Thank you.
I was the chief executive officer and managing director of Queensland Sugar Limited from 2000 to March 30 of this year, 2008—about eight years. When I started at Queensland Sugar, it was a new company set up by an agreement with the industry.
In the sugar industry in Australia, there are sugar cane farmers and sugar millers, and there's an interplay between them associated with the returns for sales of sugar. The government at that stage had an act of Parliament that meant there was a single desk in place for all the sales of raw sugar in Queensland. It was an acquisition act.
The company was just moving from being a government-owned corporation, the Queensland Sugar Corporation, to being a public company, Queensland Sugar Limited. This was a company that was owned by guarantee by the growers and millers of Queensland. When we say “by guarantee”, we mean it was a construct of a company, an ownership structure that was not for profit and didn't have shareholders as we know them in the public shareholder sense, but it certainly reported on an annual basis to a group of members who were farmers and sugar millers.
The act of Parliament continued, and it had a review date associated with it. There was in fact an early review of the single-desk arrangement by agreement among all the parties: the sugar millers, the government, and the sugar cane farmers. After five years, that review took place. It was decided that there could be a deregulation.
It was state government legislation; the Government of Queensland was the government. Their view was that they wanted to basically get away from the sort of regulation that had been associated with the sugar industry, and they were prepared to move away from it if the industry agreed on that movement.
After a process of negotiation between the government and the sugar cane farmers and sugar millers, it was agreed that they would move. However, there was one particular arrangement that just about everybody agreed on. This was that because the customer base, particularly the export customer base, was a relatively few large sugar refineries, predominantly in Asia, which had significant market power in terms of where they purchased their raw sugar or their ingredient from—I suppose a bit like a large flour mill—it was still sensible to continue to sell the product through a single sales channel and logistical channel; otherwise, there would be multiple sellers from Queensland trying to sell to what is a relatively small customer base.
It didn't make sense to them in principle that this would be a good idea, so there was an agreement that if 85% of the potential export product could be signed up to continue to be marketed with Queensland Sugar Limited on a commercial basis, the government would be prepared to take legislation away.
My role in this was really to advise the group that was contemplating this about the consequences and the implications associated with the move they were planning, and then to negotiate commercial contracts with the sugar milling companies to take the product they produced to the export market. We achieved 95% of the total tonnage going into those contracts. That was in about 2005.
As I left Queensland, we were having a further discussion, about the future of the company more than about the single-desk arrangement. There are some proposals being put forward now, particularly about the board of directors of Queensland Sugar Limited, which was a company that had four growers, four millers, and four independents including myself on the board—a board of twelve. They are now contemplating a much smaller board, of independent directors only and the managing director.