John Anderson (Gwydir, National Party) Share this | Hansard source

Well, we are all in trouble now; even you, Mr Acting Speaker—not Mr Deputy Speaker, as the previous speaker referred to you!

The member for Corio rightly highlighted the very significant performance improvement that agriculture in this country has notched up year in, year out. No sector of the Australian economy has matched its productivity gains on a year in, year out basis since the end of the Second World War and probably well before that. That has been driven by a number of factors: the commercial realities of the marketplace, the extraordinary advance of technology on-farm and off-farm, and, as the member for Corio rightly noted, our own research and development effort. The $450 million or so that goes to agricultural research every year out of the public coffers is by far the largest direct contribution made to agriculture in this country by the taxpayer. That makes us quite unique in the Western world, and my opening salvo in this debate on the Primary Industries and Energy Research and Development Amendment Bill 2007 would be to say that very often those dollars are painted as providing primarily a farmer benefit. In reality, under the R&D funding model that applies in this country—put together, it has to be said, to be fair, in the time of John Kerin, a former Minister for Primary Industries and Energy in the Hawke government who put together the model which I think is the world’s best—farmers make a contribution which is matched dollar for dollar, industry by industry, to the efforts of each of the research and development corporations. That shared effort reflects the fact that while there are certainly benefits for agriculture there are enormous common-good results as well.

I make those comments because there are many in this place, in officialdom, who believe that farmers should fund that effort entirely on their own. That debate surfaces from time to time, and I want to say again that I am vehemently opposed to that view. Where would the economy be if we had not had that productivity improvement, resulting in higher export performance year in, year out, for example, over the last 60 years? We have a very serious trade deficit problem. Agriculture is one of the major contributors to our exports. We produce enough food and fibre for somewhere between 70 million or 80 million and perhaps 100 million people every year. With a domestic population of just 20 million, that leaves a massive amount to export and it constitutes a valuable economic contribution.

In environmental terms, the research and development effort has undoubtedly resulted in dramatic improvements in the ways we manage our natural resources. Whether it has been through the control of pests like rabbits, which used to denude the country and exacerbate droughts—you had droughts even when they were not droughts—or whether it has been through the dramatic improvement in the performance in the Australian rice industry, which is now the world’s most efficient user of water in the rice industry globally and has cut its consumption of water per unit of production in half over the last decade, or whether it has been the extraordinary development in pasture growth management and run-off management, there is still a long way to go. But we have seen massive progress in recent years. Those things have produced great environmental value.

But then there is employment. I remember when these funding arrangements were being called into question when I was minister for primary industries. I think the most graphic illustration that I could find of the community-wide or common benefits that arose out of the R&D effort was to be found in the dairy industry, which had based their research effort around areas which improved their productivity and enabled them to gain access to and win very substantial export markets in Asia.

It was an incredible performance. Just the export sector of one domestic agricultural industry generated an additional 100,000 jobs, most of them in Victoria—the home state of the parliamentary secretary at the table, Minister Smith. If that is not a massive common good, I do not know what is. And how those who oppose the funding model might propose to capture the contribution that might reasonably be made by those people who have a job but who otherwise would not have was always beyond me. There is a real value in these models.

Having made those general remarks, I will make some observations about where our R&D effort in agriculture might need to be a little more focused in the future and where we as a government and a nation might devote some more energy. I noted what the member for Corio had to say about the declining global research and development effort in agriculture. I think I am representing him fairly when I say that the research he is drawing on is accurate but may not be quite up to date. My understanding of it is that you are now seeing a very significant injection of R&D funding into agriculture for some very interesting reasons, particularly in Europe and America. The reason is in large part because of the quest to crack the secrets of releasing plant energy and substitutes for oil—liquid fuels—at a time when you have got a great convergence of concern over climate change, oil security and the real possibility that at some stage over the next decade we will hit ‘peak oil’ or we will reach that point where we cannot supply new sources of oil quickly enough to offset increasing demand and the price starts to rise inexorably. We do not know when that point might come. We have had some warning bells recently that it may not be far away. It is of real concern.

