Judi Moylan (Pearce, Liberal Party) Share this | Link to this | Hansard source

I will continue where I left off yesterday afternoon. I was commenting on some points that were made by the member for New England in this House yesterday. He said that drought is a fact of life in this country and that one sometimes wonders why it is not treated in the same way as any other adverse event, such as flood or fire, where we immediately go into rescue mode and provide considerable assistance.

I want to return to a point I raised yesterday. I get very angry when I hear allegations by some in the financial sectors during drought times that we are agrarian socialists and that farmers are agrarian socialists because they receive a little help during these extra exceptional circumstances that our rural areas go through from time to time. That is simply not the case. As the member for New England quite rightly pointed out, we provide very substantial subsidies to several industries in this country, but our farmers have demonstrated a great capacity to operate very efficiently. In fact, they are some of the most efficient primary producers in the world. During the reforms of the eighties, they took the bit between their teeth and got out there and embraced reforms—sometimes it was tough, but they did it. They are very efficient. But no-one can foresee the difficulties that might arise from prolonged periods of drought, so I think that we have an obligation.

As I said yesterday, despite the growing disconnect between urban and rural areas, I believe that most people in urban areas, when they understand the circumstances and difficulties faced by farmers, are more than willing to dig deep in their pockets to help out, and that is just as it should be. A concern of producers experiencing drought, once they begin to recover, is the support services they require within their regions. How the government addresses the substantial issue of how to keep the support businesses in rural areas going during a drought period is pivotal. It is very vital to continue to support primary production. When there are prolonged periods of drought and there is little work for some of the businesses that provide support services for farmers, they have to close their operations and go away. When there is a recovery, when the rains come again, of course it is very difficult to re-establish those services. These include all sorts of services to primary producers, including machinery dealerships, mechanical workshops, grocers, banking facilities and a whole range of support services.

Yesterday I outlined to the House my visit to rural areas in New South Wales during the last drought, in the early nineties, when I was shadow minister for small business. It was a devastating time for many. As shadow minister for small business, I came back to this place determined to develop some policies to ensure comprehensive assistance for primary producers and those whose business services look after the primary producers and to put a plan to shadow cabinet along the lines that, interestingly enough, the member for Windsor outlined to the House yesterday. Since its election in 1996 the Howard government has continuously worked to improve the substance and timeliness of assistance to drought affected areas. Measures that have been introduced include the Farm Management Deposits scheme, which is quite effective. In good times it helps farmers to put funds away for the more difficult times. We have other drought-proofing measures, like the 100 per cent tax write-off for farmers who elect to build additional dams and put down sink bores so that during difficult times they have reserve water supplies on their property. In the Pearce electorate, many farmers have done just that. At least it is helpful. It does not completely save the day, but it is helpful if they are able to do that in the good times.

Somebody once said that without trucks and farmers Australia stops. This bill to amend the Farm Household Support Act 1992, and consequentially the Age Discrimination Act 2004 and the Social Security Act 1991, will ensure positive support so that during times of drought businesses that support primary industry production will have a better chance of riding through the drought and providing continuity of services when the drought breaks.

The Prime Minister made an announcement in November 2006 to allow agriculturally dependent small business operators access to the same exceptional circumstances assistance that is already provided to farmers. This assistance includes EC relief payments and ancillary benefits such as provision of the health care card and, indeed, concessions under the youth allowance and Austudy means tests. Assistance will be available to eligible small business operators until certain dates. I think the dates have changed, but there are some cut-off dates for that. It is a very sensible measure.

2006 was indeed a tough year for farmers. Those in horticulture, viticulture and aquaculture industries were hard-hit. In this place we have heard about the dairy industry and how difficult it has been for them. The season was dry and unforgiving and the rain just did not arrive. Most farmers across the Pearce electorate, just like those across the country, suffered the income losses that come as a result of a poor or dry season. Financially, many of them are struggling as we come into another season. We certainly hope and pray for good rains this year.

Despite Pearce not being included in the exceptional circumstance area, I support the government’s move last year to declare areas across the state of Western Australia drought affected in order for them to be eligible for exceptional circumstances assistance, including this measure to assist small businesses. Originally the government made the assistance available to eligible small business owners who were affected by the 2006 drought, had no more than 20 employees and whose income was at least 70 per cent reliant on agricultural industries located in the EC declared regions. Later in the year these areas were extended and more regions in WA were EC declared, meaning that more residents could access financial help, thankfully. Again, this did not apply to my particular electorate, but I represent a rural electorate and we are all very sympathetic to those further east in Western Australia who have particularly hard times ahead.

Agriculturally dependent small business owners are currently able to access EC relief payments through ex gratia arrangements. The Farm Household Support Amendment Bill 2007 will formalise these arrangements by outlining eligibility criteria payment rates and multiple entitlement exclusions, and provide agriculturally dependent small business people with access to the health care card and other benefits. This may further assist some farmers as many have informed me that they have had to diversify into different industries and change their crop routine to make enough money to make ends meet in the tougher seasons. Some have had to work off farm or start their own small business, in many cases in local rural towns. This will perhaps further assist some of those farmers in that category. It will provide for farmers who have diversified into agriculturally dependent small businesses as a drought management measure. As these farmers are no longer deriving a significant proportion of their income from their farms, they would not be eligible under the normal course of events for EC relief payments as farmers, and their continued ownership of farm assets would affect their eligibility under the small business assets test.

Farm families are very resilient and resourceful. We often see them unable to farm for a season or two and when the drought is over they successfully resume their farming activities. To make sure that this category of farmer is not disadvantaged, applicants will have specific farm and small business assets exempt from the relevant assets and means test. These provisions do not apply to farmers who continue to derive a significant amount of income from their farms but who also operate small, agriculturally dependent businesses. The amendments will affect agriculturally dependent small business operators where 70 per cent or more of their gross income is derived from providing farming related goods and services to farmers in EC declared areas.

Farming land in the Pearce electorate in Western Australia is located past the Perth hills in the rural centres of Northam and York, through the Swan Valley, east of the Perth wineries, where lots of small horticultural properties scatter the landscape, and south-east of Perth in the centres of Narrogin, Beverley, Brookton, Wandering, Pingelly and Cuballing—areas home to farming families and businesses reliant on these farming families. Farming is about sustainability and we need to be able to assist our hardworking agriculturalists in times of need. When the rains fail, it is very much beyond their control. As I said, they can take advantage of some of the measures that the Howard government has put in place, such as the deposits, scheme and the incentives to drought-proof their properties. But in difficult and sustained periods of drought, these are often just not adequate and farmers need additional assistance. The government does recognise the value of agriculture and the contribution that farm families make in good seasons. It is this recognition that prompts the government to make significant investments in the environment and in agricultural land to ensure that it is preserved for generations to come, while agriculture remains sustainable into the future.

Through droughts, fires, cyclones, frost, labour shortages and even the recent events in respect of the Australian Wheat Board and the debate about the wheat marketing arrangements in Australia, which have all come to a head during the last year’s harvest, farmers and farm families are indeed survivors. For all of those farm families around Australia, we hope that the rains do come and that this next season will be a very productive one that restores many farms to productive farming activity.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

The Farm Household Support Amendment Bill 2007 amends the Farm Household Support Act 1992 to give effect to some of the measures announced in the 2005 drought assistance package, which the Prime Minister announced on 30 May this year. Some of the changes announced by the government can be done by ministerial direction. This piece of legislation is necessary to provide for changes to the income test for exceptional circumstances relief payments, but I believe they do not go far enough. The legislation provides for an exemption of up to $10,000 for off-farm wages and salaries to a person and their partner as of 1 July 2005. It also provides that, in future, a person seeking exceptional circumstances relief payments will make an application directly to Centrelink, instead of to a state or territory rural adjustment authority.

