Stewart McArthur (Corangamite, Liberal Party) Share this | Hansard source

I do acknowledge the presence of the member for Batman at the table and, more importantly, the contribution of the member for Hotham. It was a thoughtful contribution. I acknowledge his longstanding interest and previous ministerial responsibility in this area. Of course the member for Hotham cannot resist talking about the stealing of superannuation funds for the implementation of the broadband proposal. Both those former presidents of the ACTU are condoning a position where the superannuation funds of our hardworking public servants and members of the Defence Force will be stolen from the Future Fund. They are condoning that in this parliament. Apart from that, the member for Hotham gave some thoughtful contributions about R&D and so I commend him on his contribution on the bill.

On a more sober note, I am pleased to contribute to this debate on the Primary Industries and Energy Research and Development Amendment Bill 2007. As a wool grower and cattle farmer, as the member for Batman has noted, I have long had an interest in agriculture research and development, innovation, extension and agricultural education. In Corangamite a group of enterprising farmers have formed Southern Farming Systems. The objective of this group is to incorporate the latest research in agronomy, spray technology and plant varieties. Ironically, they have developed the raised bed technology which assists in removing excess water from cropping operations in high-rainfall areas. However in recent years there has been below average rainfall which has not fully tested the new technology. Results in the Winchelsea area with raised beds indicate a 50 per cent increase in yields on soil types that are of a poorer quality.

Just this morning we had a discussion over breakfast with Australian Farmers Managing Climate Change. Speakers raised the issue of climate change and rainfall. Representing the farmers was Mr Ian McClelland from the Birchip Cropping Group. That group has been instrumental in bringing new technologies to the Mallee and ensuring that hands-on farmers use the technology to their commercial advantage. The Birchip Cropping Group is probably a world first—where farmers, the community and scientific researchers combine their skills for the common good. I pay particular tribute to my good friend Ian McClelland for his leadership, enthusiasm and innovative approach in bringing the latest research to farmers, particularly in times of drought and economic downturn. Ian McClelland has been a unique leader in combining research with practical farming and, more importantly, disseminating research results to farmers.

Farmers elect to pay compulsory industry levies collected by the government to fund farmers’ research and development priorities to help sustain the long-term profitability of their industry. R&D and extension are funded in this way. The argument put forward is that many individual farm enterprises are too small to individually undertake research. If the farmers make a contribution, it also encourages government to assist—in the ‘national good’, which the member for Hotham referred to on a number of occasions, being interpreted as more research and development in a particular industry. There have been a lot of arguments over the years about agricultural levies, both in the parliament and amongst farmers themselves.

Over the years, I have had great reservations about the policy of statutory compulsory levies on agricultural producers. This parliament has a proliferation of acts related to primary production levies. It would be interesting to calculate the number of acts of parliament that have been passed by both houses to force a levy on farmers and on primary producers. I note that in other industries there do not seem to be compulsory levies to assist with R&D. Some tax concessions are the order of the day in other industries apart from primary industry.

Heated debates have been had about whether the levy should be a compulsory levy, how much the levy should be and what the levies should be spent on. Once a levy has been agreed to, farmers want to know that the funds raised by the compulsory levies that they pay will be put to good use, that the research priorities being followed are in accordance with the short- and long-term interests of their farm businesses and that research and development corporations themselves are being well-managed. That is the thrust of the legislation before the parliament. This bill is about the management of these research and development corporations.

Each farming industry has a different approach to resolving the conflict of how much levy should be imposed and for what purposes it should be used. In the context of this discussion, I note that my colleague the Minister for Agriculture, Fisheries and Forestry, the Hon. Peter McGauran, yesterday issued a statement announcing the results of the first dairy industry levy poll. Deputy Speaker Secker, you would be aware that Minister McGauran recently joined us in Wannon and Corangamite at the Sungold Field Days at Allansford. The minister took the opportunity to meet a number of my dairy farming constituents and those of the member for Wannon to discuss issues such as the dairy poll and of course the drought with those hardworking farmers. Sixty-four per cent of those farmers who voted in the inaugural dairy levy poll wanted to retain the current one per cent levy which is paid on milk production, representing $3,150 per million litres of milk produced.

The poll is a major development in the dairy industry. For the first time, individual dairy farmers are able to vote on their future. Some 5,039 dairy farmers chose to vote in the poll out of 9,540 ballots distributed, representing 53 per cent of the industry. It is interesting to note that, while 64 per cent of the farmers who were polled wanted to retain the levy, one in three dairy farmers did not want a levy and only four per cent of farmers wanted to increase the levy. This was industry democracy at work.

