both earnings and investment) in the industry
support legislative change. However, larger numbers of small players are
opposed to change.
In summary:
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Sugar Industry and Other Legislation Amendment Bill
(No. 2) 2003
The Milling Sector: the Australian Sugar Milling Council (ASMC),
which covers the ten milling companies in Queensland, has called for
comprehensive legislative change, and rejected "selective tinkering" with
the Act.
The major grower representation body Queensland Canegrowers
Organisation advocate a "targeted" approach to reform.
Harvesters: the Queensland Mechanical Harvesting Association
supports regulatory change. Their members have been locked out of the
statutory bargaining system, allowing both growers and millers to exercise
market power against them.
Individual grower submissions: over 350 submissions were received
from individual growers. The majority of individual growers reflected the
Australian Cane Farmers Association views denying there was a need for
change, arguing instead that all the industry required was good weather, a
better price and immediate government financial assistance to survive.
However, a minority of individual grower submissions came to very
different conclusions. For this group, change in the industry was
absolutely essential. They argued that the legislative arrangements gave
third parties too much power over how they themselves conducted their
businesses.
External Investors: while no formal consultation took place with
external investors, in the course of seeking new investment in Queensland,
the Department of State Development found at least one significant
overseas corporation who expressed views on legislative change. This
Corporation felt that without such changes, the present restrictive
environment jeopardised both their planning and their investment
confidence.
· Government
All Government Departments support the proposals in this Bill.
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Sugar Industry and Other Legislation Amendment Bill
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NOTES ON PROVISIONS
PART 1--PRELIMINARY
Short title
Clause 1 provides that this Act may be cited as the Sugar and Other
Legislation Amendment Bill (No. 2) 2003.
Commencement
Clause 2 provides that:
· sections 3, 10 to 22, 27, 31 to 33 and 40(1), (4), (6) and (7) will
commence on assent. These provisions will enable applicants to
apply for exemptions for subsequent seasons from the vesting of
sugar where it is to be used for domestic purposes; and
· section 40(3) will commence on 1 July 2004.
The remainder of this Act commences on 1 January 2004.
PART 2--AMENDMENT OF SUGAR INDUSTRY ACT
1999
Act amended in pt 2
Clause 3 provides that this part amends the Sugar Industry Act 1999.
Amendment of title
Clause 4 amends the title of the Act to reflect the reforms being
implemented by the Bill. Instead of being an Act about the sugar industry
in Queensland, the Act's purpose will be to provide for the establishment of
marketing arrangements for the domestic and export supply of sugar.
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Sugar Industry and Other Legislation Amendment Bill
(No. 2) 2003
Amendment of s 1 (Short title)
Clause 5 amends the short title of the Act from "Sugar Industry Act
1999" to "Sugar Marketing Act 1999". The change reflects the move from
an industry-wide regulatory scheme to a system establishing a single
marketer for raw sugar exports.
Replacement of ch 2, hdg
Clause 6 changes the heading of Chapter 2 of the Act from "Production,
supply and milling" to "Supply Contracts and Cane Access Rights". The
change is consequential to the amendments made to Chapter 2 by the Bill.
Those amendments delete a substantial amount of the chapter thereby
reducing the scope of its coverage.
Replacement of ch 2, pt 1 (Cane production areas)
Clause 7 replaces Chapter 2, part 1 of the Act. Part 1 related to cane
production areas (CPAs). Formerly known as Assignment, CPAs are, in
effect, a licence allowing a grower to grow cane and supply a particular
mill (to which the grower is "assigned"). Part 1 dealt with:
· the establishment of entitlements, applications for grant;
· variation or cancellation of cane production areas;
· moving cane supply from one mill to another - this will remove
restrictions on growers being able to transfer from one mill to
another. To remove the restrictions created by CPA without
removing this restriction of these would be to unbalance the
system and prejudice one side of the industry;
· registration requirements for the grant variation or cancellation
of CPA;
· cane production area plans; and
· expansion.
Chapter 2, part 1 of the Act is replaced with a new part 1 that provides
for cane supply and supply contracts.
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Sugar Industry and Other Legislation Amendment Bill
(No. 2) 2003
NEW PART 1--CANE SUPPLY AND SUPPLY
CONTRACTS
New Division 1--Cane supply is governed by supply contracts
New section 7 - Object of pt 1
New section 7 provides that the object of part 1 is to ensure the supply by
growers of cane to a mill and the payment to growers in return are governed
by written supply contracts between growers and mill owners.
New Section 8 - Definitions for pt 1
New section 8 provides for definitions for Chapter 2, part 1.
New Section 9 - Supply contract
New section 9 provides that each grower must have a supply contract
with a mill owner for each season. Growers may enter into supply
contracts individually or through a collective but at any rate they must enter
an agreement before the grower supplies cane to the mill.
