Gavan O'Connor (Corio, Australian Labor Party) Share this | Hansard source

I acknowledge the contribution of the honourable member for Maranoa to the debate. He has a longstanding interest in the production and research side of agriculture. It is pleasing to see that members of this House can come together and agree on a piece of legislation and the fundamental premise on which it is based. I acknowledge also the presence in the chamber of the Independent member for New England, who will make a contribution to the debate later. I also acknowledge the contribution by the honourable member for Corangamite, who preceded us in this debate.

I was not here when the honourable member was on his feet. I do not know too much of what he had to say, but I do know that he does have an interest in the wool and sheep industry, as does the honourable member for Maranoa. The member for Corangamite is a squatter and a squire from the western district of Victoria and a former political enemy of mine. However, I do owe this one to the honourable member for Batman, who pointed out to me that the honourable member for Corangamite has been peddling mutton dressed as lamb for a long period of time!

The honourable member for Corangamite, as well as other members in this House, appreciates the importance of research and development to Australia’s agricultural industries. The Primary Industries and Energy Research and Development Amendment Bill 2007, according to the minister’s explanatory memorandum, is primarily designed to improve the governance of the eight statutory research and development corporations funded by the Commonwealth. There are six discrete R&D corporations covering particular commodities. They are cotton, fishing, grains, grapes and wine production, sugar, and forest and wood production. Smaller industries are well covered by the Rural Industries Research and Development Corporation, RIRDC, while water and land management issues are covered by that very expert body Land and Water Australia that is held in very high esteem within this parliament and outside it.

The objective of this legislative exercise, according to the government, is to further develop the independent skills capacity of the boards that govern the research and development corporations, in line with the Uhrig report’s recommendations aimed at improving the performance and accountability of such boards. In the past, governments have appointed an Australian government director to these boards, a practice that will be discontinued as a result of these amendments to remove any of the potential conflicts of interest for serving public servants. To compensate, the bill includes the strengthening of links between the rural development corporation boards and the minister in the preparation and organisation of research plans. The bill also provides for increased reporting requirements. Attempts are made in this legislation to increase the diversity of experience and gender among those who are nominated for board memberships, and I think those are admirable objectives. The opposition regard these objectives as very worth while, and we will support the passage of the legislation through the House in a true sense of bipartisanship.

Over the past 10 years, the opposition has been somewhat critical of the government’s performance in this area. It has been a perennial concern of ours that not enough time, thought or effort has gone into some of the changes not only to the governance arrangements of many of these boards but to the general structures of these organisations and the mechanisms by which they report to the executive and are held accountable by this parliament. At least on this occasion, the government has shown the sense to back these changes of the Uhrig report into governance issues as they relate to such corporations and other statutory bodies.

I had the good fortune in my early political years to work with the then Deputy Prime Minister of Australia, Brian Howe, who gave me a very good piece of political advice that I have carried through my years in this parliament. He said, ‘It is always important, Gavan, to undertake the research and have those recommendations to assess before you proceed in a policy development sense.’ Indeed, the reporting process is a very important part of the policy development process. Too often, ministers are caught listening to lobby groups. They cobble together proposals on the run and those proposals are put into the public arena with no foundation discussions and no foundation research, but on which the government then proceeds to act.

Of course, our experience in this chamber with governments that operate on those sorts of principles is that they inevitably fall into some very deep holes and traps as a result of failing to do the appropriate research. On this piece of legislation, the government have acted on the basis of a procedure. They have a report that makes recommendations into the governance of many of the statutory bodies and research and development organisations, and they have extracted from that report some recommendations on which they have based the amendments that we are debating here today.

There are compelling reasons that this parliament ought to be concerned with governance matters in these areas; in fact, there are about 451 million of them. That is the amount, $451 million, that the federal government, on behalf of Australian taxpayers, pours into the seven industry owned R&D companies and the eight R&D corporations that constitute critical pillars of agricultural research in this country. Therefore, it is imperative that we get the best people onto the boards and that their governance is best practice in every sense of the word.

As I stated earlier, the rural R&D corporations are an important pillar in the agricultural research and development effort underpinning Australian agriculture. The farm sector is an important contributor to the national economy—some three per cent of GDP—and its significance to regional growth and employment cannot be underestimated. There are some 330,000 people employed in the sector. The flow-on effects have been well documented. In a recent letter to the Australian Financial Review, David Crombie, President of the National Farmers Federation, outlined some of those flow-on benefits, stating that agriculture underpins some 12 per cent of Australia’s GDP and is responsible for value-added production in the region of $103 billion, which in turn translates on the ground to some 1.6 million people being employed as a result of activity in the sector and some 50 per cent of that employment being situated in Australian capital cities. So there are many Australians who are dependent on agriculture research and development, and many of those people are indirectly employed in city areas.

A growth of 3.8 per cent per annum in productivity in the sector over the past 20 years has been above that of the rest of the economy, despite massive structural changes in agriculture. Of course, the linchpin of that productivity growth has been agriculture’s R&D effort. I believe that this is one very important area in which there is agreement across this chamber. There is a bipartisan view on the importance of maintaining public sector research and development and, of course, getting good governance for the moneys that are expended.