At present, more than 44 per cent of the country’s agricultural land has been exceptional circumstances, or EC, declared. That covers 63 regions. A further four areas are currently being assessed for EC declarations. Labor is prepared to support the proposed amendments to this act and to the Age Discrimination Act 2004 to allow agriculturally dependent business operators access to the same exceptional circumstances assistance that is already available to farmers who have been adversely affected by drought. Drought is very much part of the Australian landscape and in some years it can be more severe than others—this year being one of them. Not only have farms been impacted; businesses that depend on farms for their livelihoods have also been impacted.

Labor supports the intent of the Farm Household Support Amendment Bill, which includes provisions to broaden eligibility to EC relief payments and other benefits such as the health care card and concessions under the youth allowance and Austudy means tests, because despite some shortcomings it might do some good. While Labor is broadly supportive of this bill, it requires amendment to more realistically reflect business in rural and regional Australia.

This bill has created the unreality that a business in rural Australia that employs 100 employees should be defined as small. This is an artificial definition created by the government to suit its own agenda. The Australian Bureau of Statistics defines a small business as one that employs five to 19 individuals. A business with 100 employees is defined by the ABS as being a medium sized business. In order to make this legislation work, Labor intends to move an amendment to this bill that will be in two parts: firstly, to change the term ‘small business’ in the definitions and replace it with ‘eligible business’ and, secondly, to remove all references in the bill to ‘small business’ and replace them with ‘eligible business’.

The government’s previous attempts to address this issue have been pathetic. This is the second attempt to assist non-farm businesses in relation to drought assistance. In 2002, through the Small Business Interest Rate Relief program, the government forecast 17,500 applications and received only 452 applications, of which 182 were successful. That is a pretty poor record by any government’s standard. We have found that businesses found it difficult to prove that 70 per cent of income comes from farm businesses and that the process of applying was costly and very complicated. So, although the government and members on the other side hang out that they give great support to regional Australia, in reality they give very little.

In my own state of Tasmania, which many believe does not get drought affected, we get no help from the federal government, yet we do have exceptional drought conditions. Last week I visited a number of properties between Millers Bluff and the east coast in my electorate, and it was quite shocking to see the land degradation and the lack of water in the catchment. Tasmania has had a very hard time of it because so little has been done to help our struggling people on the land and, although there has now been an attempt to deal with that, I believe that the amendment should be agreed to because of the failure of this government to act more quickly.

I have also been approached by many farmers in the southern Midlands, and they have had to shoot much of the stock that they would have sold this year, as feed has been almost impossible to find. This has huge impacts on farmers and their families—shooting stock rather than taking it to saleyards is the most demoralising thing to happen—but, if there is no grass and therefore every animal has to be handfed, farmers cannot survive the costs that mount up. It has become so bad in parts that many of the men on the land have been on suicide watch—a sad indictment of the state of the country’s problems.

I have spoken to my state Minister for Primary Industries and Water, responsible for agriculture, Mr David Llewellyn, and he has told me that he has been trying to get some assistance for these farmers. He has spoken to the federal minister and asked for the guidelines to be varied for Tasmania’s exceptional circumstances, because they are very different from those on the mainland but are still in every way exceptional. It is the time factor that is different. I have spoken to members of this House who come from other states, like South Australia, which have similar problems. The exceptional circumstances guidelines seem to have been drawn up for New South Wales and Queensland. Other states have different circumstances and should be given opportunities to be judged under different criteria.

Rain may come and might just register on the rain scale, but if it is accompanied by wind the water evaporates almost instantly and brings no good to the ground. It remains dust dry and in any one day driving through these areas you see the wind whipping the topsoil off and blowing it away. We have asked the Minister for Agriculture, Fisheries and Forestry, Peter McGauran, to reconsider these guidelines because the circumstances are exceptional; yet because they vary from the standard model of drought he has turned us down. I believe we can develop a prima facie case for drought relief.

I know that, despite recent rain across significant parts of Western Australia, Victoria and New South Wales, and parts of South Australia and Queensland, around 45 per cent of Australia’s farmland is currently drought declared. In New South Wales the figure is closer to 85 per cent. Some of the most productive areas of Queensland are also in drought, as are parts of Victoria, South Australia and Western Australia. In fact, large parts of New South Wales, southern Queensland and northern Victoria have been in drought since late 2002 or the early part of 2003. A significant number of families in these regions have derived little or no income from their properties for three years in a row. So in some ways their ability to claim is really no better than it is for those in Tasmania because of the way ‘drought’ can be interpreted. This government builds legislation that deals with the loudest and largest states, but every person on the land has a right to be considered in this assistance. Whereas the eastern states are the ones that will benefit most, states like South Australia and Tasmania have different needs and different assessment criteria are needed.

Drought can have enormous effects outside the industry, as we have noticed this year in our northern Midlands town of Ross. The low level of water in their feeder dam has led to algal blooms, which means that all drinking water has to be boiled. It is not a good look for the tourists who come to that lovely town. So this small farming town has not been backed up by tourism in the last year, which of course has major economic effects on the local businesses.

We need to put more emphasis on drought proofing and the assistance programs, as well as have some flexibility in the guidelines to allow states such as Tasmania to help the farmers, the rural workers, their families and the businesses that support their communities. I am concerned, too, that my state will not get proper consideration during the allocation of funds for ongoing drought proofing if we have to adhere to the guidelines set down by this government.

Water is going to be one of the most important commodities of the future. We need to act now to develop more research on water saving, water pricing and water recycling to help our rural industries to expand and develop sustainably. We have to understand that Australia will always be a drought affected nation and that our use of water has changed over the last two centuries—there are more people now in the cities than in the past and many of our newer crops are intensive and some are very thirsty. So we have to relearn water usage.

This legislation really is a bit of a bandaid exercise. We must continue to assist farmers to grow crops with less water. For instance, in Tasmania this year we have grown considerably fewer potatoes because of the lack of water in many of our catchments, for example in the northern Midlands. Drought has effects right through to the school level and on employment in our rural and regional towns. Businesspeople who service farming communities and employ workers are affected when farm businesses struggle, so there are ongoing effects. That is addressed by this bill.

We need to work hard on new storage opportunities for capturing some of the winter run-off in Tasmania. I think Tasmania comprises one or two per cent of the landmass of Australia, but we get around 12 per cent of the rain run-off. We need to be able to capture a little more of that and store it successfully to help us have a more productive, sustainable farming position. And there are plenty of opportunities for us to be able to do that economically, especially in the northern and southern Midlands of my electorate.

There is also great scope to increase the opportunities for young people to develop skills. I have just finished a report on the lack of skills opportunities in regional and rural Australia and the need to improve opportunities to develop skills into the future. This is where they are urgently needed. Perhaps we can increase production of vegetables and some grains by capturing more of the water from the winter rains that usually run right through and spill over the dams.

So we have to do better than we have in the past. We have to do better than the current minister is prepared to do with the effort he is putting into this. I think we need to do a lot better. As I said, this legislation is only a bandaid exercise. But there are many out there in terrible circumstances and we just have to help them get through this—and these measures will help them get through. Hopefully, more people will have an opportunity to claim some of this EC relief. That will help them, this year, to have an income—one which will allow them to have some sort of quality of life and maybe keep their business intact. Then, as crops get planted in the future, those businesses will still be there to give support to many farming enterprises in rural and regional Australia.

Kay Hull (Riverina, National Party) Share this | Link to this | Hansard source

It gives me great pleasure to rise today in support of the Farm Household Support Amendment Bill 2007. This bill will, and will continue to, deliver to the people of the Riverina and beyond. Drought is an exceptionally difficult issue to manage. I congratulate all those communities right across my electorate of Riverina, who are being as supportive of one another as they possibly can be, for the way in which they have withstood the onslaught of the difficulties that have been apparent since 2001 in my electorate.

I was just flicking through some of the announcements that have been made in my electorate on drought issues. They go back to 2001—and then on through 2001, 2002, 2003, 2004, 2005, 2006 and now here we are in 2007. In 2001 I would not have thought for one moment that in 2007 I would still be making announcements to my electorate on what additional drought support people were entitled to receive. I think that indicates how very serious this has been, not just in Riverina but in many areas across Australia. It has been particularly bad in New South Wales.