New section 9 also enables interested third parties to participate in a
supply contract between a mill owner and a grower. Growers and millers
can actively engage parties such as harvesting contractors or other potential
industry participants to become directly involved in commercial
arrangements.
New Section 10 - Individual contract
New section 10 provides that a grower may enter into a supply contract
as an individual for all or part of their supply of cane.
New Section 11 - Collective contract
New section 11 enables two or more growers to enter into a supply
agreement with a mill owner known as a collective contract. Each grower
actively participates in establishing the agreement, as each grower is
required to sign the collective contract. A group of growers may appoint a
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Sugar Industry and Other Legislation Amendment Bill
(No. 2) 2003
bargaining representative to perform negotiations on behalf of the group
with a mill owner.
For the purposes of the Trade Practices Act 1974 (Cth), new section 237
authorises such collective contracts where they are made between a group
of growers and a mill owner who are within the same region.
New section 12 - Variation of supply contract
New section 12 provides that the parties to a supply contract may vary
the contract with the written consent of each contracting party.
New Division 2--Dispute Resolution
New Section 13 - Application of div 2
New section 13 outlines that Division 2 applies where a dispute arises
between any or all of the parties to the supply contract about its terms.
New Section 14 - Parties may choose dispute resolution process
New section 14 provides that where a dispute arises about a supply
contract between the parties, they may agree to:
· refer the dispute to mediation as outlined in new section 16; or
· resolve the dispute in a manner deemed suitable by all parties to
the supply contract.
New Section 15 - No final offer arbitration
New Section 15 makes it clear that the parties cannot use final offer
arbitration as a means to resolve disputes under any circumstances. New
section 15 outlines what constitutes final offer arbitration. The removal of
final offer arbitration:
· discourages parties from submitting preferred and unrealistic
bargaining positions; and
· ensures that an arbitrator may, as is the case in commercial
arbitrations, exercise a discretion to make an award that is
reasonable between the parties.
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Sugar Industry and Other Legislation Amendment Bill
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New Section 16 - Mediation
New Section 16 provides for mediation processes where parties to a
supply agreement are in dispute. If the parties refer a dispute to mediation
and the parties cannot agree on a mediator, the Sugar Industry
Commissioner or a person appointed by the Sugar Industry Commissioner
will act as a mediator. New Section 14 outlines matters about costs of
mediation and that unpaid costs are recoverable as a debt to the mediator.
New section 14 will not affect any rights or remedies to which a party to
the dispute may be entitled.
New Section 17 - Arbitration
New section 17 enables the Sugar Industry Commissioner to refer the
dispute to arbitration where the Sugar Industry Commissioner certifies that
the dispute has not been resolved by mediation under new section 14.
Referral to arbitration must proceed only with the agreement of the parties.
The Commercial Arbitration Act 1990 (CA Act) applies to any arbitration
that occurs in accordance with new section 17. The CA Act provides a
framework for arbitration of commercial disputes, as opposed to resolution
by the court system.
The arbitrator cannot be ordered to pay costs or part costs of the
arbitration. New Section 17 also outlines matters about costs of arbitration
and that unpaid costs are recoverable as a debt to the arbitrator.
Omission of ch 2, pt 2 (Cane supply and processing agreements)
Clause 8 omits Chapter 2, part 2 of the Act relating to Cane Supply and
Processing Agreements. The statutory bargaining system provides that a
mill suppliers' committee (MSC), elected on a one grower-one vote
system, negotiates a collective cane supply and processing contract with
the mill. This contract is binding on all holders of CPA. It is possible to
have an individual agreement with the mill outside the statutory collective,
but the MSC is entitled to know all the terms of this agreement, save the
price for cane, and may take court action where it perceives the individual
agreement to impose a significant adverse effect on growers supplying to
the collective. This process has been identified by CIE as the key
restriction in the Act on productivity gains.
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Sugar Industry and Other Legislation Amendment Bill
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Omission of ch 2, pt 5 (Mills)
Clause 9 omits Chapter 2, part 5 of the Act relating to mills. This part
essentially dealt with how cane production areas were to be affected by the
closure of a mill and how it would affect relevant mill suppliers'
committees, cane production boards and negotiating teams. Since CPA is
being abolished by this Bill, as well as mill suppliers' committees, cane
production boards and negotiating teams, these provisions are now
redundant.
Insertion of new ch 3 pt 1, hdg and s 99
Clause 10 inserts a new heading for Chapter 3, part 1. The new heading
is "Marketing of sugar vested in QSL". Clause 10 also inserts a new
section 99 in the Act which contains definitions for the new Chapter 3, part 1.
Amendment of s 100 (Vesting of sugar in QSL)
Clause 11 amends section 100 of the Act to provide an exemption from
sugar vesting in QSL where the Sugar Industry Authority grants an
exemption for the sugar under part 2 of Chapter 3 of the Act.
