Sussan Ley (Farrer, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

I am pleased to speak on the Farm Household Support Amendment (Ancillary Benefits) Bill 2010, and I appreciate the presence of the Minister for Agriculture, Fisheries and Forestry at the table. I give him permission to leave—he must have a lot to do back in his office! He can read my remarks in Hansard later. I am sure he will. I want to acknowledge the efforts of the minister and the government. We in the opposition do not think they are quite there yet in terms of drought support, but we also recognise that drought support, exceptional circumstances relief payments and, more importantly, the interest rate subsidy are enormous costs on the budget and if we can work out a way to support our farmers financially and in other ways we should do so.

This bill facilitates the trial in Western Australia, and I look forward to seeing the outcomes of that trial. I recognise that we might learn valuable things, particularly as it will be conducted in an area that is not actually under exceptional circumstances declaration. It will be good to see what comes out of the trial. Clearly not enough money has been allocated. There are some confusing reports in the media that the dollars are uncapped, but it does appear that only $12 million has been allocated in the budget. If every farmer in the area took up the trial to its fullest extent, there maybe a potential government liability of much more than that—even up to $400 million. That is a problem.

The trial itself I believe is coming at the issue with the right perspective. Farmers might receive $7,500 for farm planning, and if they undertake those farm plans they could then be eligible for $60,000 to put in, for example, better integrated water infrastructure or some other technological investments on their farm—maybe lock-up paddocks for sustainable grazing systems. So the door to another $60,000 would be opened, and then I understand there would also be a further $20,000 for environmental benefits for farms. So it is quite modest. If you compare it with what is available now, sure, the household support, which is the fortnightly payment from Centrelink, is still there, and that is a good thing. We all appreciate the way that that continues to put food on the table for our farming families, but I can certainly say that were it not for the exceptional circumstances interest rate subsidy almost the entire western division of New South Wales would be on its knees right now.

That is the constant feedback I get from every rural financial counsellor, both at state level and at federal level, as I travel in the western part of my electorate. I do acknowledge that these are large sums of money, and that if you have received as a farming enterprise $300,000 of interest rate subsidy from the federal government, even $500,000 in some cases, then that is significant support. We have to look at a policy purpose that is more than just allocating dollars to individual businesses; it has to recognise the vital nature of our farm sector and the need for it to continue. If these farms go under, and frequently they do, they often do not get resumed as working, productive properties. I guess the good thing about those who have gone broke in western New South Wales is that they have been able to sell to businessmen in many cases, and occasionally overseas buyers—people from outside the area who have paid a good price but have not necessarily farmed the land. In many cases they may visit only at weekends, and that becomes a problem for neighbours when they have to deal with an absentee neighbour and feral animals and pests et cetera. We know, and I know, that the productivity of this land is the most important thing that governments should be recognising and facilitating to the greatest extent that they can.

In conversations I have had with our rural financial counsellors, they have acknowledged that a better system needs to be found. They are frustrated by the seeming endlessness of the drought, though in many areas in the west it is now looking pretty good, and it is terrific to see that. However, one hazard gives way to another. We now have plague locusts, and when they hatch in spring and summer they will be extremely problematic. I appreciated the briefing we had last week from the Australian Plague Locust Commission. I recall that outfit from when I was involved in the agriculture portfolio in the last government. It is a bit clumsy because it only has a mandate to deal with plague locusts when they cross state boundaries and therefore has to work in conjunction with the state bodies that do the same thing, and clearly that is messy. What is needed is a national plan and something that gives effect to that national plan while recognising that state and federal funding should be included in it. So now drought has given way, unfortunately, to plague locusts.

I remember having been involved in exceptional circumstances declarations across my electorate. Sadly, most of my electorate is still in exceptional circumstances, although I expect that much of it will come out of exceptional circumstances when those declarations are lifted towards the end of this year or early next year. I can remember having long, intense discussions with the National Rural Advisory Council, which is the independent body that makes the recommendations to government. I do not mind the process, although it did sometimes get unnecessarily complicated. You cannot expect a federal government bureaucracy to understand the lie of the land in terms of rainfall history, drought prospects, stock-carrying numbers and all the other statistics that make up a case for drought relief, but one of the biggest battles that we had as members in this place was to convince the National Rural Advisory Council that low irrigation allocations actually warranted drought support. The criteria had been set for grazing and pastoral enterprises, but what we were seeing in the New South Wales and Victorian Murray in the early years—2003 and 2004—was extreme no-water and low-water allocations. So there were irrigators who were receiving the notionally normal rainfall for their areas but were not able to access any irrigation water because their general security allocation was zero.