My entire electorate of Riverina has been exceptional circumstances declared and is experiencing the effects of the worst drought on record. The government has committed to assisting those who have been suffering the effects of the drought, including our small businesses, by providing an additional $210 million as of 7 November last year.

Of this funding, $127 million had been allocated for the measures covered by the Farm Household Support Amendment Bill 2007. I enthusiastically welcomed this announcement because the viability of many of our agricultural small businesses is highly dependent on the viability of our farm production businesses. While our farm production businesses have been the first group to experience the effects of the worsening drought, there has been increasing pressure on our agriculturally dependent small businesses, and they too have been and are experiencing significant financial hardship.

The announcements that were made on 7 November allowed our agriculturally dependent small business operators access to the same EC assistance and arrangements that was already provided to our farmers and producers. This assistance includes EC relief payments, ancillary payments such as the healthcare card, and concessions under the youth allowance and Austudy means test.

But there was a further announcement. Initially, the announcement was for small businesses 70 per cent reliant on agriculture but employing only up to 20 people. There was extensive concern, particularly in the Temora area. A couple of businesses there were rigorous and unrelenting in their determination to present the case that restricting small business to 20 employees impacted on them greatly because they had set up their businesses in many additional areas. A case dealer might have set up in Leeton or Coolamon or Temora or Coleambally or Griffith, all under the same business, buying locally and employing locals et cetera. But those businesses were precluded because they were employing more than 20 people.

So it was with great excitement, after a significant lobbying process, that I was able to welcome a further announcement—that we would extend this drought assistance to businesses that were employing up to 100 employees. As I have just indicated, it is still for small businesses; most of these businesses are operating in other regional towns that are also experiencing the dramatic effects of the drought. It was a tremendous announcement and I was very thankful to the Minister for Agriculture, Fisheries and Forestry and the Prime Minister for recognising just how small business works in rural and regional communities.

The bill will also formalise the current ex gratia arrangements for EC relief payments and allow our agriculturally dependent small business operators to access all of the benefits that are currently available to all farmers. It is not a pleasing thing to stand in this House lauding the benefits of what the government is doing in these circumstances of drought. It is one thing that you do not want to have to do and you would really rather not have to. You would rather there was no drought. You would rather not have to be standing in this House supporting a bill that is providing assistance to our growers and businesses across the region. You would certainly rather drought not be the damaging circumstance in the lives of so many people across our electorates.

It is quite an irony actually to be standing here congratulating the government for being proactive and positive and for moving swiftly in order to address some of the concerns of the many people affected across Australia. As we have seen just recently in our papers, New South Wales farmers and the NFF have said that they do not want to be seen as the ‘poor buggers’. They are proud people who like to stand on their own two feet. It is just that the circumstances they are experiencing now are rendering it almost impossible for them to do that. They do not want our sympathy; they really need our understanding as to why governments are required to assist production in such times of dramatic downturn. It is simply because one cannot control the environment.

Farmers are an extraordinary group of people. If I had to rely on the natural elements to make my living, I am sure that I would not have the resilience to do that. So it is with great pride that we, as Nationals, always stand and support our farming communities for the wonderful job that they do in Australia. I have often said in this House that unless we as Australians want to be running around naked and emaciated we have to support production in rural and regional Australia. This government, to its great credit, has reacted and come to the assistance of our producers and of our businesses that are heavily reliant on producers and on our communities by offering up a range of measures.

This could not have taken place without the economically sustainable management of our finances whilst this government has been in power. Many people complain about the way our government has a bank and a surplus. I will never complain about a surplus. It is the same with our own banking procedures in our own lives and in our own households: if you have no resources in the bank and an emergency comes up then you are not able to deal with that efficiently and effectively. It really is in the interests of everybody to have a very healthy bank balance and healthy reserves for those rainy days. The government follows the same principle: we manage economically the moneys of the taxpayers of Australia so that the government can responsibly respond to issues when they become apparent.

Nobody wants to be in the position of having to respond to this critical drought situation that we find ourselves in. But if we had not had that economically responsible way of managing money under the Treasurer, Peter Costello, the Prime Minister, the Deputy Prime Minister and all the ministers and members of the government we would not have the funds available to be able to provide this assistance. That is what the people of Australia clearly need to understand. In order to respond to the many issues that come up and confront us on a day-to-day basis that have not been planned for, there has to be economic sustainability and financial responsibility from the government of the day. And nobody could accuse this government of not being financially and economically responsible. So there have been many things announced across my electorate that have been of benefit. They are not going to fix all the problems, and we have heard criticism of what the government has not done, but nobody in the House is going to rise today and say that the government can adequately respond to, ameliorate or fix every problem associated with the extraordinary drought we are experiencing at the moment.

But there are things such as funding for organisations to support communities that have been affected by drought. We had a $10 million fund that enabled organisations to apply for between $3,000 and $300,000 for projects for up to two years under our Strengthening Drought Affected Communities initiative. That was an absolutely fabulous initiative. It was for not-for-profit organisations to apply to develop projects to address local issues with local responses, creating local opportunities for families in our drought affected communities. We all knew at the time when all these programs were announced that it was extraordinarily tough for families who were trying to respond in this extraordinary time. These projects for communities could include activities that would increase social participation, provide communal support to share and address issues, build skills and opportunities to make our families and communities more self-reliant, and develop skills in leadership and mentoring and volunteering—embodying all the ethics and ethos that go to make up our country communities. We have heard discussions of suicide watch and the extraordinary suicide rate, which is indeed a trial and a problem that many communities have to deal with on a week-by-week basis. But the government has responded to try to address this and to make available funding that can bring people together.

On Saturday I was at Eurongilly with Gail Commens and the CWA, who were out there bringing together the community. The Rotary Club from Canberra came across and did the barbecue. They brought across a significant amount of assistance packages, which were all lined up for people to take home to help them to get through another week. I have to say that on the drive to Eurongilly I was absolutely staggered to see the condition of the properties along the way. It was just amazing; there was not an ounce of surface coverage—it was a moonscape. I have never seen it to this degree in a supposedly safe, generally high-rainfall area. It was just so bad. I have done a lot of travel across my electorate and I think that area is the worst I have seen. The smell of rotting flesh absolutely permeated the vehicle as I drove out there. When I got to Eurongilly to see the people there, there were kids on a little jumping castle, Rotary from Canberra were cooking a barbecue—they understood the plight of this area—and people were sitting around trying to give comfort and security to their mates and fellow property owners.

Under another government program I had been able to get about $36,000 to do some construction work to rebuild and strengthen the Eurongilly hall so these sorts of activities will be able to continue to take place. As we know, our rural communities have so few places to meet, and they all do a great job of trying to keep their local village or their local hall in the middle of nowhere updated and maintained. They do a fabulous job, but the money has just run out for these communities. So it was great to see how excited this community was that they were going to be undertaking their voluntary roles in rebuilding parts of this hall so it could continue to provide the meeting place for communities who just give so much and are sometimes so little recognised.

So the government have helped in a myriad of ways. They sent around the drought bus, and many of the people across my communities were able to access it—in Gunnedah, Narrandera, Ganmain, Wagga Wagga, Junee, Temora, Griffith, Leeton and Cootamundra. It was a great assistance to these communities to be able to go into the drought bus, to apply for their EC certificate there and not to have to self-assess but be able to get reliable and up-to-date information on what their entitlements were. I felt that it was a tremendous initiative and one that many of the farmers sincerely appreciated, because for most of my areas there is no available Centrelink office and so they have to travel off farm. This is very hard because they are constantly having to feed their livestock and they are carting water because their dams are empty. They are just trying to manage on a day-to-day basis, so if they have to take a day off to come into town the cost of that is quite great when they have to consider the expense of their livestock. It was a great relief to them to have the availability of and access to the drought bus and the community support bus that went around and provided the ability to talk to a counsellor. Certainly it enabled them to get correct information rather than having to wade through the process of finding out what their entitlements were or were not.