Amendment of s 101 (QSL to market and pay for vested sugar)
Clause 12 amends section 101 of the Act which requires that QSL pay
for sugar vested in it. The amendment will replace the term "mill owner"
with "supplier". This amendment recognises that, with the abolition of the
cane supply and processing provision of the Act, it is possible that a party
other than the mill may have legal ownership of the sugar at the point
immediately prior to vesting and be entitled to payment.
Amendment of s 102 (Schemes for payment)
Clause 13 amends section 102 of the Act to substitute "supplier" for
"mill owner". The reasons for this are the same as those set out above for
the amendment to section 101.
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Sugar Industry and Other Legislation Amendment Bill
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Amendment of s 103 - (Production of brands of raw sugar)
Clause 14 amends section 103 of the Act which enables QSL to make
arrangements for the production of particular brands of raw sugar. The
amendment removes sub sections (7) and (8) which empower QSL to give
directions about the manufacture of particular brands. The amendment
reflects the fact that the marketing of sugar needs to be on a more
commercial basis rather than relying on regulation.
Amendment of s 104 (Directions about delivery etc.)
Clause 15 Amends section 104 of the Act to substitute "supplier" for
"mill owner". The reasons for this are the same as those set out above for
the amendment to section 101.
Amendment of s 105 (Sugar quality standards)
Clause 16 amends section 105 which empowers QSL to make standards
about how sugar quality is decided and affects amounts payable to a mill
owner. The amendment substitutes "supplier" for "mill owner". The
reasons for this are the same as those set out above for the amendment to
section 101.
Amendment of s 107 (Exemption of sugar for local consumption)
Clause 17 amends section 107 of the Act. Section 107 provides mills
with the power to sell 0.25% of their production for local consumption.
This is called "exempt sugar".
This right will remain, however this sugar will be referred to as "local
consumption exempt sugar" to avoid confusion with the scheme
exemptions from vesting in clause 18 of the Bill.
Insertion of new ch 3, pt 2
Clause 18 inserts a new Chapter 3, part 2 into the Act providing for
exemptions from vesting in QSL. The new chapter provides for the
retention of vesting, but with a scheme for exemptions. New Chapter 3
provides a transparent and accountable process involving an independent
third party (the Sugar Industry Authority) with the power to grant
exemptions from vesting. The criteria for granting an exemption are
framed so that, providing an applicant can demonstrate the applicant has a
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Sugar Industry and Other Legislation Amendment Bill
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domestic use, the applicant will receive an exemption. The Authority is not
given a wide discretion. This is important to provide confidence for mills
and others investigating alternative uses that their applications will be "as
of right" provided they can demonstrate a domestic use. The system would
be deliberately separated from QSL, because it is a competitor in the
domestic market.
It is the person who owns the sugar immediately prior to vesting that can
apply for the exemption. This is a departure from the existing operation of
the Act under which only mills could deal with sugar.
In general, the current provisions of section 100 of the Act still apply,
that is, all sugar vests on manufacture. The new model will, however
provide for an exception to that general rule for "exempt sugar".
NEW PART 2--EXEMPTIONS FROM VESTING IN QSL
New Division 1--Preliminary
New section 107A - Definitions for pt 2
New section 107A provides definitions for Chapter 3, part 2.
New section 107B - Meaning of "exempt use"
New section 107B details the types of use of sugar that are eligible for
exemption from vesting in QSL. Those uses ("exempted uses") are:
(1) sugar to be sold on the Australian domestic market.
(2) sugar to be used for the manufacture in Australia of alternative
products (eg ethanol).
(3) sugar to be exported not in bulk but in bags at a grade suitable for
human consumption.
(4) for any other similar use to the abovementioned uses.
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Sugar Industry and Other Legislation Amendment Bill
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New Division 2--Obtaining exemption certificate
New Subdivision 1--Exemption applications
New section 107C - Declaration of exemption close day
New section 107C provides that the Sugar Industry Authority will notify
the date for Close of Applications by publication in the Government
Gazette and in any other ways the Authority sees fit.
Before setting the date the Authority must consult with QSL. This will
ensure that the application date will be set early enough to allow processing
of applications in time for QSL to become aware of how much sugar it will
have to commit for sale on the international market.
New section 107D - Applying for exemption
New section 107D enables an applicant to apply to the Sugar Industry
Authority for an exemption from vesting providing the application is made
on or before the exemption close day.
New section 107E - Procedural requirements for application
New section 107E provides that an exemption application must include
the following:
(1) material to show that the Applicant is the owner of the sugar;
(2) a description of the proposed use of the sugar, including material
to show that the Applicant has a contract, arrangement or
understanding with another party ("the On-User") for a dealing
with the sugar for an Exempt Use.
(3) details of the On-User.