The response to this in America—with which I am a little more au fait because I had the opportunity to spend four or five days there in a very intense study tour recently looking at where they are going with renewable energies, genetic modification and all those sorts of things—has been absolutely astounding. We have seen, on the surface of it, an explosion in the development of ethanol and biofuels, which of course has attracted the interest of many people across rural and regional Australia. There are many points that need to be made about what is happening there.

The first is that, unlike the best of the plants proposed in Australia—for example, the Primary Energy technology proposal which would result in a plant in this country producing 13 times the amount of fossil fuel energy that it consumed—the truth is that many of the American ethanol plants are not really truly renewable. The amount of diesel used in crop production, oil used in fertiliser production and transportation of crops and the very high levels of natural gas used, which is increasingly expensive as resources of natural gas in America are exhausted—and is increasingly likely to be imported in the future—mean that those plants are not as ‘renewable’ in their production as they appear to be on the surface. As I say, that is in stark contrast to the best technologies being proposed in this country, which are a whole generation ahead.

Furthermore there is now a real recognition that ethanol is not the only plant based alcohol, or fuel, that can be produced from plant material. There are new options coming along and vigorous exploration and scientific investigation of them is now being undertaken in an attempt to raise their energy content. Ethanol is a simple fuel based on a two-molecular structure. More complex fuels will more closely approximate the energy of petrol. It is a very exciting future. Some of the numbers in this game are absolutely amazing.

The quest is to overcome the possibility of a very ugly food versus fuel debate, which we are already seeing. The price of corn in America has risen to the point where you have had political unrest in Mexico because the price of tortillas has risen to the point where poor families are finding it difficult to cope. You have had the government in China, where there is a very active ethanol industry, say that they will have to limit the amount of grain going into ethanol. There is a debate going on in South Africa about diverting sorghum from the plates of poor families into the fuel tanks of wealthy BMW owners. In America this is all being driven by the fact that only 16 per cent of the national corn crop is now going into producing three or four per cent of the country’s liquid fuel needs. If it is having that impact now, where do we go in the future?

Many now recognise that the scientific effort needs to be massively increased to get the production levels up so that we do not have that acrimonious, very difficult, morally and ethically charged debate. At the same time as we seek to produce more grain to feed people and to provide for these new industries, we are also trying to crack the process of lignocelluloses. That is where you are really seeing some big dollars flowing. When I was in the US, BP had just announced that it would put up $1 billion for biofuels, $500 million of which was to go to research.

We have seen Richard Branson offer $US3 billion over the next decade for biofuels development. He proposes building a massive plant to try to take the whole thing forward as part of that $3 billion—it may in fact be in addition to that $3 billion, I do not know. Warren Buffett, regarded by many as the world’s smartest investor, is today building an $80 million lignocelluloses plant. They are not yet commercial, but he believes that the secrets to extracting the sugars from the cell materials in biomass other than seed material will be cracked in a way that will release massive amounts of energy in the future. He is backing that with his own money. Those things are telling of the things that are happening. The US Department of Energy has just put $US160 million into three partnership arrangements with the private sector for the development of celluloses based biofuels plants as well. So there are massive amounts of money going into the plant area—and that, I think, is why the member for Corio’s information, accurate as it was at the time, is rapidly being overtaken by events.

Australia cannot afford to miss out on this effort. This is very important. The Americans say that if they can crack the secret of lignocelluloses then they have available some $1.4 billion tonnes of biomass a year. That is an extraordinary amount of biomass. It is believed that it could provide up to one-third of the nation’s liquid fuel needs. It is renewable and greenhouse energy friendly. We do not know whether that is going to happen. It is not yet commercially viable. But they are putting in the effort and they are determined to reduce their reliance on Middle Eastern oil and so forth. They are throwing the dollars at it.

As one senior scientist said to me, ‘What this has done is start to help us put together scientific teams of the quality and depth that in recent years you have only seen in medical research.’ Previously that was where it was sexy to be, to use the vernacular. Now it is changing. What was the ‘nice idea’ of a quest for renewable fuels has become an absolute imperative. With that sort of dedication, money and resourcing going into it, the game is going to change very rapidly indeed. We in this country, with our heavy dependence on liquid transport fuels, need, I believe, to tap into this.