In short, I can say that we cannot possibly resolve every issue for drought affected communities. The government can do some of the things it wants to do, but not all of them. I believe the farmers, producers and communities are cognisant of that fact. They are very proud. They do not want to be considered as ‘poor buggers’. They certainly are great Australians. For all of the actions that the government has put in place to assist with and ameliorate some of the problems confronted by our wonderful producers right across our electorates, I am very thankful. I am also thankful that the irrigation communities have been included in the exceptional circumstances arrangements. This recognises the plight that we have, not just in dryland farming. The irrigators have been taking hits to their water for so many years now that it has finally hit home. The irrigators have now found themselves having to apply for EC. I commend this bill to the House.

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

I appreciate the opportunity to speak in support of this measure by the government, the Farm Household Support Amendment Bill 2007, and welcome the chance it brings to make a few general observations that are perhaps pertinent in the current dreadful drought circumstances confronting so much of rural and regional Australia. I say at the outset that I am thankful for the support that the broader community seems willing to extend to our farm sector.

Having said that, it should be of deep concern to us all that there is a relatively low level of understanding now of what is involved in producing the food and the fibre upon which we are all ultimately dependent. There are only a little over 100,000 farm units in Australia today, and many of those are hobby farms. The days when it was more or less a given that, if you were not on the land, you had an aunt, uncle, cousin or a good friend who was and you visited a farm regularly are long gone. For most Australians their experience of life on a daily basis involves very little consciousness of, and very little opportunity to interact with, the farm sector and yet we are all totally dependent upon that sector for the provision of the essentials of life.

In that context, there are some general points that need to be made that are of quite some importance. The first is that the Australian farm sector is extraordinarily efficient. It is not a sunset industry; it is not low-tech, it is not lacking in sophistication and it is not lacking in managerial expertise. It is the case, as it is in any other profession, that some farmers are more efficient or more capable than others, but the sector is world leading—I have no doubt about that at all—when considered as a whole. What needs to arise out of that is a broad awareness that this sector is not somehow inefficient, not somehow to be pitied or somehow to be seen as a sector that is dependent upon the goodwill and the largesse of the broader community.

Its current circumstances are very difficult indeed as a result not simply of the drought but of the fact that Australian farmers do not operate in a genuine marketplace. The international marketplace is highly distorted by the production subsidies and export-distorting arrangements engaged in by much of the rest of the world—Europeans, Americans and Asians—to the detriment of farmers in the Third World and farmers in Australia. The World Bank, surely an authority if ever there was one to be found on these sorts of matters, estimated a couple of years ago that if wide-ranging and real trade reform were engaged in globally, Australian farmers would receive an income lift of some $31 billion annually.

That is an important point to make because it highlights the fact that, when tough times come, care of a drought, Australian farmers are much more economically vulnerable than they would otherwise be. Their incomes are hit hard by those international practices. Not only is price injury imported in the sort of global trading environment that we operate in now but you cannot ask more on domestic markets than you can hope to extract out of export markets, allowing for freight differences, because, if food processors and so forth cannot purchase what they need at acceptable rates from Australian farmers, they will simply bring it in from overseas.

The reality is that, dependent as we are on export markets for some 70 per cent of our product, we are takers of those artificially depressed prices anyway. I would go so far as to argue that for most farm products, most of the time, the rate of return is below the genuine cost of production, if you allow properly for externalities such as the impact on farm environments. I think that gives rise to a proposition that is entirely reasonable, and it is this. The international trading practices that so many other countries engage in are immoral, not just in their impact on the Third World or on countries like Australia but also in the sense that, in artificially depressing farmers’ prices to the point where, as I said a moment ago, you could argue that they are often below the true cost of production, it makes it very difficult for farmers to do as I believe they instinctively want to do: maximise the management and stewardship of their land, water and natural resources.

Arising out of that is another important point that we ought to note on the way through—that is, in most ages and in most circumstances a drought of this order would have resulted in immense suffering, not just for farmers but for the entire community. A drought that has dragged on, year in year out, would have meant for most societies in the past—and still means today for many societies—the real prospect of starvation and massive personal suffering. The reason why it does not mean that in Australia is, as much as anything else, that in ordinary circumstances our farmers produce four or five times what we can consume here at home. We produce enough food for somewhere between 80 million and 100 million people and we have a population of just 20 million.

The surpluses are so vast that, while the drought, as severe as it is, has resulted in us having less to export, it has not impacted on our capacity to supply local supermarkets on which so many of us so heavily depend in this age when food seems to be just another consumer item. Not many cultures have the luxury of being able to see food as simply another consumer item. Most cultures have recognised that farming occupies a unique and very important place in the fabric of their communities. That applies to much of Europe, for example, because they have known what it is like to go without. We have not known what it is like to go without, and God forbid that we should ever be in circumstances where we do have to go without. But I think it is important to understand just how fortunate we are that we are so efficient in this country in agricultural terms, that we have such large surpluses and that while a drought may have an impact on supplies globally it does not have a negative impact in any serious way on consumers in this country. Certainly we get headlines that warn of the price of vegetables going up or the price of meat going up a little bit, and we talk about a little bit coming off national economic growth, but this is inconsequential in comparison to the effects that a drought of this severity would normally have if we did not have the sophisticated, very capable, very efficient and very productive farm sector that we benefit from in this country.

I often hear it said in this place, understandably, that farming is a business and must be treated as a business by people on the land. While farmers must accept that their occupation is a business, the rest of the community must accept that it is not simply a business. I am a farmer myself. From an economic perspective, I am mad to be a farmer. There is no money in it, relative to the sort of money you can make in a prosperous society with other investments. That is the reality of it most of the time. It is a business in which it is very hard to make a decent return on your investments. You dream and hope about having a year when you will get a big surge in income and it will all seem worth while, but basically if it were simply a business no-one would do it. Most farmers are deeply committed to their business as a lifestyle and in terms of the opportunities it gives them to exercise careful stewardship over their land and their resources. It is very easy in urban Australia to paint farmers as people who do not care about the environment, but that is just wrong. Most farmers are deeply committed to their land and water resources.

On that front, I would like to make a couple of comments about the severity of this drought and how it is masking some of the reforms, particularly in water, that have been undertaken to this point in time. In terms of the severity of the drought, the first two rural lands protection boards that went into exceptional circumstances last time around were Bourke and Brewarrina, in my own shire. Most of the farmers and graziers in those two shires have essentially endured seven or eight years of appalling drought. With the collapse of the reserve price scheme for wool, graziers have been suffering since about 1989 from very low wool prices as well.

The suffering has been immense and it remains something that is hard to describe in this place. I can only salute the personal courage of so many people who battle it out, day in, day out, under unrelenting clear skies. Perhaps even worse, in recent times, storm clouds have been brewing up and passing over without dropping anything, or if there has been rain it has been of little use. I am not sure how some of those people have managed to keep going and keep their spirits up. Some have not; some have found it too much. We have all heard of some of the sad family circumstances that have resulted from the sheer pressure that these circumstances have brought about.

The flow-on impact to the local communities has been immense—and that is what is being recognised in the measure that is now before the House. In Wee Waa, where the Australian cotton industry started in the 1960s, local business turnover is down by something like 47 per cent. In Bourke, also in my electorate, with a population of 4,000 in the township itself, where some 700 jobs are dependent on irrigation, there has not been a cotton crop of any substance for years and there is little prospect of that turning around. So there is economic devastation.

I mentioned a moment ago that we see headlines about the drought knocking a tiny little bit off national growth. But there is no growth in communities like those, and while it is not a recession in economic terms it is a depression. Our fellow Australians, through no fault of their own, are living in circumstances where their local economy is in depression. While I am very grateful that the broader Australian community is prepared to support those people, and I am sure it is, I think it is important to recognise just how devastating the impact on those people is.