(4) a description of the amount of sugar to be exempted, which must
include:
a. either a tonnage figure or a percentage of total
production of a mill area; and
b. another means of identifying the sugar to be exempted,
for example - grade, time of crushing; and
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Sugar Industry and Other Legislation Amendment Bill
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c. the length of time for which the Exemption will apply.
The Authority will be entitled to recover its costs of receiving and
processing applications.
New section 107F - Authority may seek further information or
documents
New section 107F enables the Authority to seek further information or
documents after an exemption application has been made. The Authority
may also require an applicant to verify the correctness of a document by
requiring a statutory declaration.
New Subdivision 2--Deciding exemption application
New section 107G - Decision on exemption application
New section 107G requires the Authority's decisions in relation to the
applications for exemptions to be made within 28 days of the application
being lodged. If the Authority needs to request extra information in order
to make a decision on an application, the time between the request being
made for the extra information and its supply by the applicant will be
added to the 28 day time limit.
If the Authority has not decided the application within the 28 day period,
the application will be deemed to have been granted.
New section 107H - Criteria for decision
New section 107H provides that the Authority must not grant an
exemption application unless the Authority is satisfied that:
· the applicant is the owner of the relevant sugar cane to be
exempted immediately before the sugar is manufactured; and
· the proposed use of the sugar to be exempted under the
exemption application is an exempt use.
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New section 107I - Exemption conditions
New section 107I enable the Authority, in granting an exemption
application, to impose conditions to ensure that the exempt sugar is used
only for an exempt use.
New section 107J - Period of exemption
New section 107J provides that an exemption may be granted for a
season or seasons after the application is made. An application may be
made for one season or multiple seasons and may be granted for the season
immediately after the application is made or for some later year or years.
New Subdivision 3--Action after decision on exemption application
New section 107K - Grant of exemption application
New section 107K requires the Authority to issue to the applicant an
exemption certificate containing certain information as soon as practicable.
New section 107L - Exempt use on copy of exemption certificate
New section 107L requires the Authority to keep a copy of the
exemption certificate.
New section 107M - Authority must give QSL details of exemption
certificate
New section 107M requires the Authority to supply QSL with an
applicant's exemption certificate details within 7 days of it giving the
applicant the exemption certificate.
New section 107N - Notice of refusal of exemption application
New section 107N requires the Authority to provide an applicant with a
notice of refusal of exemption application as soon as practicable after it
makes a decision to refuse the application.
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Sugar Industry and Other Legislation Amendment Bill
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New Division 3--Register of exemption certificates
New section 107O - Keeping register
New section 107O requires the Authority to keep a register of exemption
certificates.
New section 107P - Exemption certificate details
New section 107P requires the register to contain the information stated
on the exemption certificate.
New section 107Q - Inspection of register
New section 107Q enables public inspection of the register.
New Division 4--Procedure for amendment of exemption
New section 107R - Application for amendment of exemption
New section 107R enables a person to apply for a variation of that
person's exemption. If an Applicant is granted an Exemption, and for some
reason they can no longer use the sugar for the Exempted Use or the On-
User has changed, the Applicant must apply to the Sugar Authority for a
variation of the Exemption. The Authority may grant a variation to the
Exempted Use on sighting appropriate evidence of the new proposed use.
The Authority may recover its costs of considering a variation.
New Division 5--Use of exempt sugar
New section 107S - In what ways can exempt sugar be used
New section 107S sets out the ways in which exempt sugar can be used.
The holder of an Exemption or the On-User may only use the sugar
referred to in that exemption in the following ways:
1. for the Exempt Use specified in the Exemption Certificate;
2. for a Variation on the Exempt Use approved by the Authority; or
3. in a contract with Queensland Sugar Limited.
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If sugar is used in any other way apart from above, for example it sells
the sugar to someone other than QSL without an exemption certificate, the
exemption certificate is void and the sugar should be taken to have vested
in QSL on manufacture.
New Division 6--Application of Freedom of Information Act 1992
New section 107T - Exempt matter
New section 107T provides that a document held by the Authority in
connection with an application for exemption or the granting of exemption
is exempt matter under the Freedom of Information Act 1992. It is essential
that the information is exempt matter because it will be of a highly
commercially sensitive nature and for industry to take up new and
innovative uses of sugar on the domestic market it will need to be confident
in the integrity of the system.
New Division 7--Prohibited conduct
New section 107U - False or misleading application
New section 107U makes it an offence to include false or misleading
information in an exempt sugar application or an application to vary an
exemption. The penalty for the offence is 3000 penalty units. The penalty
has been set very high to offset the potentially significant profits that could
be made by illegally selling sugar on the international market. Such illegal
trade would prejudice the single desk marketing of sugar on the
international market.
New section 107V - Improper use of exempt sugar
New section 107V makes it an offence to use exempt sugar improperly.
Again the penalty is 3000 penalty units. The reason for the high penalty is
the same as for new section 107U above.
