Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Trade and Regional Development) Share this | Link to this | Hansard source

The Primary Industries and Energy Research and Development Amendment Bill 2007 is a bill for the better governance of the research and development corporations within the primary industries sector. Labor are happy to support the bill in that direction of improved governance procedures. However, it does open up the debate and provides an opportunity for this House to address the failure of this government in respect of the nation’s research and development effort as a whole. This is particularly pertinent with the release of the Productivity Commission’s report, on Tuesday this week, into the government’s research and development effort, which we say demonstrates that the government’s innovation system is in tatters.

Innovation is a key driver of a nation’s economic growth. Innovation, skills development and investment in infrastructure are the drivers that determine whether we can sustain higher levels of economic growth rather than just relying on the resources boom. The policy approach of this government has been to rely on the resources boom. It does not believe in government playing an activist role to drive better opportunities and to secure our future. If a nation invests in innovation and skills, it becomes smarter, innovative and creative. We enhance not only our growth prospects but also the opportunities of individuals. It provides them with more rewarding career paths because we are prepared to invest not just in physical infrastructure but in human capital as well. It is therefore a necessary investment to be made not just for our economy but for our people. It builds pride and respect, it draws the admiration of other countries and it creates much more interesting job opportunities.

Through creativity, knowledge and value-adding, we enhance the nation’s comparative advantage. Instead of just relying on commodities as the basis for our wealth, we value-add. We do not retreat from reliance on them; rather, it is about doing something more with them. You cannot do that unless you are prepared to make investments in innovation. Labor has always understood the importance of encouraging research and development and innovation, both at the macroeconomic level for the nation as a whole and at the micro level for industries we are encouraging to become more export focused and innovative.

Labor’s investment in research and development, including encouraging business investment in research and development so that it is not just a call on the budget but is a recognition of a partnership with business to drive the innovative direction forward, was always part and parcel of a massive policy approach that Labor introduced when it won office back in the 1980s. Its investment through incentives to R&D, through the establishment of the cooperative research centres programs, paid huge dividends for this nation.

Let us have a look at the suite of policies that Labor put in place from 1983 onwards. It was Labor that introduced the 150 per cent tax concession for investment in research and development. Why a tax concession? Because for research and development there is what is referred to as market failure—that is, without the incentive, business will not make the investment because the return on that investment does not happen until well down the track. The tax concession is offered to address that failure. We promised and we delivered the 150 per cent tax concession. The government, going to the election that was held in 1996, also promised to keep it but, when they came to office, in their very first budget they cut it back to 125 per cent.

Labor in those days also understood the fact that it is all very well to offer a tax concession of 150 per cent to encourage research and development, but what about small start-up companies that do not pay tax that are relying on innovation? What can we do for them? That is what led to us taking the view that we should allow what was referred to as syndicated research and development proposals. This also plugged a market failure. It recognised that those companies could carry forward losses and could draw on them down the track when they subsequently made profits.

As a Labor government we also heavily invested in public research and development—a massive increase in public research and development. Australia’s research and development effort is the envy of most nations. In fact, the Australian research and development effort when it comes to public investment and public research and development punches well above its weight. That is widely recognised. Where this country has always fallen down is the business expenditure on research and development—the complement to the public investment; that which takes it to the commercial stage and turns the good research and the good ideas into good products and good services. That is what was lacking. That is why we needed the 150 per cent tax concession. That is why we developed the syndicated research and development.

To bring these two segments of the economy together—public research and the commercialisation of it by the private sector—we also established the Cooperative Research Centres Program. It is a program dear to my heart, because I was the minister who implemented it back in 1990 when I first came into this place. It is pleasing to note that the Cooperative Research Centres Program has been retained by this government, because it was recognised as an important piece of public policy—one that does need to be supported. But, as I said before, whilst the government has supported the CRC Program, it slashed the incentives that drove expenditure on research and development.

I thought it would be pretty instructive to see what the consequences are of that disinvestment in our research and development effort, so I asked the library to do some research based on statistics from the Australian Bureau of Statistics. I seek leave to have the table incorporated in Hansard.

Leave granted.

The document read as follows—

This is a very instructive graph because it shows what government policy and government initiatives to encourage research and development actually end up achieving. Government investment as a proportion of GDP has fallen from approximately 0.24 per cent of GDP in 1995-96—the year that we left office—to 0.18 per cent of GDP in the latest year that these statistics are available, 2004-05. That is a massive reduction. That is a reduction by one-third in GDP proportionate terms, not in terms of expenditure. There will be circumstances in which it will be claimed that expenditure on research and development has gone up. Everything has gone up. As the economy grows, you would expect it to go up. But the real measure that we have to have regard to—and this is the way in which it is compared internationally—is the proportion of expenditure in relation to GDP.