I also mentioned a moment ago that I wanted to touch on the fact that this drought is masking some of the other activities that have been undertaken. The water issue is of course very much at the forefront of people’s minds in this day and age because it is now affecting the cities. However, the impact can be far more devastating on people who are utterly dependent upon water for their livelihoods. Of course, farmers are not the end users of water. I am still astonished to sometimes see the accusation aimed at the farm sector that they ‘waste’ water without a recognition on the part of the people who make the claim that people who eat, people who wear clothes and people who have timber in their houses are in fact the end users of that water. That is my first point.

The second point that arises is this. It is a simple fact that the farm sector is further ahead in relative terms in the efficient use of water than our major cities are. The farm sector is investing heavily in the more efficient use of water. If you doubt my words, consider the cotton industry. It alone is set to invest huge sums of money in further substantial water efficiency gains over the next few years. Over the last decade the rice industry has halved the amount of water it uses per unit of production. I think it is now the most efficient user of water in the rice sector anywhere in the world, so real progress has been made.

But there is another aspect of this that needs to be nailed. We hear commentary to the effect that, after years of talk, no water—not another drop, not another cupful—has been returned to the river systems, in particular the Murray. That is simply not right. That simply does not reflect the facts. There have been very substantial and often involuntary cutbacks for water users in the Murray-Darling Basin in recent years. The reason why that has not shown up in increased flows into the rivers is that there are not any flows into the rivers. The irrigators have not got any and, of course, the rivers are not flowing because it has not rained. But, when it does, the cutbacks that have been made to date by one way or another will be shown to have been very substantial and to have returned a lot of water to the environment.

That process, I would urge my city cousins to recognise, has been very painful for a lot of people in country areas. I know farm businesses that are now very unlikely to survive, not simply because of the drought but because they have lost entitlements to much—in some cases, the great majority—of their water. In most cases they have received little or no recompense. Some would ask, ‘Why should they?’ The reason is the great majority of them have done nothing wrong whatsoever. They have used licences given to them by state governments of all political persuasions—either in ignorance or through mismanagement, or both—over the decades and they have often come with conditions that have implied that if they do not use them they will lose them. Farmers have created a lot of wealth and jobs with that water. While they will wear the bulk of the pain in the cutbacks, I believe it is only fair and reasonable that the community, given that it has benefited from the wealth and jobs created, burden-share, if I can put it that way, and help the many farmers and country towns cope with the very real economic impact.

The broader community should be aware that the water issue will impact on the Indigenous community as much as anyone else. A lot of jobs will go missing—a lot already have gone—as a result of the water reforms. I do not argue with their necessity. It is just the opposite: I was the architect of the National Water Initiative, which acknowledged that there had to be clear pathways—but fair and just ones—for returning systems to sustainability. I would urge that the progress that has been made be recognised. It is the case that we have not yet seen the benefits. That is because it has not rained—but it will; it will rain again.

I am very optimistic about the future of agriculture. I am not a sceptic on greenhouse warming. It is undoubtedly happening, and we do not yet know what the climatic implications will be for Australia. It is obviously a result of natural changes as well as of some impacts, no doubt, of human activity, and we are right to engage ourselves in a serious debate now about how best to tackle it. But I do not believe that the current drought is a result of climate change. Indeed, even the met office seems to believe there is a very high chance of us now having a wet winter, and some experts are saying we may be in for a succession of wet winters. It will turn around.

I also believe that there will be great opportunities for farmers in the future. In closing, I would make this observation. I think a large part of that future will be derived from the fact that the world is waking up rapidly to the fact that plants can be a tremendous source of many things other than food and fibre: feedstocks for the chemical, plastics and medicines industries as well as a replacement for oil—not simply ethanol but more complex biofuels, multimolecular fuels that more approximate the energy that is provided by petrol. All of these sorts of things are on the drawing boards, and massive amounts of public and government money are going into them, not so much here but internationally. More needs to go into them here. I do think that this will result in a whole new farm sector: the production of crops for a variety of uses other than food and fibre. On that basis I conclude that this is a good measure and I hope it helps a large number of small businesses survive until there is a real turnaround.

John Forrest (Mallee, National Party) Share this | Link to this | Hansard source

It is a great honour to follow the member for Gwydir. By way of response, given his efforts with the establishment of the National Water Initiative, I report to him that the Wimmera Mallee Pipeline is proceeding at the enormous rate of six or seven kilometres of pipe per day, with all of the different branches. That is providing tremendous positive encouragement for the people of the Wimmera Mallee. On their behalf, I express appreciation for the work that the member for Gwydir did in that regard.

I am very pleased to speak on the Farm Household Support Amendment Bill 2007. By way of describing the situation that exists in my federal division of Mallee, it is very sobering to note that the entire area of 76,000 square kilometres is now fully declared as being in exceptional circumstances. As the member for Gwydir and other speakers have mentioned, this is having a very sobering impact upon the constituents of that region.

The eastern Mallee, which is the north-eastern corner of my division, has been in exceptional circumstances for three years. The far eastern section of my division, which is the Goulburn and Loddon River valleys, has included irrigators. The rest of the Mallee, the northern Mallee and western sections, is in exceptional circumstances now for its second year. I was very grateful a fortnight ago to have the southern Wimmera finally included in a full EC declaration, which has taken some time to achieve. Given the state’s desire to include the whole of western Victoria, we now have a situation where the entire section of western Victoria—west of Bendigo and Ballarat, all the way south to the coast, to the South Australian border and the Murray River—is in exceptional circumstances. That gives some concept to those people who may reside in the metropolises of just how dire the circumstances are.

Of course, at the South Australian border it is the same and north of the Murray River, in the member for Farrer’s constituency, it continues. In fact, when you look at the huge number of regions, I think it is now well over 60. South of the Tropic of Capricorn, basically the whole continent is in exceptional circumstances.

There are some people in my electorate who assure me that they have seen worse, but I certainly have not. I can remember my region of the world in 1983 when, after touring the world and studying, I decided to establish a consulting engineering practice with offices in Swan Hill and Mildura. I will never forget my late father’s groaning when I advised him of my intention in the middle of what was then being described as one of the worst droughts. It was hard operating a small business. I found those first few years very difficult and had to range wide afield for engineering work to sustain my business. Thankfully even in those days the mining sector provided a source of work, and it is interesting to reflect that that sector of our economy is still booming and therefore enables us to prop up those sectors of primary industry that are currently doing it extremely hard.

Back in the 1980s the arrangements for exceptional circumstances did not deliver for grain growers in the north-west of Victoria, because they were entirely based on rainfall outcomes. Whilst rainfall over the summer and Christmas periods is welcomed, it does not necessarily mean that it can ultimately deliver a grain crop. Because of the entire dependence on rainfall records in those years, the arrangements for exceptional circumstances did not deliver the outcomes we now have for desperate primary producers.

This bill deals with the secondary aspect of the small business commerce that occurs in regional Australia, and that is one of the reasons I mentioned my experience in the mid-1980s. I hear anxious concern now even from retailers in the strong provincial centres, which are basically Mildura, Swan Hill and Horsham—Horsham being the hub of the Wimmera region. I understand their anxiety at their reduced sales figures, because they all say to me that, on the day we receive an inch and a half of rain in April or May, their business suddenly booms. People then have the confidence to spend on items which have not been necessary and on which they have conserved their spending. I look forward to that outcome. Although it seems to be remote, I am quietly encouraged that even the Bureau of Meteorology is suggesting the possibility of the end of the drought.

As the member for Gwydir has said, this is not an event that has just happened; it has been occurring at least over the last eight years. In fact, a reasonable crop return was possible for the grain growers of the Mallee in 1985, but it is fascinating to observe that they grew a reasonably returning crop off a total of four inches of rain in a region that has a historical tally of 10 inches; although I struggle to see how that has ever been achieved in the last decade. That reflects the efforts that have been undertaken in grain research and plant breeding to grow varieties nowadays that can deliver outcomes with reduced rainfall.