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New section 107W - Executive officers must ensure corporation
complies with pt 2
New section 107W provides for personal liability of executive officers of
corporations that fail to comply with the exempt sugar provisions.
Amendment of s 124 (Minister's directions to QSL)
Clause 19 amends section 124 of the Act which relates to the giving of
directions by the Minister to QSL. The amendment will remove the
Minister's power to direct QSL about the pricing of sugar for sale to
domestic customers. Currently QSL's marketing activities on the domestic
market are controlled by a Ministerial Direction which provides that
domestic sales must be made at export parity price, which is the prevailing
world price plus the Far East Premium. This was intended to simulate
domestic deregulation, and does provide Australian raw sugar consumers
with competitively priced sugar. The Direction was only necessary so long
as the domestic market remained regulated.
Amendment of s 128 (Membership)
Clause 20 adds to the qualifications of members of the Sugar Industry
Authority may have to include experience in the application of competition
principles. This skill is applicable to the new role given to the Authority
under clause 21 of the Bill of granting certificates allowing use of exempt
sugar.
Amendment of s 135 (Functions of authority)
Clause 21 adds to the functions of the Sugar Industry Authority the
function of granting exemptions from the vesting of sugar and the giving of
exemption certificates.
Amendment of s 138 (Authority's budget)
Clause 22 amends section 138 about the budget of the Sugar Industry
Authority. Currently QSL pays the Authority's budget. The amendment
will mean the QSL will pay the Authority's budget other than the fees and
charges the Authority gets from matters associated with the granting of
exemptions from the vesting of sugar.
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Sugar Industry and Other Legislation Amendment Bill
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Omission of ch 4, pt 6 (Cane production boards)
Clause 23 omits Chapter 4, part 6 of the Act which deals with Cane
Production Boards. Cane Production Boards are small, part-time bodies of
grower and miller representatives with an independent chair that handled
the administration of cane production areas. Cane Production Boards are
no longer required following the removal by the Bill of the cane production
area System and the statutory bargaining system.
Omission of ch 4, pt 9 (Negotiating teams)
Clause 24 omits Chapter 4, part 9 of the Act which deals with
negotiating teams. Negotiating teams are no longer required following the
removal by the Bill of the statutory bargaining system.
Amendment of s 223A (Powers of commissioner)
Clause 25 amends section 223A of the Act that sets out the powers of the
Sugar Industry Commissioner. The amendment will give the
Commissioner the power to acquire, hold, dispose of, and deal with
property including assets transferred to the Commissioner from Cane
Production Boards and Negotiating teams under new sections 388 and 410.
Amendment of s 234 (Appeal to Magistrates Court)
Clause 26 amends section 234 of the Act which enables appeals to the
Magistrates Court against decisions made under the Act. The amendment
will delete appeals against a decision by a cane production board to refuse
an application by a person to register any matter on a register it keeps. The
provision is no longer required because cane production boards will be
abolished by this Bill.
Insertion of new s 234A
Clause 27 inserts a new section 234A which enables appeals to the
District Court from decisions of the Sugar Industry Authority regarding
matters associated with the granting of exemptions from the vesting of
sugar.
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Sugar Industry and Other Legislation Amendment Bill
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Replacement of ss 237-242
Clause 28 omits the following sections which authorised certain
activities under the Trade Practices Act 1974 which would otherwise have
been in breach of that Act for being anti-competitive:
· Section 237 - cane production areas;
· Section 238 - expansions;
· Section 239 - supply agreements - individual agreements;
· Section 240 - supply agreements - collective agreements;
· Section 241 - supply agreements - payments;
· Section 242 - cane quality programs.
All these sections have become redundant following the reforms being
implemented by this Bill. Clause 28 inserts new section 237 which
provides an authorisation for collective contracts under the Act for the
purposes of the Trade Practices Act 1974 (Cth).
New Section 237 -Collective Contracts
New section 237 authorises the making of collective supply contracts
under the Act for the purposes of the Trade Practices Act 1974 (Cth) where
they are made between a group of growers and a mill owner who are within
the same region.
New section 237 specifies the extent to which the authorisation applies
in relation to collective contracts. Specifically authorised activities under
new section 237 are:
· the acceptance and crushing of cane by a mill at a time fixed
under a collective agreement;
· the payment of a price for cane by a mill owner to a grower under
a supply agreement mentioned in this section;
· the receipt of a price for cane by a grower from a mill owner
under a supply agreement mentioned in this section; and
· a financial incentive scheme of premiums, discounts and
allowances relating to cane and sugar quality or to anything that
may affect cane and sugar quality having regard to best practice
under a supply agreement mentioned in this section.
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Sugar Industry and Other Legislation Amendment Bill
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Omission of s 246 (Sugar Price Directions)
Clause 29 omits section 246 which authorised the issuance of sugar
price directions. Section 246 is redundant following the reforms being
implemented by this Bill.
