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Wheat Marketing in Transition: The Transformation of the Australian Wheat Board PDF

159 Pages·2012·1.06 MB·English
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Wheat Marketing in Transition ENVIRONMENT & POLICY VOLUME 53 For further volumes: http://www.springer.com/series/5921 Linda Courtenay Botterill Wheat Marketing in Transition The Transformation of the Australian Wheat Board Prof. Linda Courtenay Botterill Faculty of Business and Government University of Canberra Canberra, ACT 2601 Australia P reface T he origins of this book lie in the public furore that surrounded revelations in 2005 that Australia’s monopoly wheat exporter, AWB Limited, had been one of the worst offenders in cooperating with Saddam Hussein’s regime to bypass the sanctions imposed by the United Nations against Iraq. AWB Limited had been responsible for the payment of some $US221 million in kickbacks under the humanitarian component of the ‘Oil-for-Food’ program, which began in 1996 and ran until the invasion of Iraq by the Coalition of the Willing in 2003. In Australia, the involvement of AWB Limited became a major political scandal, threatening to end the careers of senior Cabinet Ministers in the Howard Government and, incidentally, providing a springboard for the rise of Kevin Rudd to the leadership of the opposition Australian Labor Party and ultimately to the Prime Ministership. T he present project was motivated by my strong sense that the reporting of the scandal, and the political debate around AWB Limited’s actions, was incomplete. It was fl awed in several important ways. First, the analysis was ahistorical; it was ignorant of the background to the monopoly wheat exporter’s dealings with Iraq and its unhappy experience with earlier sanctions against Iraq. Second, it was confused about the nature of the company at the heart of the story. AWB Limited had its ori- gins as the statutory Australian Wheat Board which had been established in 1948 but which underwent a process of privatisation in the mid-1990s. The privatised entity continued to be the benefi ciary of a legislated monopoly over wheat exports, however, it was not a government agency and its employees were not government employees at the time the sanction-busting activities took place. Throughout the public debate in the mid-2000s, this important distinction was lost as media com- mentators and politicians continued to refer to AWB Limited as the Australian Wheat Board. Third, the debate did not recognise the essentially secretive nature of the international wheat trade; a trade which is dominated by several large, privately- owned companies who play their cards very close to their chests. The main implica- tion of this characteristic of the wheat trade was the unrealistic expectation that offi cers within the Department of Foreign Affairs and Trade who were involved in the management of the sanctions could know whether the price of wheat on a contract had been infl ated to disguise the payment of kickbacks. v vi Preface T his book seeks to provide a more considered and complete examination of the Oil-for-Food scandal; but that is only part of the story. The Australian Wheat Board was a longstanding and well respected institution of Australian rural policy. It out- lasted many of the Australian Government’s support measures for agriculture which were steadily dismantled from the 1970s onwards. The Wheat Board enjoyed strong support from wheatgrowers and it represented important collective values with their origins in the 1930s. The Australian Wheat Board, and then AWB Limited, was the institutional embodiment of these values and it is the institution of collective mar- keting on which this book focuses. I n the mid-1990s, I was employed as Manager, Strategic Planning at the Grains Council of Australia, the peak industry body representing Australia’s graingrowers. In that role I was involved in the early stages of the debate around the privatisation of the statutory Australian Wheat Board, drafting discussion papers and attending meetings with growers to discuss the future of the collective marketing arrange- ments. I was exposed to the passionate attachment many growers felt for the Board and its role as monopoly exporter. I was also aware of the many challenges that these collective arrangements were facing in a policy environment which favoured deregulation and minimal government intervention in markets. The Oil-for-Food scandal probably accelerated the demise of collective wheat marketing in Australia but it was arguably inevitable. As the book describes, the industry underwent major changes in the 1980s, including the loss of the Wheat Board’s monopoly over the domestic wheat market and the writing was on the wall for the remainder of the Board’s statutory powers. T he story of the privatisation of the Australian Wheat Board has not been told and, as indicated above, the involvement of AWB Limited in the Oil-for-Food scan- dal has been given only an incomplete treatment to date. I hope that the account that follows will address this and, as well as fi lling an important gap in the history of Australian rural policy, will provide lessons for similar arrangements, notably the Canadian Wheat Board. The story of the Wheat Board highlights the pitfalls of privatising a monopoly in a way which left important powers with the new body and blurred the distinction between the government agency and a private company seek- ing to maximise its profi ts and its share price. As an account of a longstanding institution from cradle to grave, the book also seeks to fi ll a gap in the historical institutionalist literature which to date has been focused on institutional birth and survival. I hope that considering the demise of an institution and the factors which contributed to that end provide some insights into institutional strategies of repro- duction; and the need to consider the unintended consequences of apparently suc- cessful adaptation to change. I would like to thank the many grains industry insiders who spoke to me both on and off the record during my research for this book. I am also grateful to the former Chief Operating Offi cer of the Grains Council of Australia, David Ginns for releas- ing many of the Council’s internal papers to the Noel Butlin Archives at the Australian National University; where they were not only accessible to me but are available to any other researchers interested in this fascinating piece of rural policy history. There are still many stories buried in those papers waiting to be told. Preface vii T here are of course many other people to thank for supporting me as this project unfolded. My husband and dive buddy Bob is my escape from academia and our time spent together underwater provides a blissful and precious change of pace and focus. However, this book is dedicated to my father who, as the most over-qualifi ed research assistant possible, made an invaluable contribution to this project at a time when I was feeling slightly overwhelmed and struggling to make progress. He has shown immense interest in my academic career and is probably unaware how much that means to me. Linda Courtenay Botterill C ontents 1 Introduction ............................................................................................... 1 Analytical Framework ................................................................................. 2 Historical Institutionalism ....................................................................... 3 The Role of Values .................................................................................. 6 Making Rural Policy in Australia ........................................................... 8 The Socio-Political Context ........................................................................ 10 The Book’s Structure .................................................................................. 14 References ................................................................................................... 17 2 Australian Wheat Industry Policy in Context ........................................ 21 Wheat in the Australian Economy .............................................................. 22 Wheat Exports ......................................................................................... 26 The National Contribution ...................................................................... 28 The Rural Policy Paradigm ......................................................................... 29 References ................................................................................................... 31 3 The Birth of Collective Wheat Marketing .............................................. 33 Institutional Development and Change in the Wheat Industry ................... 34 The Nature of the Policy Community ......................................................... 39 The Birth of the Australian Wheat Board ................................................... 41 A Parallel Case: The Establishment of the Canadian Wheat Board ........................................................................... 44 The International Context ........................................................................... 46 Conclusion .................................................................................................. 48 References ................................................................................................... 49 4 From Orderly Marketing to Deregulation 1948–1988 ........................... 51 A Changing Rural Policy Paradigm ............................................................ 52 Institutional Development and Change ....................................................... 56 The Industries Assistance Commission Reports ..................................... 57 The McColl Royal Commission ............................................................. 59 Reviews of Statutory Marketing ............................................................. 61 ix

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