But even that has not been enough, and I am grateful for the safety net that has been put under my primary producers. Bear in mind that the EC declarations that are now in full force across my entire electorate include every producer of primary products. That includes horticulture, stone fruit growers, grape growers and vegetable growers. I am immensely grateful for the recognition of the obvious fact, which had to be demonstrated, that even irrigators, whilst they might have access to irrigated water, do endure downturns in their productivity when it is not raining. When it is not raining, that simply means they have to use more irrigation to compensate for the lack of precipitation.

Every commodity in my electorate now has access to exceptional circumstances. It is very sobering to recognise what use those primary producers are making of these arrangements. The farm household support is not substantial, but it does provide some relief. Of course, now with full EC across the entire electorate farmers are able to apply for what they see as the most beneficial, which is interest rate subsidies. I am immensely grateful for the willingness of the government to consider unfinished business as this drought has worsened and be prepared to alter arrangements to introduce better flexibility and to consider people beyond the primary producer sector.

That brings me to this bill and what it addresses. Until now, the assistance to small businesses, through the same arrangements available to primary producers, has been made by ex gratia arrangements. This bill formally puts these measures into effect and alters the definition of small business so that businesses employing 100 people, rather than no more than 20, can now qualify for assistance. I am immensely grateful for that outcome. There are a large number of agricultural machinery manufacturers in my electorate. Each of the provincial centres and a lot of the smaller towns have agricultural manufacturers and they are producing things such as disc ploughs that are two cricket pitches wide and are benefiting from export opportunities. There are header manufacturers, spray manufacturers and cultivator manufacturers. Many of them have had more than 20 employees, so they are very grateful for the willingness of cabinet and the government to extend the safety net for their businesses. Of course, they will have to demonstrate their dependence on agriculture. That is a reasonable stipulation. They will have to demonstrate that 70 per cent of their income and business activities are entirely reliant on agriculture. I am confident that those businesses I have mentioned will be able to justify that, given the impact that the downturn in business as a result of the drought has had on their activity.

I believe that is important because it will assist us to retain those skilled workers who are involved in those industries. These are very often welders, young apprentices, diesel mechanics, motor mechanics and auto electricians of a young age. If we lose them from our region and they get attracted into the mining sector, where they would obviously be able to generate a much more substantial income, they will never come home. The measures that this bill puts into effect will give those businesses some capacity to retain that expertise for the day when we all hope and pray there will be a turnaround.

The member for Gwydir has made reference to the impact that this drought has had on water. I am delighted that the Commonwealth has taken a lead role in addressing this matter. The reality across the entire southern part of our continent, south of the Tropic of Capricorn, is that there are something like 17 million Australians currently enduring some level of water restriction. Some are only in stage 1 restrictions, but I would just like to remind members of this place that the water users serviced by the Wimmera Mallee stock and domestic water supply system, including all of the townships across the north-west of Victoria, have been in stage 5 restrictions for the last five years. It is very sobering to travel back from Canberra, noting the wonderful green growth that is everywhere here, and arrive in Horsham, Warracknabeal, Birchip, Donald or Sea Lake and see how brown and unkempt the parks and gardens are. There are people in the provincial centre of Horsham who have been watering their roses using buckets and showering with a bucket to retain this precious resource.

I remain hopeful that the lead being shown by the federal government will bring the states into an arrangement where we can finally address this issue. Victoria does have very secure water arrangements. To the extent that it is demonstrated, the horticulturalists on the southern side of the Murray—the Victorian side—are currently being supplied at least 95 per cent of their licenced allocation. There is some uncertainty as to how that will continue after April. However, on the New South Wales side, many of those similar horticulturalists with the same commodities are down to as low as 15 per cent of their licenced allocation. So there is an enormous disparity in the arrangements for water security between the states. I would like to see all of the states come up to Victoria’s arrangements, which are very secure. We Victorians would not want to see any dumbing down of what those arrangements deliver. They have cost water users over decades. It costs money to ensure that water is not allocated unless next year’s supply is in storage. It has to be funded. I think to some extent that has meant in Victoria’s circumstances that many of the irrigation supply districts have not been undercapitalised. They are still delivering water through water systems that are 100 years old. Many of them are soldier settlements from both world wars. I am hopeful that the money that is on the table will give Victoria an opportunity to ensure that capital can be provided to give those irrigators who are producing important and valuable export commodities a system that can deliver to them a 24-hour a day, seven-day a week supply. With water assurance like that, they can grow whatever crop they choose. If they are enduring a downturn in one commodity, they can switch to other crops.

Returning to the bill, I wanted an opportunity to express my gratitude to cabinet, particularly to the Minister for Agriculture, Fisheries and Forestry. It is a whole-of-government approach to addressing the needs of families associated with primary production and small business. I am also reminded just how stoic and resilient the people of my electorate are. It is a great honour to represent them. They are very reluctant to ask for help. In fact, in quite a number of circumstances they have stoically resisted going to see the rural counsellor or have expressed sentiments like, ‘I won’t be seen dead in a Centrelink office.’ On some occasions I have gone with them, because I can understand that stoicism and resilience and the desire to be independent.

It has been very encouraging to see initiatives occurring outside the activities at both state and Commonwealth government levels. For example, my own church, the Swan Hill Church of Christ, which has sister churches in metropolitan Melbourne, cooperated to distribute three semitrailer loads of food and commodities, some of them luxury items, which were distributed to needy families across the Wimmera-Mallee. From talking to the recipients, whilst there is a humbleness and embarrassment, it does provide them with enormous spiritual support and encouragement to know that people in the cities care that much.

One of the metropolitan based Victorian Country Fire Authority services recently got together and established some cash and food parcels and sent them up to Horsham for distribution through the CFA network. Only last Saturday the state government provided a free country and western concert, hosted by Lee Kernaghan himself. Twenty-thousand people from across the Wimmera and the southern Mallee attended that concert. Some might ask: what does a concert do? It provides that much needed spiritual support to assist people to have social interaction and to not despair.

I often say to them that the nation is benefiting from an economic boom, thankfully, because of the ascendance of our mining sector, that it is the mining sector’s turn to prop up the other sectors of our economy that are not doing so well as a result of the drought and that they should feel no embarrassment and no reluctance to take advantage of the resources that are being made available to them, particularly those provided in this bill. I would also like to mention the rural counsellors, of whom there must be a dozen servicing that huge area of north-western Victoria I represent. They are working extremely hard, and I am immensely proud of their work under enormous pressure. As well as putting applications together and addressing the financial difficulties of families, they are also associating themselves with some of the pressure and emotional strain. I am immensely proud of the work they are doing.

I am also immensely proud of the three Centrelink offices—in Mildura, Swan Hill and Horsham—and the wonderful way in which they empathetically deal with the huge workload they are confronted with. It can be a little disappointing sometimes: some families express dissatisfaction with the time it takes. I ask them to stand by the process and, whatever they do, not sit out there and self-assess. I say to them that they may well be surprised that they do qualify for assistance provided through measures like this bill and others that the government makes available. I say: do not self-assess. If you need assistance to find your way through, I can put you in touch with Centrelink or any one of the number of rural counsellors. I commend this bill to the House.

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

I take some pleasure in following the member for Mallee. He and I represent the two electorates throughout Australia that have the largest number of grain-growing properties, on ABS figures. I beat him by about 500, I might add, at 4,000-odd. He, of course, has 3,000-odd. We have a genuine interest. All agricultural sectors are covered by the Farm Household Support Amendment Bill 2007. The reality is that rain, as it applies to the grain-growing sector, is the gamble that growers take when they spend on average $120 a hectare to put a crop in the ground. They hope that the land will get enough rain to provide an economic return.

These measures are aimed at bringing the same arrangements for household support to agriculturally dependent small businesses as would be available to farmers in the same region, and that, of course, must be endorsed. Such businesses are totally necessary for a farming region to operate. They make huge contributions socially. The great tragedy of modern agriculture would have to be the number of closed-up shops and premises that we unfortunately see—in towns, I might add, that were created to be convenient to people with horse-and-cart transport. I totally endorse this legislation, which has been well covered by previous speakers, but I want to draw the House’s attention to some other aspects of the farming economy that could in many cases remove the need for this sort of financial assistance from the taxpayer and leave the farming community and their small business entities living in comfort and with pride.