Omission of s 248 (General provisions about show cause proceedings)
Clause 30 omits section 248 of the Act which sets out general provisions
about show cause provisions. The section is no longer required because the
only such requirement is in section 32 of the Act about cane production
boards cancelling cane production area. Section 32 is being omitted from
the Act by this Bill.
Omission of ch 10, pts 1 and 2
Clause 31 omits parts 1 and 2 of Chapter 10 of the Act. Chapter 10 dealt
with transitional provisions related to the transition from the Sugar
Industry Act 1991 to the Sugar Industry Act 1999. These provisions have
served their purpose and are no longer required.
Amendment of ch 10, pt 3, hdg
Clause 32 omits the heading to part 3 of Chapter 10 and provides for a
new heading for Chapter 10, part 1 entitled "Transitional provisions for
Sugar Industry and Other Legislation Amendment Act 2003".
Insertion of new ch 10, pt 2
Clause 33 inserts a new part 2 of Chapter 10 of the Act that provides for
transitional provisions for the Sugar and Other Legislation Amendment Act
2003.
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Sugar Industry and Other Legislation Amendment Bill
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NEW PART 2--TRANSITIONAL PROVISIONS FOR
SUGAR AND OTHER LEGISLATION AMENDMENT
ACT (No. 2) 2003
New Division 1--Preliminary
New section 373 - Definitions for pt 2
New section 373 includes definitions for part 2 of the new Chapter 10.
New Division 2--Dissolution of cane production boards
New Subdivision 1--Interpretation and application
Cane Production Boards (CPBs) are to be abolished under this Bill. To
facilitate the dissolution of CPBs the provisions of this Division will enable
the CPBs to transfer their assets and liabilities to a receiving entity
provided that that transfer occurs 1 January 2004. If no receiving entity is
found by that date, the assets and liabilities of the CPB transfer instead to
the Sugar Industry Commissioner.
New section 374 - Definitions for div 2
New section 374 inserts definitions for Division 2 of the new Chapter 10.
The new Division relates to the dissolution of cane production boards.
New section 375 - Application to transfers from more than 1 board
New section 375 enables the provisions of Division 2 to apply to the
transfer of assets and liabilities of multiple Cane Production Boards
(CPBs) to a single receiving entity.
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Sugar Industry and Other Legislation Amendment Bill
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New Subdivision 2--Voluntary dissolution
New section 376 - Decision to transfer to person
New section 376 enables a CPB to decide to dissolve and transfer its
assets and liabilities to a person before 1 January 2004.
New section 377 - Things that must be decided for the transfer
New section 377 requires the board of a CPB to decide the person (the
"receiving entity") it will transfer its assets and liabilities to.
New section 378 - Deciding the receiving entity
New section 378 sets out the conditions that a CPB board must meet
before deciding on a receiving entity. Those conditions are that the board
has received written notice from the receiving entity that it consents to the
transfer and that the board is satisfied that the relevant mill owner and a
majority of growers who supply cane to the mill consent to the transfer.
New section 379 - Notice of decision about receiving entity
New section 379 requires the board of a CPB to give the Minister notice
of its choice of a receiving entity.
New section 380 - Minister's decision
New section 380 requires the Minister to consider the notice of decision
provided by a CPB board under new section 379. If the Minister considers
that all requirements of this Act have been met, the Minister must approve
the transfer. If the Minister does not consider that all the requirements of
the Act have been complied with, the Minister must refuse to approve the
transfer and state the reasons for the refusal.
New section 381 - Transfer and dissolution
New section 381 provides that on the transfer day, all of the boards
assets and liabilities are transferred to and become the assets and liabilities
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Sugar Industry and Other Legislation Amendment Bill
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of the receiving entity. On the transfer day the board of the CPB is
dissolved.
New Subdivision 3--Provisions facilitating transfer
New section 382 - Exemption for cooperatives
New section 382 excludes the operation of section 268 of the
Cooperatives Act 1997 to the transfer of assets from a board to the
receiving entity if the receiving entity is a cooperative. This amendment
will allow the smooth transfer of a CPB to a cooperative by waiving the
usual rules for acquisition and disposal of assets by cooperative.
New section 383 - Registration of transferred assets
New section 383 sets out evidentiary provisions relating to the transfer
of assets from a board to the receiving entity.
New section 384 - References to board
New section 384 provides that references to the board in an Act or
document existing before dissolution will, from its dissolution, take effect
as references to the receiving entity.
New section 385 - Continuity of proceedings and matters
New section 385 provides that proceedings that had commenced or that
could have been taken if a board continued to exist, may be continued or
commenced against the relevant receiving entity.
New section 386 - Employees
New section 386 provides that on the transfer day any employees of a
board will have their employment terminated unless the receiving entity
agree to continue that employment. An employee whose employment is
terminated has the rights given to an employee under the Industrial
Relations Act.