Lest anybody think I am being critical of the ethanol industry, let me say that I am not. Everyone makes it quite plain that it is the critical first stepping stone to what is likely to be a very much more significant renewable fuels plant based energy future. It is not the whole answer; but it is a significant part of it. We need to make certain that we are not missing out on it. In the context of the government’s commitment to having a good look at what can be grown with and how we can use the water in the north of the country more wisely, it is very unlikely that you are going to use it to grow cereal crops. But it is highly likely that it can be used for the production of vast quantities of biomass. That might be a biomass source such as a grass. Who knows? Sugarcane is a grass. Ideally it would be perennial, able to be harvested every year, would regrow vigorously, capture carbon and provide the base material or stockfeed for a whole range of sophisticated biofuels. This would benefit the country enormously in the future.

There is a related issue that I will only touch on. It is likely that GM technologies will play a role here as well. We have a state based moratorium in this country on most GM technologies for agriculture. That needs to be lifted. There ought to be one nationally consistent approach. I understand peoples’ caution in this area: concerns over food safety, segregation and all of those sorts of issues. But the state based moratoria run the real risk of stunting scientific investigation and the ability of farmers to make wise commercial decisions about what they ought to grow and where they ought to grow it. We need some real reform in that area. Just as Bt has proved the answer to insect loadings in cotton, in my view it is entirely possible, even likely, that a future biofuels industry will need access to similar technologies for similar reasons in the north of the country.

I now come to another issue: where our research is going, which is all relevant to the rural industries research and development corporations, which put a lot of effort into the plant sciences. I am suggesting that more is needed. We had a plant CRC. It may very well be time for the Minister for Education, Science and Training to consider again the possibility of a new plant CRC in this country, perhaps with an emphasis on renewables.

There are other warning bells going off that I have recently become aware of. We had a vigorous debate, of which I was part, in this country a few years ago about the fact that we were very good at basic research but not so good at developing that research and taking it forward commercially. There is some evidence now—putative only, but we ought to be aware of it—that, because of our emphasis on commercialisation, we are underemphasising the importance of basic research. In the context of what I have been saying, I wonder, firstly, whether we should not be putting more effort into basic research in this country such as the type of plant material, biomass material, that might be used in a future biofuels industry that is much expanded on what is currently envisaged and, secondly, whether, as part of that, we ought to be further investigating whether we can be players in unlocking the secrets of extracting those biofuels from plant materials. That is relevant, because there is often a view in this country that we should not duplicate expensive research being conducted in other countries such as America and Europe, and thereby avoid the cost of duplicating that effort. However, the fact is that research is expensive. Much of it is being done by the private sector and it may be protected by intellectual property rights arrangements in the future. One of the ways you get access to that sort of research at reasonable rates is to ensure that you also have parts of the jigsaw, that you have research that you can trade.

There is a real prospect that perhaps we are in danger of swinging the pendulum a little too much towards development and commercialisation of research, while perhaps not putting quite enough effort into basic research. Indeed, it goes well beyond even the issues of food and fuel. Plant research is now showing exciting options in providing polymers, feedstock and other vital componentry in our Western way of life—our dependence on chemicals, plastics, and the very exciting area that I have been hearing about this morning of polymers, cling-like film, if you like, that can be used for solar cells. At the moment, silicon solar cells are 10 per cent efficient. Polymer film made from feedstock oil is much cheaper, much thinner, more effectively and easily made and deployed but is only six to seven per cent efficient versus the 10 per cent efficiency of silicon solar cells. But it may very well be that, because the film is cheaper to make and easier to deploy, it can be made out of plant material based polymers—a whole new area of valuable resources that can be provided renewably out of agriculture at a time when we may very well be facing real shortages of liquid fuels in the future.

Finally, let me make this observation: I believe that there is a real opportunity for the farm sector in all of this. It is highly likely that within a few years we will see a new farm based sector which is basically farming for renewable fuels. But one of the great ethical challenges before us is to make certain that it does not become, in some ugly way, a competition between the wealthy and the poor over food versus fuel. We have to do better and research will be a large part of the key.

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