Corporate welfare – a sweet deal for some
Crikey’s forthright stand on the Great Sugar bail out brought praise
and some bagging, but the situation is worse, there’s a large dose of
corporate welfare - yet again - from the Howard Government.
The $444 million sugar industry assistance package, to give it its
political name, is certainly a sweet deal for the industry, especially
all those government members in marginal seats along the Queensland
coast. But it’s also an example of corporate welfarism at its
John Howard worst.
In fact it’s the fourth lot of assistance to this industry since 1998
and takes the amount to well above half a billion dollars. The
question remains, can anyone explain why large companies such as CSR
and the Finasucre group of Belgium should have a chance to get their
hands on the money?
As details of the package are picked over, the section called
“Sustainability Grant” is the one which should be causing taxpayers the
greatest aggravation. It is the largest single area of assistance.
(don’t you love a handout described as “Reform”) includes grants to
millers and growers of up to $146 million to help them through the
current financial crisis, so that they can take the necessary steps to
reform and adjust.
This is what the Prime Minister’s statement said on Thursday:
“The Australian Government will pay the sustainability grant in two
instalments to all operating growers and mills, with the first
instalment planned for June 2004. Industry groups will be asked to sign
up to a Statement of Intent on behalf of the industry committing to
achieving real reform and restructuring before receiving the first
Sustainability Grant payments.”
There’s no break up of the $146 million between millers or growers, or
any information on just who will benefit. Will any of the mills
close up or merge? Highly unlikely given the regional nature of the
industry and the fact that the only rationalisers, CSR and the
Belgium-controlled Finasucre would find it hard for either ACCC reasons
or Queensland political parochialism.
Around 94 per cent of Australia’s sugar is grown and milled in
Queensland so the overwhelming bulk of the $444 million will be paid
there. These are the millers operating in the Queensland Industry
according to the website of the State’s millers’ association:
- Bundaberg Sugar Ltd
- CSR Ltd
- Isis Central Mill Company Ltd
- Mackay Sugar Cooperative Association Ltd
- Proserpine Co-operative Sugar Milling Association Ltd
- Mossman Central Mill Company Ltd
- The Maryborough Sugar Factory Ltd
- The Mulgrave Central Mill Company Ltd
- Tully Sugar Ltd
- W.H. Heck & Sons Pty Ltd
Then there is the Hanwood co-operative on the NSW North Coast, milling
the NSW crop.
The grants do not apply to the refining side, on
the basis of the documents seen so far. In Queensland the grants will be distributed through Qld Sugar Ltd
under guidelines from Canberra. Qld Sugar will in turn make payments to
operating mills based on average production in the last three years.
These mills will then distribute these funds to their growers, based on
the division of funds between growers and mills over the previous three
A similar arrangement will be made in the smaller states of Western Australia and NSW.
Complex yes, but before getting to the big guys, a point about some of
the Co-Op mills. They are owned by the growers in their respective
districts. So the growers will be getting money in two ways. From the
mills direct and money held by the mills as their share of the payments
from Qld Sugar. This fits in with the strength the growers and
their corporate entities have in some areas of coastal Queensland.
But as corporate entities, you’d have to ask why the mills are getting
money in any case? These mills are on the same footing as the big
blokes, CSR and Bundaberg (Finasucre of Belgium). Part of the
answer is that the owner-growers are quite often powerful in the
National Party in their area and in the influential Queensland
Canegrowers group, one of the best connected bodies in conservative
politics in the state.
CSR says it’s responsible for about 40% of the nation’s raw sugar
output. As well, the company has a 50% interest in refined sugar joint
ventures, which are the leading suppliers in Australia and New Zealand.
Under Queensland state legislation, sugar produced by Queensland mills
is acquired by the industry owned marketing company, Queensland Sugar
Limited (QSL). QSL sells the sugar to a range of domestic and
international sugar refiners. Major export destinations for Australian
raw sugar are Japan, Korea, Malaysia, New Zealand and Canada.
In a statement CSR CEO, Alec Brennan, welcomed the package and in part
said, “we are committed to do what we can to ensure a sustainable sugar
industry into the future and remain confident that with the support of
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