I have already approached the opposition desk to see if they will grant me leave to incorporate the graph I have here in Hansard as part of my speech. It is unexceptional as far as politics goes. For you, Mr Deputy Speaker Haase, as another member of this House with an extreme and genuine interest in the welfare of farmers and wheat growers, I will briefly speak to this graph. The graph shows movements in world wheat prices over the period January 2006 to March 2007. The graph indicates a peak in about October, when the 2005-07 crop was being put in the ground, where world wheat prices got above $A330 a tonne.

The other lines on the graph demonstrate the amount of money that is being paid to growers for their deliveries to the 2005-06 pool. Remember that that pool was of the order of about 17 million tonnes. It was a good crop for Australia. The difference is that, at the point in time I mentioned and throughout the period of this rapid growth in world prices for grain and during the time that AWB went into the silos in my electorate and exported grain—and, Mr Deputy Speaker, you would still find certain silos in your electorate that are not filled with 2006-07 grain; they are filled with 2005-06 grain—that grain was taken out of those silos and exported into a market which is now running internationally at about $300 a tonne, and the payment going to the growers is still $190 a tonne, as this graph demonstrates. The EPR, as it is known—the estimated pool return—of the entire 2005-06 crop has not deviated over the period I just mentioned. But worse: there is $1,000 million yet to be paid.

Everybody who has an association with wheat growing knows that a wheat grower lives about 18 months behind on revenue. The proceeds of the 2006-07 crop for many was nil, but for certain areas—including some in your electorate, Mr Deputy Speaker—in Western Australia it was quite a good year for rain. It was built more on thunderstorms than on general rainfall. In other areas, known as safe areas—again in your electorate, Mr Deputy Speaker—the farmers never got their tractors out of the shed. So the price of the 2006-07 crop is of less relevance. But at the very time when the world market reached $A330 a tonne, AWB announced its EPR for the 2006-07 season at $A250 per tonne, and since then they have reduced it to $A237 while the market stays at about $300. Furthermore, on 15 March, Reuters reported that AWB was buying wheat in Pakistan for $A280 a tonne. So if you are a Pakistani grower you can get $A280 from AWB, but if you have been forcibly required to deliver your wheat into an AWB pool, as the legislation provides at the moment, perhaps you will get $A237. That is only an estimate.

Might I add, while AWB has been paying out on the 2005-06 pool at $190 a tonne, it has paid itself $11 million in performance bonuses. That is presumably what AWB executives get when they outperform the market, which they are lagging behind by over $100 a tonne. You can measure that in billions. You might ask: how many farming small businesses in regions that grew wheat in the year before last—and under normal arrangements, that would be getting paid for at this time—would need this assistance? The AWB has said that it will pay $1,000 million ‘after 30 June’. It has not even given a definite date. With a definite time frame, how much easier would it be for farmers to finance their current cropping program in what, according to ABARE and the Bureau of Meteorology, could be quite a good season? I seek leave to have this document incorporated in Hansard. I believe there is no objection.

Leave granted.

The graph read as follows—

I thank the opposition for that. Having made those points, the House has taken an interim measure to try and correct that arrangement. In fact, I thought the House did not do as well as it could have in the implementation, but I will not waste time on that today.

The House has to confront a situation where, through bad management or fraud, the licensed monopolist has dropped so far behind the market. The AWB can give any excuse it likes, but the fact is that roughly $100 a tonne for at least half of the 2005-06 crop should have gone into farmers’ pockets and through their bank accounts to the small business people we are attempting to assist with taxpayers’ money through this bill. Of course, the situation confronting us for 2005-06 wheat is quite different.

It is worth commenting on other aspects of this circumstance. It is my view that grain growers have gone as far as they can in achieving economies on their properties to keep their businesses viable. It is an interesting if irrelevant statistic that every time someone quotes what great-grandpa got for wheat from multiple exporters in the Great Depression, that price is typically quoted at 1s 6d a bushel on farm. That equates to about $170 a tonne today. On average, very few growers have netted that amount in recent years. If one looks at the price of 4s a bushel that was paid to growers before the Depression, one finds that that equates to $500 a tonne today. So one can see the very low price that is available to wheat growers today relative to what was paid in years gone by. They have stayed in business because of the efficiencies they have achieved through agricultural science, through the availability of very large machinery and through single-till agriculture, where instead of going over the land three times they now go over it once.

The reality is that farmers can get a crop in the ground in some parts of my electorate at the rate of one acre a minute, and frequently they dry seed it and wait for rain. What they achieve by doing that, in my view, is about a two-inch increase in the rainfall of any season, effectively, because those two inches that can now contribute to growth were previously lost in getting the crop in the ground. They used to wait for rain to plough, wait for rain to scarify and wait for further rain with their little combines loaded with sacks of fertiliser and wheat to put a crop in the ground. Of course, those guys who got 1s 6d a bushel actually used horses to do it. When you take all of those things into account, the massive efficiency on farms has come substantially from the use of very large machinery. There has been no improvement whatsoever in the cost of freight, handling and marketing—in fact, there has been exploitation. When one burrows into the accounts of AWB Ltd and its subsidiary, AWBI, one finds that AWB shareholders got $48 million in one year for the freighting business of the Geneva desk of AWB Ltd, but AWBI, the pooling company, absorbed $20 million of demurrage costs. One wonders about the management of this and the costs that growers are absorbing through bad management. As I said, the House is going to have to deal with that. It is going to have to deal with the corruption and the bad mistakes—

John Cobb (Parkes, National Party, Assistant Minister for the Environment and Water Resources ) Share this | Link to this | Hansard source

Mr John Cobb interjecting

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

Why the member for Parkes keeps grinning I do not know. If he is of the view that maximising the returns to growers is not the fundamental responsibility of regulated wheat marketing, I would appreciate him dropping me a line. The fact is that, if we cannot improve the efficiency of off-farm activities, this House will be asked time and time again to give more EC assistance to farmers as the rainfall difficulties continue.

But there is another aspect that has come to my notice. I have always been a supporter of multiperil crop insurance. It does exist in other parts of the world and it is often subsidised by government. It is my view that we should look at it because of the expense incurred by the various EC legislation that we have introduced and the nature of its effect on the budget. We can put figures in these bills but we can never be sure as to the level of expenditure—and I felt that some comments made yesterday in the debate on this bill really do not stand up; you have to estimate an amount of money and circumstances will dictate the cost. The reality is that, if the cost were transferred, as occurs with private health insurance, to a premium subsidy for growers to insure against these risks, that would give them the choice of self-insurance. For many who rely on their banks to fund their operations, it would become a necessity just as it is with respect to home mortgage insurance. Banks do not give you high-risk home mortgage accommodation unless you insure for it. I have done the figures on previous occasions and I think it is achievable, but it has not been the view of the experts or various government ministers that it is achievable. I think Treasury would be a lot happier to know that they had a responsibility to find, say, $500 million a year to subsidise crop insurance premiums rather than be stuck with $200 million one year, nothing the next and $1.2 billion the year after that.

Putting that aside, a couple of years ago some young men in Western Australia operated a business which, to my recollection, was called AACL. Under the operation of the managed investment scheme, they gave wealthy city people the chance to invest in a crop produced by a wheat grower. I mentioned some farmers in your electorate, Mr Deputy Speaker Haase, who did not get their tractors out of the shed this year but sold some of the rights to their crop to this investment scheme and received the cheque. In fact, that has become their sole source of income. They received a cheque under an appropriately managed scheme in return for a share of a crop that was never produced. In other words, the investor in Perth takes part of the risk. In bookmaking terms, the wheat grower is allowed to lay off some of their risk. This scheme now has the support of farmers, who are saying: ‘I want to buy into the scheme to spread my risk. I have a share in the wheat crop of a farmer who might be 100 kilometres north or south of me in a different climatic zone.’ In these difficult years, the rainfall pattern can be paddock to paddock on an individual farm.