I note that the honourable squire from Corangamite has graced us with his presence here in the chamber today. We know out there in the western districts of Victoria that the wool and sheep industry, which he has been associated with for such a long period of time, is now very much dependent on the cutting-edge research and development that is done not only on farm but also at the value-adding end. I refer, of course, to the CSIRO’s fibre and textile facility, which is located in the electorate of the member for Corangamite. I think that, for both of us, it has been very important to retain those researchers in the Geelong region to service an industry which is a foundation industry as far as the Geelong economy is concerned and as far as the western districts are concerned.

I must say that I did make reference to the honourable member for Corangamite, but that was a quip that was provided by the honourable member for Batman—that is, that the honourable member for Corangamite has been trading mutton dressed as lamb for a long period of time. But I know that the honourable member for Corangamite in his enterprise has been interested—like most farmers are—in producing a quality product, getting it to the marketplace and getting a reasonable price that allows a reasonable standard of living for those who engage in that activity.

This sector has been blessed with an R&D structure that has delivered growth and productivity to Australian agriculture. These R&D corporations, the CSIRO, the cooperative research centres, tertiary institutions and state research bodies form an integrated network of research that has kept the sector in the competitive ring in a global sense. But there are warning signs that falling levels of relative government support for public research and development will expose the sector long term to declines in both productivity and profitability.

As members will appreciate, modern farming in Australia is a very sophisticated business in the 21st century. Farmers not only must manage and maintain their production in a sustainable way but are required to call on a broad range of skills to enable them to stay in the business in the face of natural disasters such as drought, oil shocks that ramp up their cost structures, exchange rates that mitigate against their competitiveness and corrupt international markets that are extremely difficult to sell into in most of the key commodity areas. That is the reality of farming today. I hope that all members of the House have an appreciation of that.

As I have said in the debate thus far, many of the jobs in urban areas are directly related to the agricultural sector and depend heavily on it. If the sector is going to maintain its current economic position then not only will the quantum of research dollars have to be maintained—and increased—but the whole R&D effort will have to be refocused. Returns to the national economy from agriculture R&D have always been high. But the task today will be to maintain and improve levels of investment in this area to maintain the long-term productivity levels that have been the hallmark of the sector’s performance in the past.

As has been pointed out by Dr John Mullen in the Australian Farm Institute’s report Productivity growth in Australian agriculture: trends, sources and performance, public spending on R&D in intensity terms—that is, the ratio of public investment in R&D funding to agricultural GDP—has fallen from five per cent of GDP between 1978 and 1986 to just over three per cent in 2003. Dr Mullen considers that government research funding has been affected by three factors: the level of funding for research being transferred to industry, the outsourcing of research to public and private bodies and the increasing degree of collaboration between state departments of agriculture and universities. It is an interesting analysis. At the end of the day, he has sounded a warning bell in relation to the need to maintain public levels of funding for research and development in the sector. If we do not, then it will become increasingly difficult for Australian farmers to remain competitive as they respond to the economic and environmental changes around them. It will be the capacity of the sector to innovate that in the future will be its saving grace. The key to that innovation will be the sector’s research and development effort.

I will conclude by making some comments about the level of research and development around the world. There is an increasing concern that these levels are falling. This has quite profound implications for food security. That relates generally to the security of nations and the way that we as developed countries respond to some of the humanitarian crises that occur from time to time around the world. This is an observation that has been made by many people. There is a changing focus in the research that is taking place. Research in developed economies is changing very subtly from being aimed at enhancing production of food to being aimed at enhancing the attributes of the food that is being produced. That is being driven in developed economies by lifestyle changes, by the health debate and other debates—among other things, the animal welfare considerations that were mentioned by the honourable member for Maranoa.

It is very important that we understand not only the way in which the R&D dollar is spent is changing in Australia but also how the international scene is changing. At the end of the day, that has some quite profound implications for humanity, the supply of food and food security issues, which—along with a lot of other things—feed into the general security situation on continents that from time to time are ravaged by drought and other factors.

In conclusion, I will refer members to what I think is an excellent article on this. It is called, Agricultural R&D spending at a critical crossroads. The people who wrote it are Professor Philip Pardey from the University of Minnesota, Professor Julian Alston from the University of California and Nienke Beintema, another researcher. It is a fascinating article, because it challenges us to think about the levels of public investment in R&D and the directions that are being taken, particularly in the developed world, which in past decades has really driven some of the great improvements in productivity that the sector has seen. They had this to say:

Agricultural R&D is at a crossroads. The close of the 20th century marked changes in policy contexts, fundamental shifts in the scientific basis for agricultural R&D, and shifting funding patterns for agricultural R&D in developed countries. These changes imply a requirement for both rethinking of national policies and reconsidering multinational approaches to determine the types of activities to conduct through the CGIAR and similar institutions and how these activities should be organised and financed.

There is a similar challenge here to us as we contemplate this piece of legislation, which attempts to improve the governance of R&D corporations.

This is an opportunity to reflect on how the research and development dollar is being spent in Australia and what the returns are, not only to agriculture and farming families but to the national economy. It is an opportunity to assess some of the trends that are going to impact on how that dollar is spent over the next couple of decades. At the end of the day, will we be able to construct and maintain in Australia a viable and sustainable agricultural sector? That is an objective that all members of the House will agree with.

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