The levy funds will be managed by Dairy Australia to fund research and development projects to help our dairy farmers remain internationally competitive and to assist them to manage through the current drought. The Howard government will match the dairy farmers research funding up to a total of $15 million per year. I commend the dairy farmers, Pat Rowley and all the other leaders who have put the dairy industry at the top of the tree in research and development for the way in which they have organised this poll and the way the money has been spent. I commend the dairy industry for their innovative approach in R&D now that the deregulation has taken place. In my opinion, the dairy industry in Australia is a world-class industry.

This bill amends the Primary Industries and Energy Research and Development Act 1989 by improving the government’s arrangement for eight statutory research and development corporations—namely, the Cotton Research and Development Corporation, the Fisheries Research and Development Corporation, the Forest and Wood Products Research and Development Corporation, the Grains Research and Development Corporation, the Grape and Wine Development and Research Corporation, the Rural Industries Research and Development Corporation, the Sugar Research and Development Corporation, and Land and Water Australia. That is quite a big list of the groups that are at the forefront of research for rural producers in Australia. These primary industries R&D corporations are statutory corporations established under government legislation, to be distinguished from industry owned R&D companies such as the red meat industry’s Meat and Livestock Australia Ltd and the dairy industry’s body Dairy Australia, which I have referred to before.

The amendments in this bill are being made in response to the findings and recommendations of the review by John Uhrig, the former chairman of Rio Tinto and Westpac, into the corporate governance of statutory authorities and office holders. The Uhrig review was a 2001 election commitment of the Howard government, and the report recommended improvements to the governance arrangements of statutory authorities to improve and clarify the roles and expectations of the authorities and their accountability to government.

The agricultural research and development corporations were assessed in terms of their compliance with the recommendations of the Uhrig review. There are some improvements that can be made and these have been recognised in the bill. Independent boards have been appointed to manage the R&D corporations and to develop their research priorities. The boards generally comprise directors appointed on the basis of skills and experience, but it is interesting to note that these boards also include a so-called government director. The government directors are senior officers of the Commonwealth Public Service. As an example, the government director of the RIRDC Board is Mr Simon Murnane, General Manager of the Science and Economic Policy Branch of the Department of Agriculture, Fisheries and Forestry, and the government director of Land and Water Australia is Mr Charles Willcocks, General Manager of the National Biosecurity Strategy Taskforce in the Department of Agriculture, Fisheries and Forestry. Of the eight primary industries R&D corporations that are the subject of this bill, all eight government directors are officers from within the Department of Agriculture, Fisheries and Forestry.

In assessing the R&D corporations for compliance with the Uhrig recommendations, it has been determined that the appointment of government directors is inconsistent with the practice of appointing directors using a skills based approach. The amendments in the bill will terminate the practice of appointing government directors and will instead provide for an expansion of the skills that are appropriate for board selection to include expertise in public administration. A further beneficial outcome of these reforms is that they will remove any potential for conflict of interest for those departmental officials serving as government directors between their responsibilities to the department and the minister and their responsibilities to the board and the R&D corporation.

It should be noted that this reform is in no way a reflection on the service provided by the government directors. The officials within the department provide a high-quality contribution to the government and people of Australia, and in particular to those working in the industries that the officials are working for.

The bill will also make changes to the act with regard to board selection committees and reporting on the performance of the selection committees. Board selection committees have an important role to serve in the process of selecting effective board members of R&D corporations. It is important that boards comprise a diversity of skills suited to enhancing the relationship and responsiveness of the corporation with industry participants, the farmers who fund the levies, researchers and government. The changes in the bill will provide an enhanced emphasis on board membership diversity.

The eight statutory R&D corporations were responsible for delivering more than $541 million worth of rural research and development and extension in their respective industries in 2005-06. I note that the member for Hotham was rather critical of some of those figures and the amount spent. It seems that in the vicinity of half a billion dollars is a huge amount of money to be devoted to research in rural Australia.

Australian farmers are the most competitive and the most exposed to international markets in the world. Unlike farmers in the United States, the United Kingdom and across the world, our farmers are not protected by subsidies and trade barriers. Our farmers produce more product than can be consumed domestically, exporting 70 to 80 per cent of their produce. As exporters, our farm sectors depend upon open international markets. It is not in our farming industries’ interests to seek government handouts, subsidies or trade barriers, because our nation could not afford to outbid the Europeans when it comes to farm subsidies. For these reasons, our farmers need to remain at the forefront of agricultural innovation and the levy-funded research and development companies need to make a massive contribution to this end by developing new practices and products to drive enhanced productivity.

