Bill Heffernan (NSW, Liberal Party) Share this | Link to this | Hansard source

Today I rise to talk about something that the press has been full of in recent times—that is, the proposed takeover of GrainCorp by ADM. I have been very disappointed in most of the commentary both in the financial press and in this place. It has been about the politics of the issue; very little of the detail has been dealt with. It is quite a serious matter for Australia's wheat growers. There are people on both sides of the argument. At the start, I would like to congratulate Alison Watkins on her move from GrainCorp to Coca-Cola. In the Senate committee hearings I asked her whether she was concerned about the reputation of ADM. She did say that she was not concerned about the reputation of ADM; she was concerned about the best deal she could get for the shareholders. On ADM—and I said this then—it beggars belief why the US state department would put out a press release somehow criticising the Australian government and the intestinal fortitude showed by the Treasurer, Mr Joe Hockey, on this issue when they know that ADM have a reputation as one of the worst corporate crooks in America's corporate history, involving everything from a $400 million settlement in a price-fixing arrangement to $100 million fines. They currently have a $700 million litigation matter with the US, Brazilian and Argentinian governments which is about tax avoidance.

To give you an idea of the challenge to maintaining the national interest for Australian citizens, one of the great challenges in the national interest is revenue leakage. Last year, it was estimated there was $3 trillion—not billion—of tax avoidance through the incapacity of G20 nations to audit transfer pricing. That does not take into account the derivative swap market. I think the derivative swap market combined with a hedge is what the ADM have got themselves into litigation over. I see they have set aside $50 million in their balance sheet to try to come to an arrangement with the US, Brazilian and Argentinian governments.

With that sort of track record, I am not too sure why the US state department would want these people to come out here and buy an infrastructure arrangement which is a monopoly and which came out of the Grain Handling Authority, a government agency set up to provide a service to growers. As the recently resigned CEO said, 'We've got to act in the interest of shareholders.' I note that 73 per cent of the shareholders are offshore investor shareholders. I think 35 per cent of those people in recent times—and I actually have the documents, but I have not completed them, so I will not table all of them today—have been the hedge funds, and the hedge funds have been doing a bit of exiting in recent days. I think 16 per cent of the shareholders, maybe a few more, would have paid tax in Australia.

If I could just go to the couple of issues that have been raised: having had the intestinal fortitude as a government to take this decision against a lot of criticism, we now have to go about fixing what is wrong with the grain-handling system in Australia. To that end—and I note my National Party colleague is in the chamber—I propose in the new year to bring new terms of reference to the Senate for an inquiry into how to fix what seems to be at risk of being broken.

Sadly, it is my duty today to also inform the Senate that I think GrainCorp has misled its shareholders. In fact, its chairman, Mr Taylor, has lied to the Australian people. Today's Australian tells the story:

GRAINCORP has confirmed it will begin closing grain collection sites before the next harvest. But it has denied claims that it warned federal politicians more than 100 of its 280 grain collection points would have to be closed next year if the Archer Daniels Midland bid was blocked.

Sadly, that is a lie. On 14 November at 3.30 at a meeting which included CEO Alison Watkins, chairman Don Taylor, director David Trebeck and government relations director Angus Trigg to brief the National Party—and I am reading from a contemporaneous note of the meeting—Alison Watkins indicated that because of the position GrainCorp would find itself in next year they may have to close around 150, somewhere in excess of 100, receival sites. 'I would have great difficulty, as reinforced by Mr Taylor, in raising finance capital, having promised before the bid started from ADM that they would invest $200 million in infrastructure improvements.' Bear in mind that they did not actually say whether it was going to be in Australia or offshore, but they are now saying they are going to have great difficulty. If they are having great difficulty and can inform a private meeting of politicians, why did they not inform the market? I think, probably, unless he has a useful explanation—and I can assure him I am telling the truth about what happened—Mr Taylor should resign. That is just a matter for GrainCorp.

Can I go to a statement he made yesterday in The Australian which says:

Mr Taylor said up to 140 buyers competed for Australian grain, and GrainCorp had collection sites that allowed rivals to bid for incoming grain.

Well, damn me. I am sorry, Mr Taylor, but I have a letter from a Mr Andrew Earle, who was the Thallon silo committee chairman for the last 12 years—that is the GrainCorp silo site. He has a very proud record and this includes 'building the site from 150,000-tonne capacity to 320,000-tonne capacity, improving the daily intake from 6,700 tonnes per day and up to 100 road trains queuing outside the depot to receiving 20,500 tonnes per day with minimal queuing.' I congratulate GrainCorp—the same thing has happened at Junee. They have done a good job. In recent years I have expressed concerns about a reduced service level, particularly with cliff-face pricing which gives a serious advantage to the grain handlers and storage because they then blend. You can fall off the cliff, and they get a higher price because they blend. He said he flew to Sydney to speak with Alison Watkins to say: 'Unless we received improved service we would be looking to store our own grain. We are in the final stages of a development application process.'