Let us have a look at what the graph shows. It shows that, when Labor was in office, in every one of the years from 1984 through to 1996—those 12 years—there was really strong growth in business expenditure on research and development. Why? Because Labor had the policies in place that drove that incentive. In fact, over that period, in real terms, average annual growth of business investment in R&D was 11.4 per cent. That was the average in each one of those years for the whole 12 years. What is the record under this government from 1996 onwards until 2004-05? It is less than half that. It is only 5.1 per cent. That is the cost of not continuing as a government to make the investment in and not prioritising the significance of research and development in the suite of policies.

For the manufacturing sector the position is even worse. We all know how lip-service is paid by the government to support for the manufacturing sector, but it is the manufacturing sector that has seen the most dramatic decline in expenditure on research and development. Before that, under Labor, the average annual growth for the whole economy was 11.4 per cent. Under Labor, each year, it was 10.6 per cent for the manufacturing sector. Under this government, that has plummeted to less than two per cent. In other words, it was cut by more than four-fifths. Yet this is a government that says that it supports the manufacturing sector.

The simple message from this graph is that when Labor were in power we saw strong growth in research and development. We saw business investment in research and development increase from 0.25 per cent of GDP up to 0.85 per cent of GDP. We had 12 years of really strong growth. They came in, having promised to retain the 150 per cent and retain the syndicated research and development, and proceeded in their first budget to abolish syndicated R&D after demonising it by saying that it was open to tax rorting. I might say that we acknowledged that there were circumstances in which financial managers were taking advantage of these schemes, but we had put in place the system by which that loophole would have been closed. The government, rather than face up to the debate on the significance of R&D, sought to demonise the program as their justification for cutting the program. We question the justifiability of cutting syndicated R&D completely; we were in favour of closing the loopholes but did not support cutting it completely. But they had no defence or justification whatsoever for the cut of the 150 per cent back to 125 per cent. They said that they had to cut government expenditure, but this was an investment in the nation, not just a cost to government. The nation reaps huge benefits from it.

But, when they came in, what did we see? This graph tells the story. We saw negative growth in business investments in R&D. Growth in R&D investment by the private sector fell in 1997, 1998, 1999 and 2000. Only from 2001 did the rot stop. There was then growth in business expenditure in research and development, because the government realised that they had acted badly in this regard and introduced new programs to try and stem the tide and to get business expenditure in research and development up again. As the graph shows, in each of the years from 2001, the rate of growth increased. But the truth is that in 2005—the last year available—we were only back to where we were when Labor left office in 1996. It is a pretty instructive comparison: 12 years of strong growth because we as a government were prepared to make the investment, compared to their 11 years of negative growth followed by a pick-up—11 years of wasted opportunity.

Just imagine if we as a nation had continued to make the investment that Labor saw the need to make. Just imagine how much better off we would be in terms of our balance of payments and in terms of products and services getting into overseas markets—the value-adding dimension and the creative side of it, not just the resources boom which is what has driven this economy and carried it along over recent years. That is the story that is contained in this. That is the message that we need to keep sheeting home every time we have the opportunity in this parliament.

We hear the Treasurer from time to time in this parliament copy another phrase from the previous Prime Minister, Paul Keating, in using the argument about getting behind the authors of the particular policy and backing them. I make the point that, when people make judgements about where we go as a nation in the future, that is exactly our argument when it comes to issues such as innovation, research and development, skills formation and investment in infrastructure. We made an announcement last week in relation to broadband and connecting the nation. That will be a great enabling piece of infrastructure for this nation. It will ensure that this nation goes forward as a whole and that opportunity is afforded to the whole of the country, not just the capital cities. We have the ability to fund that and invest in the future. That is the Labor way, and it is the way forward for this nation. This is a government that has not got the wit or will to think of initiatives such as that. It is the government that decimated the research and development effort in this country. As a nation, we have paid the price for that. This is a government that is not prepared to invest in the nation’s future. Only Labor will.