By working with our primary industries, the Howard government is supporting expenditure of more than $500 million in rural research and development as recorded in 2004-05. The rural industry’s RDC research portfolio totalled around $23 million in 2004-05, funding some 435 projects. I emphasise that, Mr Deputy Speaker Secker: 435 individual projects—and you would be aware of some of those personally. The research portfolio covers projects supporting new and emerging industries such as new plant and animal products, Asian foods and essential oils; smaller established industries such as honey bees, rice, chicken meat, horses, deer, buffalo; sustainable agricultural systems; global competitiveness; and biosecurity.

I move to the Cotton Research and Development Corporation and indicate that it will invest $11.7 million into research and extension programs this year, 2006-07. The corporation is funded from a levy on production matched by the Commonwealth government’s contribution. The cotton RDC’s website says of its 2005-06 R&D program that 32 per cent of the funds were spent on crop protection, 22 per cent on farming systems, 18 per cent on breeding and biotechnology, 14 per cent on people and knowledge, seven per cent on integrated natural resource management and seven per cent on the value chain. I commend that, because the cotton industry is going through some difficult times in relation to water, with some public debate on some aspects of their production technology.

The fisheries RDC 2005-06 annual report indicates that the corporation spent $24 million on research and development priorities in 2005-06, with a Commonwealth contribution of $16 million. In addition to the corporations’ research program, the FRDC managed over $65 million in fisheries research and development for other parties in 2005-06.

The Forest and Wood Products Research and Development Corporation received $3.04 million from industry levies in 2005-06, which has been matched by a $3.03 million contribution by Australian government funding. The FWPRDC does not undertake research in its own right but funds research providers such as state forestry R&D bodies, the CSIRO, tertiary institutions and other industry providers. The total research funded by the corporation was valued at $5.96 million in 2005-06, contributing to projects worth $16.64 million in total.

The grains RDC raises levies on 25 crops to fund a $115 million research and development program in 2005-06. The Australian government contributed $43 million in matching research funding to the GRDC. So, in the grains area, we see quite a considerable contribution by both the government and the industry. My discussions with the grains industry indicate that they have had a very good return from those research activities in improving the grains industry, varieties and technology.

I will move to the grape and wine RDC, which raises levy funds from approximately 7,000 grape growers’ annual harvests and the wine yield of more than 1,800 wineries. So there we have it, Mr Deputy Speaker. In your electorate, they make a contribution to these levies. In 2005-06 the industry levy raised $13.5 million for research and development, which was matched by $12 million in Australian government funding. So we see that, even in the wine industry, the government is contributing to an industry which has been going through some difficult times over the last couple of years.

The Howard government contributed $5.2 million to the sugar RDC in 2005-06 as a matching contribution to the sugar industry levy collection of $5.3 million. The corporation committed $8.6 million towards research and development projects over the year, with the distribution of funding as indicated in their report—that is: 49 per cent for farming systems, 19 per cent for industry capacity, 17 per cent for processing and distribution systems, and 15 per cent for the value chain.

Land and Water Australia is a differently funded arrangement from the seven other research and development corporations that are discussed in this bill. There is no industry to levy but this statutory corporation was successful in raising $18 million in funding in 2005-06 from third parties for research and development projects in natural resource management. The Howard government contributed $12.5 million to the corporation in 2005-06 towards the corporation’s $27.1 million research and development investment in that year.

The reason I have taken the time in this contribution to mention the size of the research effort by these organisations and the government’s contribution to agricultural research is that the major assistance the government provides to research and development for our farming industries is quite often forgotten. I emphasise that point. With all the debate amongst the agricultural producers and primary producers, sometimes the government contribution is forgotten. I well recall, Mr Deputy Speaker, as you do, that the government contribution to the wool industry in terms of the reserve price scheme and research and development was a major point of debate for many years.

I would like to conclude by saying that I commend the bill. I commend the sentiments of the government’s legislation and the improvement of the governance of the R&D corporations. In the long run Australia will depend upon R&D in primary industries to enhance producers who will, hopefully, return to better seasonal conditions if the drought breaks. Farmers throughout the eastern seaboard, particularly, and Western Australia and South Australia will be able to utilise some of these research capacities to improve the profitability of their farm enterprises.

Australian farmers depend upon research and development. I say to the member for Batman that I have been associated with the Melbourne University in agricultural education in Victoria for about 30 years in the hope that those young farmers would go back to primary industries and provide some skills, both management skills and some research skills, to enhance the development of those industries. Farming industries have moved a long way in the last 15 to 20 years, from small family enterprises to enterprises that handle huge sums of money and handle huge risk elements, as identified by the drought commodity prices. The one key feature is that they can improve their technology through research and development both with the assistance of their own industry and the assistance of the matching contribution from the government. I commend the bill, I commend the sentiments and I am pleased that the opposition are also supporting the bill. (Time expired)

See this speech in context