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Sugar Industry and Other Legislation Amendment Bill
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New section 387 - Members cease holding office
New section 387 provides that each person who was an officer of the
board goes out of office on the transfer day. No compensation is payable
for the persons losing office on the transfer day.
New subdivision 4--Automatic dissolution if no receiving entity
This subdivision deals with the situation where a cane production board
has failed to nominate a replacement entity by 1 January 2004 or the
Minister has refused to approve the transfer to the nominated replacement
entity. In these circumstances transfer will be made to the Sugar Industry
Commissioner.
New section 388 - Automatic dissolution
New section 388 provides that if a board has not given the Minister a
notice under new section 379 or the Minister has refused to approve a
notice, the boards and assets will transfer to the Sugar Industry
Commissioner on the transfer day (1 January 2004).
New section 389 - Continuity of proceedings and matters
New section 389 provides that proceedings that had commenced or that
could have been taken if a board continued to exist, may be taken against
the Commissioner.
New section 390 - Employees
New section 390 provides that on the transfer day any employees of a
board will have their employment terminated. An employee whose
employment is terminated has the rights given to an employee under the
Industrial Relations Act.
New section 391 - Members cease holding office
New section 391 provides that each person who was an officer of the
board goes out of office on the transfer day. No compensation is payable
for the persons losing office on the transfer day.
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Sugar Industry and Other Legislation Amendment Bill
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Insertion of new ch 10, pt 2, div 3
Clause 34 inserts a new Division 3 into Chapter 10, part 2 dealing with
the abolition of cane production areas.
New Division 3--Abolition of cane production areas
New section 392 - Definition for div 3
New section 392 inserts definitions for Division 3.
New section 393 - Abolition of existing cane production areas
New section 393 provides that cane production areas are abolished and
that no compensation is payable in respect of that abolition.
New section 394 - Undecided applications taken to have lapsed
New section 394 provides that any applications for the grant, variation or
cancellation of cane production area are taken to have lapsed. No
compensation will be payable for the lapse.
New section 395 - End of processes relating to cane production areas
New section 395 provides that any process that had commenced seeking
expansion of the CPA area of a mill is ended with no compensation
payable.
New section 396 - Existing instrument, agreement, understanding and
undertaking
New section 396 will preserve the legal affect of any contract which
identified a grower by reference to the grower's cane production area.
Insertion of new ch 10, pt 2, div 4
Clause 35 inserts a new Division 4 of Chapter 10, part 2 dealing with
the termination of supply agreements.
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Sugar Industry and Other Legislation Amendment Bill
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New Division 4--Supply agreements
New section 397 - Definition for div 4
New section 397 provides definitions for the new Division 4.
New section 398 - Termination of existing supply agreements
New section 398 provides that any existing supply agreements are
terminated with no compensation payable.
New section 399 - Undecided applications taken to have lapsed
New section 399 provides that any applications that have been made for
a variation to a collective agreement are deemed to have lapsed with no
compensation payable.
Insertion of new ch 10, pt 2, div 5
Clause 36 inserts a new Division 5 of Chapter 10, part 1 dealing with the
termination of mill suppliers' committees.
New Division 5--Mill suppliers' committees
New Subdivision 1--Preliminary
New section 400 - Definition for div 5
New section 400 provides definitions for the new Division 5.
New Subdivision 2--Incorporated mill suppliers' committees
New section 401 - No effect on corporate status
New section 401 provides that if a mill suppliers' committee has
corporate status, this new division has no affect on that corporate status.
This provision will have application to the Kalamia mill suppliers
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Sugar Industry and Other Legislation Amendment Bill
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committee, which is incorporated. Whilst that committee will cease to
have functions under this Act, the company will continue to exist.
New Subdivision 3--Transfer of assets and liabilities of unincorporated
mill suppliers' committees to replacement corporation
New section 402 - Application of sdiv 3
New section 402 provides that this Division applies to a mill suppliers'
committee that is not a corporation.
New section 403 - Definitions for sdiv 3
New section 403 provides definitions for the new subdivision 3 of
Division 5.
New section 404 - Transfer of mill suppliers' committee's assets and
liabilities
New section 404 provides that a mill suppliers' committee's assets and
liabilities are transferred to the "replacement corporation". The
background to this amendment is that over 75 years of compulsory levies
under the now repealed Primary Producers' Organisation and Marketing
Act 1926 (PPO&M Act), the Canegrowers organisation and its subsidiary
bodies at mill and district level accumulated significant assets. Because the
subsidiary bodies were not incorporated under the PPO&M Act, the central
organisation in Brisbane held these bodies' assets in trust. While the
PPO&M Act only required land to be held in trust (section 30B), industry
practice was that, the Canegrowers organisation, as the only incorporated
body, also held effective control over other, non-real assets.