I give credit to Wendy Craik, who was the head of NRAC in those days, because she accepted the message and pushed hard, and we had a change of policy in that area which has seen irrigators receive EC relief. I have already talked about the pastoralists being on their knees, but I assure everybody in this House that the irrigators would have been decimated if they had not received that EC relief. I know that water policy, while it has an influence on agriculture policy, does not come under this particular area of government, but it clearly intersects with it, and we are crying out for a better water policy for farmers. Farmers are desperately unhappy with the current government’s approach, and as they are beginning to face the sustainable diversion limits that will come with the draft basin plan due out in a few weeks time I am getting a lot of desperate calls from people who feel that they are being ignored by the hierarchy. Towns will get all the water they need and should get, the environment will get all the water it needs—although, while we want the environment to be well catered for, I am not certain that I would put it above the needs of irrigated agriculture in every case and on every day—but farmers are saying, ‘Okay, so you have towns getting their water, you have the environment getting its water and, if there is any left, we get it; so we are the ones who have to give up the most.’

Opinion is divided on whether we are facing climate change in the Murray-Darling Basin. Some farmers say they do not believe that we are, but some will quite freely admit that the circumstances that they see on their farms every day strongly indicate that something is changing permanently. But, if we are facing climate change, we have to manage irrigated agriculture with less water, and we are doing that. Previously, there was up to $6 billion allocated to a fund directed towards farmers to enable them to update their own infrastructure on-farm. So a farmer could update their water delivery system receiving a grant by the government—doing that is so capital intensive that you could never do afford to do it on your own—and then give the government back a proportion of the water saved. The disappointing feature of the current government’s policy is that the current Minister for Climate Change, Energy Efficiency and Water has made it very clear that she does not believe that taxpayers’ money should be allocated on-farm to people’s individual farm infrastructure. I think that is a huge mistake, because if you want to achieve the outcome you have to recognise that the main actors in the scheme are the farmers and they really do have to embrace the change and want to make it happen.

The policy currently in place buys back water—at the moment I think about 700 gigalitres of water have been bought back from the Murray Darling Basin—but there has not been the commitment by farmers to see it through. There has not been a recognition of the need for it, and the government certainly has not spelled out a real plan for that 700 gigalitres of water. It is fine to embark on a water buyback and—although I do not agree with this—say, ‘We have to take this out of the system; the system has been overallocated,’ but that is no use unless there is a sensible and comprehensive plan.

I know that an environmental watering plan is being developed which is going to be released with the basin plan and the sustainable diversion limit, but I am not confident that there is sufficient understanding in that plan of how to get the water to all the environmental sites. For example, there are certain wetlands that you can only flood when you have a king tide. So water is needed in order to carry water to a place to produce an environmental outcome, and if there is not enough water to create conditions that are completely counterseasonal—though there should not be, and I can see no reason why you would want to do that—delivery of the water is impossible. There is the Barmah Choke on the way, which has a constraint on the number of megalitres it can pass each day. There is also the interaction between the Menindee Lakes and the Darling River as well as that between the Murrumbidgee River and the Lachlan Catchment, out of which a significant amount of water has been bought. We know that the Lachlan has not flowed into the Murray for at least a hundred years, so it is clear that that water is not going to find its way down the river very easily.

My main concern, as it always tends to be when I am talking on agricultural matters, is the lack of water for irrigated agriculture. It is continually exacerbated by low storages in the Murray-Darling. The Hume Dam is currently only at 22 per cent of capacity; Dartmouth Dam is at 31.9 per cent. The Menindee Lakes, and this is absolutely fabulous, are at 85 percent. A few weeks ago, on a visit to Broken Hill, I travelled out to Menindee and watched the regulators being opened to move water from Lake Pamamaroo into Lake Menindee at, I think, a rate of 15,000 megs a day. It was an absolutely magnificent sight.