This scheme has been caught up in the government’s response to what is known as agricultural MISs and may no longer be available to farmers. If it became a nationally supported scheme, farmers would be participating in multiperil insurance. People with money do not come only from the major capital cities these days. You have ordinary workers in mining areas and other places wanting to take up these tax effective options and, hopefully, in the process on behalf of the farmers, they will share in a profit. They are shorter-term schemes, and I think it is time the government looked at such a scheme in isolation as a way of giving people the right to self-determination, enabling them to stand up in society and not have to rely on government handouts.

That scheme, like many others, is something the government needs to deliver to make sure that there is no need to pay EC. I applaud EC, but no farmer wants that instead of having their own money in the bank or the chance to do a deal. One of my supporters said, ‘I wouldn’t be in that scheme’—the one I just mentioned—‘as I would have to give someone my profit.’ I said: ‘That’s great. You are a good farmer, you have resources and you can self-insure; others cannot.’ (Time expired)

Sussan Ley (Farrer, Liberal Party, Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry) Share this | Link to this | Hansard source

I thank all my colleagues on both sides of the House who have essentially supported the Farm Household Support Amendment Bill 2007. The support from members has been pleasing to see. I also acknowledge the contributions members have made in speaking for their electorates—the people they know or the people they have represented in another capacity here in this place—and their understanding of what it is to experience a drought in rural Australia at this time.

It is correct that it is not the first time this government has offered drought assistance to small business operators—something that was raised by the member for Hotham and the member for Lyons—but it should be noted that this program is quite different to the one we offered in 2002. During this debate the issue has been raised that the assistance on offer in 2002 had low rates of uptake and that there were a number of concerns raised by the small business community. I acknowledge that. However, based on our learning from the prior assistance measures and the expertise that has been gained from delivering the exceptional circumstances assistance to farmers, the program is now much more in touch with the needs of small business operators. In very simple terms, the current program provides much more value to a small business operator, essentially putting them on exactly the same footing as farmers in EC areas.

The exceptional circumstances program for agriculturally dependent small business operators mirrors what is already in place for farmers. In the bill that has just been presented, we see the one component of income support, but business support or interest rate subsidies are also on offer to eligible small business operators. They have access both to the interest rate support and to the household support. In the 2002 small business program, only business support was available to small business operators suffering from the drought. Interest rate relief was available only on loans of up to $100,000, meaning that a maximum of $10,000 over two years could be received. Now small business operators can get interest rate subsidies on all their commercial debts, up to a maximum of $100,000 a year, just like farmers.

The 2006 assistance program also offers something new to small business operators: the income support outlined in this bill. On top of receiving funds to help meet the financial obligations of their business, agriculturally dependent small business operators may be able to receive up to $760 a fortnight for income support to help meet their household expenses. Exceptional circumstances assistance for small business operators is a demand driven program, and it is actually very difficult to predict just how many eligible applicants will walk through the door. But I travelled recently in south-west Queensland and I have to say, after talking to rural counsellors from the rural financial counselling services there, that there is a lot of interest and a lot of applicants, and I understand a lot of assistance will flow.

The program has been very well received and it is already proving successful. Since the program was announced in November 2006, just five months ago, over $5 million has been provided to over 280 applicants at an approval rate of 69 per cent. The small business exceptional circumstances program is only on offer until June 2008, as we cannot predict what the weather is going to do. We may see rainfall stay at extremely low levels or we may, if we are lucky, get some respite from this drought. By having an end date which has a regulation allowing it to be extended, we can review the program and determine whether it is still needed 15 months from now. If there is still an overwhelming need for support across Australia at that time, drought assistance for agriculturally dependent small business operators will continue to be provided.

Of course, providing assistance to small businesses suffering from drought is not just about money and it is definitely not about providing support for unviable businesses. This bill is really about maintaining Australia’s vibrant rural communities. If agriculturally dependent small businesses are unable to continue to operate due to drought, the communities they support will lose employment opportunities, local economies will suffer and hope will begin to fade. We are already seeing a shortage of skilled workers from rural areas, and young people from rural areas are also being lured away to the cities. By supporting small businesses in rural areas, we can reverse the current trends. We all know that once people leave regional Australia it is very hard to get them back. As a rural and regional member of parliament, I am sure I share with all my colleagues who represent rural Australia a dislike of the statistic that 80 per cent of Australians live within about 50 kilometres of the coast. We would like to reverse that trend.

Rural and regional communities are important contributors to the broader Australian economy. Through providing assistance both to agriculturally dependent small business operators and to farmers, there will be flow-on benefits to townships as they will continue to provide essential services and have some income to spend in other local businesses. While farm businesses have been the first group to experience the effects of the worsening drought, agriculturally dependent small businesses in drought affected areas are definitely experiencing hardships. You only have to study the transcript of the speeches of those who have spoken on this bill to see live local examples that really bring that point home. Without the assistance provided by this bill, the ability of some small businesses to service rural and regional communities may be at risk.

I want to address a couple of remarks made by members opposite. The member for Hotham said that this government has done little to prevent the causes of this drought. He refers to it as the worst drought in 1,000 years; it seems to be a phrase that has slipped into popular culture. The member for Hotham is a former Minister for Primary Industries and Energy and, indeed, in his remarks to the House, he demonstrated empathy and an understanding for farmers doing it tough. I am a little surprised at his saying what he did. It does appear to me that there is a Labor Party line that the drought is caused by climate change, the government will not act to fix climate change and therefore the government is responsible for the drought, which is really rather silly. It concerns farmers, and everyone in this place who represents farmers knows how hard it is for them at the present time, particularly when rather glib explanations about the causes of their circumstances are presented.

I just want to make it clear that, while the scientific consensus is that climate change is real, the extent of the contribution that climate change is making to this current drought event is unclear. Furthermore, the exact magnitude of the impact of climate change on future rainfall frequency and reliability is also completely unknown. The relationship between long-term climate change and short-term climate variability is complex and unclear. It is a topic of ongoing research. But, as a government and in the agriculture portfolio, we have well and truly got our eye on these issues. There is the government’s National Agriculture and Climate Change Action Plan; it is not the subject of today’s debate, but it does aim to build resilience and adaptability into the agricultural sector, reduce greenhouse gas emissions, identify and conduct further research and development, create awareness and communicate the important issues associated with climate change. I just wanted to place that on the record.

The member for Lyons talked about the terminology relating to the numbers of employees helped by this bill. He seemed to take exception to the fact that we defined a small business as having a maximum of 100 employees and suggested that that was not what a typical small business was. But by setting the number at 100 employees—and eligible businesses with that many employees would be very unlikely—we are helping all eligible small businesses in EC areas. And ‘small business’ is just a term; it does not mean anything in a strict statutory sense. I think it is a good thing that we have set the limit on the number of staff that would be employed by a small business at 100. In this way nobody falls directly under or over the bar, and we avoid the issue where there is a threshold reached and somebody does not fit in whereas somebody in a very similar situation does. It removes what could be a possible difficulty.

The member for Lyons also mentioned that drought support was not available in Tasmania. I will shortly be visiting Tasmania—I always look forward to talking to farmers when I am there—and, to my knowledge, no application for EC has been made by any organisation. An application would normally be made by the state department of primary industry or agriculture, if that is what it is called. As soon as an application comes forward from the state department, of course the federal government will consider both prima facie EC and then, in the context of the National Rural Advisory Council, a tour of the area. There is no way that Tasmanian farmers would be disadvantaged against any existing EC guidelines; I would like to give the member for Lyons that assurance.

In conclusion, I stand by the assistance that we have provided to farmers during the present drought, which, I guess, really began in most places at the end of 2002. Since then, New South Wales has received $710 million, Queensland $351 million, Victoria $257 million, South Australia $14.2 million and Western Australia $47 million—a total of $1.39 billion. And the program, of course, is still ongoing; exceptional circumstance recognition has been extended, along with the measure we are talking about today for small business, until June 2008. Again, I thank all my colleagues for the support they have shown for this bill.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.