On 16 October, only a month or so ago, GrainCorp's group legal counsel, Julian Sefton, wrote to Mr Peter O'May, Chief Executive Officer of the Balonne Shire Council, to put the shire on legal notice if they did not block the storage Mr Earle proposed to build and was in the process of building for this harvest:

Given the urgency of the situation, we look forward to council's written response by not later than 5:00pm this Friday, 18 October 2013. Failing a satisfactory response, GrainCorp will take all necessary action up to and including the commencement of court proceedings and shall tender this letter and your response on any application for costs.

This is the company that yesterday said, 'We have collection sites that allow rivals to bid for incoming grain.' I would have thought that was very anticompetitive. I will table for the convenience of the Senate that document and the long-drawn-out legal objection.

Mark Furner (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Senator Heffernan, are you seeking leave to table this document?

Bill Heffernan (NSW, Liberal Party) Share this | Link to this | Hansard source

Yes, there is a package of documents that I have shown the opposition.

Leave granted.

People need to understand the detail, not the politics, of this. If I do not finish this today I will finish it at another time, perhaps in the adjournment debate. Australian beef growers understand this issue. There are huge multinationals that process the meat. There is a global boom in the beef price. Australians are getting just a bit over half in the saleyards of what they are getting in America, Ireland and everywhere else. We are on about $1.70 for an export-quality bullock on the hoof in the saleyards, which relates to about 340, depending on the yield dead. That is about the hoof price in the United States and Ireland. That is what happens when companies like JBS Australia get hold of your industry. The same thing will happen in the grain industry.

Going back to the Thallon problem: this is a group of farmers who between them grow 200,000 acres of wheat. They said: 'Let's get together because it will cost us $60 a tonne to take the grain to port by truck, so let's do a rail facility. I'm sure GrainCorp won't mind and we can do it for $30 a tonne.' What happened is in the tabled documents. The biggest objector is GrainCorp. They do not want any competition. These are the sorts of issues we have to deal with in a future inquiry.

I go to GrainCorp's preliminary final report for the year ended 30 September 2013. On the final page, page 24, I read—even though I am not very good at reading and writing—the following in talking about the extension of the Archer Daniels Midland bid:

Other than reported above, no other matter or circumstance has arisen since 30 September 2013 which has significantly affected or may significantly affect:

a) the Group's operations in future financial years; or

b) the results of those operations in future financial years; or

c) the Group’s state of affairs in future financial years.

A couple of weeks later, why would those people come to Canberra to push the case, along with a whole lot of other lobbyists from the hedge funds—the hedge funds were going to be the big winners—and say to a group of politicians, 'Unless this sale goes ahead, next year we're going to shut over 100 sites, which would mean we would not be able to raise the couple of hundred million dollars we promised for infrastructure'? Who is telling the lie? This is in their financial statement: 'Nothing we know of will affect it.' It is a lie, and I think the chairman should resign.

These are difficult issues that Australian wheat growers deserve to have the wider public and politicians in this place understand. They are intricate issues. They might care to read the Senate inquiry's quizzing of Mr Pinner—Senator Nash, I think you prompted the answer. The Australian Competition and Consumer Commission have no power over this—do not let anyone kid you otherwise. They mucked this up. They did not know that Toepfer was in the market—sadly, I will not finish this speech today; I will finish another time. They did not know the Toepfer finance people. They had not looked at the Allied Mills operation—I will talk about Allied Mills employing a private investigator to snoop on someone. I will also talk about what I think is skating to the edge of criminal conduct by one of the players in this bid—I will not discuss that here.

This is a series of serious issues. As you would recall, Senator Nash, we took the testimony of the Australian Competition and Consumer Commission and the Foreign Investment Review Board in camera. The Foreign Investment Review Board did not know that GrainCorp owned 60 per cent of Allied Mills, that Allied Mills had a 100 per cent relationship with Goodman Fielder, that Wilmar International had a 15 per cent share of Goodman Fielder or that Archer Daniels Midland had a 16.3 per cent share of Wilmar. The young guy supposed to investigate the infrastructure did not know what a subterminal was, for God's sake. These are the people we gave the responsibility to look at the thing.

Can I just say we have got a lot of work to do. I intend to justify, if I have to, in a further speech, the calling of a new inquiry which will sensibly look at how we can assist the process. CBH would like to have acquired some assets on the eastern seaboard. There are a whole range of things we need to do. I would like to think that those boys have now got their approval to build that site in Thallon despite GrainCorp's objections.

Finally, I would like to note that Mr Paul Howes ought to grow up if he thinks that ma-and-pa farmers are the essence of all this. (Time expired)