This is about Australia’s farm exports as well, which are facing a particularly difficult time at the moment because of the drought. But the Labor Party has always understood the importance of ensuring that the rural sector makes that investment in research and development. There needs to be an extra effort to encourage them to be innovative, to be creative and to value-add to their product line, so that they can get not just commodities but products into overseas markets. Dairy is a classic example of this. Instead of just bulk cheese, we are exporting Australian name-branded products which are recognised as clean, green, nutritious, quality produce. There is a huge demand for food product, particularly in the region nearest to us. Clearly, living standards are increasing in those countries. As living standards increase, the demand is for quality, nutritious food products. We need to invest in innovative products and in packaging so we can get horticultural and dairy products fresh to market. In a whole range of crops—grains, for example—there are huge opportunities. Australia can be the food bowl for Asia, but it has to have a value-adding strategy that markets, packages and ensures the quality of our products. That is why there has to be investment in research and development.

But which party actually saw the need to do this? It was not the National Party, which claims to represent farmers. It was not the Liberal Party, which always reckons it has got the farm sector at heart. It was the Labor Party in the Hawke-Keating years, with John Kerin as the primary industries minister, that established the very research and development board structure which today we are debating the need to improve the governance of.

Back in 1989 the rural industry research and development corporations—a whole raft of them—were created. The principle was pretty simple. The government would put half the amount—match dollar for dollar—into research and development if industry was prepared to levy itself and make its own contribution to improve the innovation within the particular sectors.

I had the responsibility, when I became Minister for Primary Industries and Energy subsequent to John Kerin, to build on that legacy; not just to establish the rural industries research and development corporations but to restructure the industries themselves to make them more market oriented. I built on the first Kerin plan in dairy with the second dairy plan. This is an industry that now exports in excess, I think, of $2 billion a year. That is an industry strategy. That is opening up markets and creating something with innovation, product design and opportunity.

The wine industry is another classic case in point, where a whole range of initiatives were undertaken including access into Europe. We have seen huge growth in wine exports from this country.

We had to restructure the wool industry to get it more market oriented and back into the game. I inherited a wool stockpile. Not only did we have to get it down; we also had to get the industry more focused on promoting regional quality. I can remember the days when we would not market regional varieties of wool. The member for Corangamite is in the House; he knows the quality of wool that comes from his district, just as the fine wools come from up in the New England area and the particularly fine wools—the superfine wools—come from Tasmania. It was not until we started getting more market orientation of the system by restructuring the boards, getting them focused on the end use, that we started to market from a regional perspective and go for quality.

That is what working with industry is all about. That is what a role of government is: not to tell industry what to do but to facilitate it, to help it and to be in partnership with it. This is the Labor way. Labor was the author of this particular initiative. I say again how much better off we could have been had we stuck with our structure for the Wheat Board instead of the one that was adopted by this government. Just have a look at the structure and cooperation that I put in place when I dealt with the Grains Council. I did not hand it back to the National Party to rort the system and not have it oversighted by an export authority. That got us into this shameful exercise where $300 million went to Saddam Hussein’s pocket to fight our soldiers. That was allowed because this government, in this House, took its eye of the ball in terms of the very industry structures it claims to represent. It is a shame on that side of the House that this in turn has brought shame on what was once a great institution.

This is more than just a bill to improve the governance of research and development. This is an opportunity to reflect upon the different approaches to innovation, creativity, and research and development in this country, and I hope that opportunities such as this present yet again the means by which we can demonstrate our bona fides, not just mouthing the words of support but translating them into action—into real, concrete policies that work for this nation.

The main points of the bill go to the governance arrangements that were essentially for the eight research and development corporations that are affected by it. These recommendations come from what was otherwise known as the Uhrig review, a review of the corporate governance of statutory authorities and office holders. We have had a number of legislative amendments to give effect to the Uhrig review, but the inquiry looked at examining structures for good governance of statutory authorities such as the R&D corporations, including relationships between statutory authorities and the responsible minister, the parliament and the public. Its key task was to develop templates to ensure governance principles which would assist the development of effective governance arrangements for statutory authorities, achieving clarity in roles and responsibilities and providing guidance for new authorities.

The key component of the amendment before us will remove the appointment of an Australian government director—they will no longer be appointed to each board—and reform the main point of contact between the boards and the ministers. We support the changes. They are not controversial in themselves. I think it is important to continue to assess and update the governance procedures by which bodies administer important appropriations of public money. We believe that the potential for conflicts of interest for serving public servants will be avoided, and it will give industry a greater voice and ensure that the boards are managed more at an arm’s length from government.