As part of removing the unconstitutional compulsory levies under the
Primary Industries Bodies Reform Act 2000 (PIBR Act), the Canegrowers
organisation was transformed from a statutory body (Queensland Cane
Growers' Organisation) to a private company (Queensland Cane Growers'
Organisation Limited referred to in this subdivision as the replacement
corporation). The assets that were held in trust for the subsidiary bodies
were continued to be held in that capacity, this time by the new private
company.
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Sugar Industry and Other Legislation Amendment Bill
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The PIBR Act also enables growers in an area to either change the
trustee or transfer the trust assets to another corporation. If that has
occurred the trusts being transferred under this Bill will go to that new
trustee or corporation.
Assets from these trusts are to be used for local purposes and have been
used to fund the activities of mill suppliers' committees under the Sugar
Industry Act. Accordingly it is considered appropriate to transfer the assets
and liabilities of mill suppliers' committees to these trusts.
New section 405 - Purpose trust for eligible growers
New section 405 provides that the assets and liabilities transferred to the
replacement corporation are to be held against the trusts referred to above.
New section 406 - Exemption for cooperatives
New section 406 provides that if the replacement corporation is a
cooperative, section 268 of the Cooperatives Act 1997 (Acquisition and
disposal of assets) does not apply to the transfer of the mill suppliers'
committee's assets and liabilities to the replacement corporation.
New section 407 - Employees
New section 407 provides that on 1 January 2004 any employees of a
mill suppliers' committee will have their employment terminated. An
employee whose employment is terminated has the rights given to an
employee under the Industrial Relations Act.
New section 408 - Members cease holding office
New section 408 provides that each person who was a member of a mill
suppliers' committee goes out of office on 1 January 2004. No
compensation is payable for the persons losing office on the transfer day.
Insertion of new ch 10, pt 2, div 6
Clause 37 inserts a new Division 6 of Chapter 10, part 2 dealing with
the abolition of negotiating teams.
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Sugar Industry and Other Legislation Amendment Bill
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New Division 6--Abolition of negotiating teams
New section 409 - Definitions for div 6
New section 409 provides definitions for the new Division 6
New section 410 - Transfer to commissioner
New section 410 provides that on 1 January 2004 the assets and
liabilities of negotiating teams transfer to the Sugar Industry
Commissioner.
New section 411 - Abolition
New section 411 provides that on 1 January 2004 each negotiating team
is abolished.
New section 412 - Continuity of proceedings and matters
New section 412 provides that proceedings that had commenced or that
could have been taken if a negotiating team continued to exist, may be
taken against the Commissioner and all matters started by a negotiating
team may be completed by the Commissioner.
New section 413 - Employees
New section 413 provides that on 1 January 2004 any employees of a
negotiating team will have their employment terminated. An employee
whose employment is terminated has the rights given to an employee under
the Industrial Relations Act and may enforce those rights against the
Commissioner.
New section 414 - Members cease holding office
New section 414 provides that each person who was a member of a
negotiating team goes out of office on 1 January 2004. No compensation is
payable for the persons losing office on the transfer day.
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Sugar Industry and Other Legislation Amendment Bill
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Insertion of new ch 10, pt 2, div 7
Clause 38 inserts a new Division 7 of Chapter 10, part 2 dealing with
appeals.
New Division 7--Appeals
New section 415 - Definitions for div 7
New section 415 provides definitions for the new Division 7.
New section 416 - Appeal to Magistrates Court against board's
decision
New section 416 provides that any appeals to the Magistrates Court
against a decision of a cane production board that have been commenced or
which could have been made lapse on 1 January 2004. Any such appeal
will become irrelevant
New section 417 - Appeal to District Court against Magistrates Court's
decision
New section 417 provides that any appeal from a Magistrates Court to
the District Court relating to a decision of a cane production board lapses.
Insertion of new ch 10, pt 2, div 8
Clause 39 inserts a new Chapter 10, part 2, Division 8 relating to
injunctions.
New Division 8--Injunctions
New section 418 - Definitions for div 8
New section 418 provides definitions for the new Division 8.
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Sugar Industry and Other Legislation Amendment Bill
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New section 419 - Undecided applications taken to have lapsed
New section 419 provides that applications for injunctions relating to
repealed provision lapse on 1 January 2004.
New section 420 - Injunctions of no effect after commencement
New section 420 provides that injunctions granted that relates to a
repealed provision have no effect after 1 January 2004.
Amendment of schedule (Dictionary)
Clause 40 amends the dictionary to delete definitions that are no longer
relevant following passage of this Bill.
PART 3--MINOR AND CONSEQUENTIAL
AMENDMENTS OF ACTS
Acts amended--schedule
Clause 41 makes a number of minor consequential amendments to the
Sugar Industry Act, the Duties Act 2001, Liens on Crops of Sugar Cane Act
1931, Plant Protection Act 1989, Transport Infrastructure Act 1994 and
Transport Operations (Road Use Management) Act 1995
© State of Queensland 2003