I am always so disappointed when the water in Menindee Lakes becomes a political football and various people decide that it is their water and that there are wetlands or Lower Lakes or storages upstream that deserve that water more. Although there is some man-made aspect to Menindee, Menindee itself is a world-class wetland and should be recognised as such. So for the water to be flowing into the fourth lake in the Menindee Lakes system and for some people to describe it as wasted because there is no outlet—well there is a very small outlet, but its carrying capacity is quite limited—is very disappointing to me. I would encourage people to go out there and have a look. Everyone should try to journey into inland Australia and look at the water at Cooper Creek and Innamincka and Birdsville and all the way down the Darling. There are arguments that you can see it better from the air, but it is pretty good from the ground as well.

So it is terrific to see Menindee Lakes at 85 per cent capacity. Lake Victoria further down the system is, at 56 per cent, reflecting better inflows from the Darling River. But it is distressing to see Hume Dam still only at 22 per cent. Until we get really good rains in the upper Murray catchment, we are not going to have the confidence return to the irrigation sector or the feeling that they can cope with government buybacks of water.

The exceptional circumstances regime has served our farmers very well. I would simply ask the government to take really great care in designing its replacement and to recognise that one of the main beneficiaries of the schemes has been the banks. The banks received 50 per cent of farm interest payments and that has enabled banks to, in their words, ‘lend with confidence’, carry on supporting farm businesses and maybe not take the action that they might have considered had that interest rates subsidy not been there.

But it is also incumbent on the banks to recognise the great benefits they have received from the exceptional circumstances interest rate subsidy. There has been a solid and sound transfer of taxpayers’ money to the banking sector to enable rural Australia to stay afloat, and I expect the banking sector to give as good as we gave them. When I talk to the economists for our major banks, I hear that in terms of liquidity requirements after the Basel III discussions that are happening in Europe at the moment that banks may find they have to carry more cash reserves. That will of course affect the amount of money they can lend. I sometimes pick up the sense that the rural sector needs to watch out. Of course, that means it might not be so simple and so on and so on. There is no reason, whatever the liquidity constraints are, for the rural sector to not be looked after by the banks. We know that, whenever there is a rural upturn, banks that have kept quiet in the marketplace—I am not naming names—leap out of the blocks and they are out there starting up a new agribusiness, knocking on farm doors and being aggressive in that marketplace. They need very much to plan for the long term and they need very much to recognise the great benefits they get. If you look at the standard mortgage rate and the margin that some farmers are paying, particularly if you are with one of our pastoral lending houses, those margins are significant.

The member for Mallee mentioned in this place last week his great concern about behaviour of banks. It does concern me when somebody running a farm business has their finances, their livestock and their merchandise all tied up with one lender. Sometimes that is the only lender they are able to access, but it is not a good situation for any business to be in. It gives the lender an unreasonable ability to control the farm operation and it really disturbs me. I have heard of situations where that lender suggests to a farmer: ‘You need cash flow, so you need to buy sheep; you need to restock. The stock price is sky high but we’ll advance you the money.’ And everything that the farmer’s better judgment is telling them is that they should just hold back, just wait, just see what the price for livestock does. Maybe the paddocks need to recover more and they are not confident that the rainfall is where it needs to be, but they are pushed into this. That is the situation that the member for Mallee and all of us who represent these pastoral areas of western New South Wales and South Australia are aware of. We are monitoring the situation carefully and closely and we are very keen always to hear about individual circumstances that we feel might be translating into unacceptable banking practices.

I would like to conclude my remarks today by recognising the death of Rob Seekamp on a pastoral property near Broken Hill earlier this week. The minister may have met him. He was the chair of the Pastoralists Association of West Darling. He was lost in his Cessna 172 mustering aeroplane on Monday. He was found yesterday. Tributes are flowing in. The people of Broken Hill and the people of the far west are shattered at the loss of this great fighter for their region. I can remember the pastoralists association, led by Rob Seekamp, coming to Canberra when the dust storms hit the western division. They had a great response from the minister and they appreciated that. We had several meetings in this place and we facilitated not the greatest help that perhaps could have been made, but I am not suggesting that had we been in government we could have done any better. There were state responsibilities there as well. We rely a lot on people who selflessly work to make their areas better places to live and who go through the trying and sometimes difficult and expensive representations they constantly have to make to government. To Rob’s family—Vicki and his children and his adopted children—I pass on my heartfelt condolences and say that he will be remembered in Broken Hill by those of those of us who knew him.

I commend the bill to the House.

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