Senate Rural and Regional Affairs and Transport Legislation Committee, , 1:40:08 to 1:47:36
Officials respond to estimates of $20-25 million in losses by excluded importers and explain the decision to pause the facility in July while maintaining the fertilizer dashboard.
Topics: Food security, Government spending
Speakers: Senator Paul Scarr, Miss Victoria Anderson, Sarah Burr, Matt Lowe, Unknown Speaker, Interjection, Senator Glenn Sterle
>> Given those losses flow from government's intervention in the market, have you have you considered how that should be addressed?
>> I think Senator Aid's last at last estimates was that um you know this is an unprecedented intervention as and Mr. sort of indicated that now we are not aiming to be in this market any longer than we we thought we needed to be. We have more than 100% of fertilizer. You know, the market conditions have changed. We have more than we think what we need at the moment. That the the um facility is paused as as we've indicated and um it's paused because you know the uncertainty in the situation means it could it could turn quickly and we want to be ready to act but we are sort of very conscious which is why we've had the AC involved all the way through. We we don't want to have a long-term impact here. We appreciate that those companies that uh that may have felt um unable to participate uh uh may feel agrieved about that, but the reality is we were dealing with a situation in the national interest and took the best decisions we could according to the criteria.
>> Well, Miss Anderson, it's it's more than They they estimate that they've lost between 20 million to $25 million because of the way the market was distorted. I understand the point you're making about national interest. Uh but three companies participated. Uh we've heard evidence that there was a list of uh an additional five companies at least who were noted as recommended as potentially being able to participate. But the estimate of losses as a as a direct result of the scheme on those companies who to date have not been able to participated is between 20 million to 25 million. So uh notice extra it was extraordinary times but shouldn't those companies be made whole?
>> The the intent of the facility was not around um support for importers. The intent of the facility was to support the supply of ura for Australia's
>> I understand that. But if an if an collateral effect of the scheme was that those importers who haven't had the opportunity to participate have suffered losses between $20 million and $25 million, shouldn't that be addressed?
>> So I think we've indicated that it was effectively an open door um for people to make an approach and participate. I think the impact on these importers would have been significant uh as a result of the Middle East crisis irrespective of what the government did because of of the lack of supply of fertilizers. So um I appreciate that there are as you say people who are um I can't remember the word you use but they
>> they've estimated they've suffered losses between 20 million to 25 million.
I would I would suggest you would need to compare that with the situation they would have been in irrespective of whether or not uh the facility existed. This would have been a very vexed situation for fertilizer import importers irrespective of the government's actions and the government's actions in this instance have secured fertilizer for Australia's farmers and and we hope we have worked in this very careful considered way to think about the national interest and to minimize our impact on the market to the
they're telling us they're estimating losses between 20 million and 25 million. Uh I'll ask just a few more questions. You might take some of these on notice.
>> Senator, maybe just before you start your next question, I'd just add to um add to the secretary's comments. Companies were still obtaining fertilizer on the commercial market um irrespective of the support of the facility. Um obviously it was a lot harder to do so um but companies were still doing so and in fact um the facility I think represents about 12% um of what was obtained um on the commercial market on commercial terms through the course of the facility of the conflict.
>> Mr. Although I don't pretend to be an expert on the ura market and different markets have their different characteristics but uh the issue that concerns me is that companies that aren't in that initial tranch of three companies out of the say nine or um eight that were identified or recommended for participation are estimating the way it's worked in practice uh they've suffered losses of between 20 million to 25 million. So that's that's why we're asking these question.
>> I appreciate that. I'm just keen to add to the context for you as well.
>> Uh so as I said, you can perhaps take these questions on notice. How much URA was landed under the facility and how much was additional to what importers had already ordered unless you've got something there now.
>> Um 330 thou 333,000 tons of ura was secured through the facility. >> And what was the second part of your
question? Sorry. Uh, how much was additional to what importers had already ordered?
>> Uh, I'd have to take that on notice.
>> Okay. If you take that on notice, did it fix the shortage?
>> Uh, it it did it achieved its objectives um in terms of securing supply for farmers during that winter um peak cropping period that Mr. Low outlined in his context. Um and so in terms of um how we've measured that um over the course of the season um and having secured over 100% of what was the estimated requirement then yes
>> Senator if I can add to that. Yep. >> Um I think happy to have ABS come to the table. Um but the production forecasts for the year have improved considerably. Now, obviously that's in part due to seasonal conditions, but that's obviously also driven by confidence that producers could plant with confidence that they'd have access to both fuel and fertilizer to undertake their agricultural operations.
>> Okay. Sure. Uh, and I've just got one more [clears throat] question. Uh, you mentioned the pausing
>> Yes.
>> of the facility, Ms. Burr. Uh, when was that decided
on the 3rd of July,
>> right?
>> Um and the decision was taken um uh well informed by um evidence um and um uh uh advice provided by the department of agriculture, fisheries and forestry and the department of industry science and resources.
>> So who took the decision?
>> Uh the decision ultimately to pause the entire facility because it applies not just to the fertilizer side but to the fuel side as well. So the whole fuel and fertilizer security facility ministerial directions are issued by um the minister for trade uh minister Farrell. So ultimately the decision um lies um with
>> Okay. And at the time of that decision I think ms boo you said some people were some companies were still in negotiation on terms.
>> Correct. And they still are
>> how many?
>> Uh I I'd have I think it's about five. Let me just confirm. Um I'm aware of um uh at least some of the companies I named still engaging in negotiations with Export Finance Australia. I think about five companies.
>> Okay. Last question. Uh Mr. Low, you referred to the fertilizer dashboard? >> I think uh when's the last date it was updated? It
>> was last updated on Friday. Um so I think that was the 22nd of October.
>> 22nd of October. How regularly you're updating it?
>> Weekly. Every Friday.
>> Every Friday. Okay. Thank you, Chair.
>> Senator Blair.