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Livex response exposes industry structural flaws, says lobby group

Jon Condon, 09/09/2011

The Australian meat and livestock industry’s recent live export crisis has exposed serious flaws in industry organisational structure and performance, an industry lobby group has claimed.

The claims were raised in a submission this week to the Senate Standing Committee on Rural Affairs and Transport by agitator body, the Australian Meat Producers Group.

AMPG is an alliance of industry stakeholders, describing itself as a ‘think tank of leading industry figures that was established following the beef industry forums held last year in Armidale and Rockhampton, to advise on restructure and reform options for industry organisations.’

While not directly affiliated with the rebel Australian Beef Association, the Graeme Acton-led United Beef Forum group or the John McDonald-led Armidale agitator group, the AMPG group shares common membership with all three groups. The common thread is the group’s coordinator/lobbyist, Sydney solicitor Norman Hunt.

While the group does include some prominent industry names among its members, it is unclear how many industry stakeholders identify themselves as AMPG members. Some prominent industry members have distanced themselves from direct connection, but say they support some of the principles behind the group’s agenda. 

With AMPG’s latest submission to the Senate inquiry, it appears the group may have changed its point of its attack from seeking industry-led reforms through the internal MLA annual meeting process, to making more direct appeals to Government for legislative reform.

The AMPG submission to the Senate inquiry argues that the public outcry over animal welfare abuses of slaughter of Australian cattle in Indonesia and the consequent ban of live cattle exports to Indonesia was both foreseeable and preventable.

It says the Federal Government Meat & Livestock Australia, LiveCorp and the other relevant industry bodies had collectively failed to fulfil their roles in improving animal welfare standards in the public interest and the interest of the livestock export trade, or provide the collectively-needed commercial outcomes required by the red meat industry.

AMPG argued that the current dual accountability regulatory separation between Government and MLA/LiveCorp and the relevant industry bodies which occurred in 1998 had in practice left a dysfunctional void between the regulatory and commercial requirements of industry.

Taking aim at RMAC

It also took aim at the Red Meat Advisory Council, questioning its relevance and describing it as singularly ill-equipped to provide relevant sectorial advice to Government on sectoral regulatory issues.

“RMAC was an ill-conceived attempt to set up a one stop shop advisory body for government. Its structure makes it virtually impossible to meaningly fulfil its one-stop-shop advisory role,” the submission says.

“RMAC is made up of cattle and sheep producers, meat processors and livestock exporters, who represented different sectors of the industry and whose commercial interests are often diametrically opposed. At best, RMAC comes up with watered-down ‘consensus’ decisions and at worst, members can’t reach agreement,” the AMPG claimed.

An example of this was the recent support by Australian Meat Industry Council for the Government’s temporary ban of live cattle exports to Indonesia, which live exporters were at the same time ‘desperately trying to revive.’

RMAC was also unable to come to an agreed position because of competing sectorial interests with respect to the allocation of EU & US beef quotas, AMPG claimed.

“The Peak Councils and RMAC have received millions of dollars from the interest earned on the reserve fund administered by RMAC. We think that this gravy-train makes the Peak Councils reluctant to rock the boat on controversial issues, which inevitably leads to poor outcomes for industry,” it said.

The submission also claimed MLA, LiveCorp and the other relevant deregulated industry bodies which had primary commercial responsibility to maintain a long-term sustainable livestock export trade were fundamentally flawed, because they failed to effectively vest ownership in the levy payers whose needs they serve.

AMPG told the Senate inquiry that the structural flaws in the constitution and operations of MLA, LiveCorp and the other relevant deregulated bodies stemmed from mistakes made during the implementation process of the Red Meat Industry Organisational Restructure that took place in the late 1990s. This led to inappropriate governance voting and board selection structures in the MLA and other relevant industry bodies which “effectively defeated the stated aim of the restructure to encourage accountability and grass roots ownership.”

Fundamental changes in the global economy and communications that had occurred during the last fourteen years meant that the organisational structures that may have been appropriate to meet the needs of the red meat industry in the 1990s were no long appropriate, the submission claimed.
Consequently MLA and some of the other relevant industry bodies had lost touch with grassroots members’ needs, AMPG said.

“The current MLA structure and that of some of the other relevant industry bodies deliver a pre-determined budget-driven identification and delivery of collective functions; rather than the need for collective functions driving and determining the expenditure and budget requirements.”

“Consequently, the current structures are defining the outcomes and the expenditure, rather than the outcomes defining expenditure and the structure. In short, MLA defines the programs and then ‘sells’ the outcomes to their levy-payers, rather than providing the services called-for and needed by industry,” AMPG claimed.

“The projects undertaken by the specialised corporations should be driven by the specific needs of the grassroots levy payers on the basis of cost benefit analysis and not by corporate staff with marketing expertise who may be tempted to spend much of their time, effort and levy payer funds ‘selling’ and ‘promoting’ projects that they have designed, rather than just delivering the outcomes that their constituents need.”

Delivering value for levy payers

AMPG suggested ‘many stakeholders’ now felt that the levy-funded industry organisations were failing to deliver value for the levy money invested by their members, and that the current deregulated levy-funded industry body structure provided for dual accountability between the Federal Parliament and industry bodies to protect the public interests and the interests of the industry.

“But while the Government’s public interest and responsibilities extend to both animal welfare and the live export trade, under the current industry deregulated organisational structure, primary responsibility for the commercial effect of animal welfare issues of the live export trade lies with the MLA, LiveCorp and the other relevant industry bodies.”

AMPG also suggested to the Senate inquiry that the current Government and industry body structure had failed in the stated aim of the 1990s industry restructure to facilitate a more internationally competitive red meat industry in Australia, and the current burden of uncompetitive Government-influenced costs and charges on the Australian red meat industry were unsustainable.

Its submission recommended that the current MLA and LiveCorp and the other relevant industry bodies be reformed so that they could more effectively provide the collectively-needed commercial outcomes required by the industry in today’s context.

It put forward a number of suggestions for consideration during any reform process. The key platforms included transition from a transaction levy to a slaughter levy, separation of R&D functions under a separate statutory corporation, and separate producer and processor corporations.

Other elements included:

  • separate sheep and beef marketing corporations;
  • An action plan for Government and industry to achieve greater international competitiveness for the red meat industry and improve responsiveness to consumer requirements in domestic and overseas markets
  • Disbanding the cross-sectoral RMAC, with the interface between Government and  deregulated red meat industry bodies driven by the establishment of a small departmental regulatory Secretariat (along the lines recommended by the 1996 Steering Committee and Task Force set up by the Minister to advise on the 1990s restructure). This would provide the necessary regulatory industry underpinning to accommodate both the commercial and public interests in the live export trade and the public interest in animal welfare.

 

A full copy of AMPG’s Senate inquiry submission can be viewed here.

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