So our problem is not with the bill; our problem is with the failed policy settings that underpin the bill. We believe that as a nation, if we are to go forward, we need to make the necessary investment in our innovative, creative culture. That will only happen with stronger investment in research and development. This is a government that has let the nation down by disinvesting in research and development. The results are there to demonstrate what happens when that occurs. It is the reason we do not have a strong performance in trade despite the resources boom. It is one of the reasons why export growth under this government is only half the rate of growth that Labor was able to achieve when it was in office. We had an integrated policy approach—the policy approach that understood the importance of opening markets by pursuing primarily multilateral trade outcomes and reinforcing them with bilateral trade approaches. This government has reversed that role. It has put its eggs fundamentally in the basket of bilaterals and it has debased and undermined our ability to secure an outcome in the multilateral round.

It is one thing to open up the market opportunities, and we can debate the means by which we achieve that; it is another to give our industries the opportunities to get into those markets. They will not be able to get into them unless you have got governments prepared to invest in the drivers that help them get there—in innovation, in skills, in infrastructure and in having an integrated approach between trade and industry policies, moving away from the concept of protecting industries in domestic markets to helping industries get into export markets. If you have to change their culture away from a protected economy to a more open, more opportunistic set of market opportunities then you have to help them get in there. That is why the investments have to be made in research and development, in export facilitation programs and in support programs to help them get into markets that they were not otherwise in. If we get that integrated approach right, we can have a sustainable economic future for this country—not one that simply relies on the next resource boom or China not burning out.

For the foreseeable future, all the indications are that China will continue to be strong. That is a good thing for our nation. It will see the wealth continue to be generated. But we can be so much better. Why is it that we simply rely on the export of our resource base? As important as they are, why shouldn’t we be doing more to seize the opportunities in terms of new markets and new opportunities, particularly in services and particularly in manufacturing—where there is a requirement to try and compete not at the low end of the manufacturing scale but in smart manufacturing using our skills, using our innovation and using our creativity? That is what Labor believe in, and Labor’s record stands. When we implemented such a program, this nation was far better off in sustaining its future. That is what we have to get back to. (Time expired)

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

I call the member for Corangamite.

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Transport, Roads and Tourism) Share this | Link to this | Hansard source

Otherwise known as the Corangamite squatter—part of the squattocracy.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Link to this | Hansard source

I am pleased to have the opportunity to have a bit of a chat about the Primary Industries and Energy Research and Development Amendment Bill 2007 and a few other matters that relate to it. I endorse the remarks made by previous speakers, particularly those on this side of the House. But the Geelong supporter from Corangamite has done a reasonable thing by going through the various RDCs, what they do and how they contribute. I think that is fine, so I do not have any great divergence of view about that with him, although there will be many issues on which we will diverge. It may well be that some of the points I raise in my contribution will be points on which we will not agree.

Much of the discussion on this legislation has focused on the question of governance—and, I think, rightly so. Sound governance arrangements, including appropriate levels of accountability, are essential to the success of the research and development corporations. We acknowledge that and support the government’s initiatives in that area. It is particularly important to remove any suggestion of conflict of interest, and it is encouraging that the amendments remove the requirement for an Australian government director to be appointed to the board of each RDC.

However, I must say that I do have some twinges of concern about the strengthening of the relationship between each board and the minister, simply based on my own experience of ministerial interference in the activities of various organisations around this country and the way in which ministers of the current government are operating to dispense largesse and favour to particular electoral districts across the country. I also make an observation about the ongoing continuing interference by this government, and one particular minister, in the affairs of Aboriginal community based organisations. I think, however, that the amendments are overall an adequate response to the Review of the Corporate Governance of Statutory Authorities and Officeholders, the Uhrig report.

However, I would like the House to consider just for a while what research and development means in regional, rural and remote Australia, most particularly in Northern Australia. The north is crying out for research to provide a basis for sustainable development. It is fair to say that development is being held back because we know too little about the sustainable use of northern environments, and that includes the marine environment as well as the terrestrial environment. That being said, our research capacity—our ability to understand and to act on our understanding—has been drastically cut as a direct result of actions of this government.

It is a telling comment, I believe, on the hypocrisy of what goes on in this place at times that this government continues to talk up opportunities for agricultural expansion in the north while, at least, all but ending our capacity to provide a solid research base for that development. I welcomed the Prime Minister’s announcement earlier this year of a northern water task force. I am not sure about its chair. Nevertheless, I support the idea of us looking at issues to do with water in Northern Australia. Understanding water regimes in northern environments is the key to sustainable pastoral and agricultural development. And, with the drought biting in the southern half of the continent, there is, as you would know, Mr Deputy Speaker, renewed interest in the north where rainfall, while seasonal, is certainly more reliable.

State and territory governments throughout that vast region have undertaken significant water conservation work, and this will provide a platform for the task force. Indeed, I hope it does not go about duplicating work which has already been done in Western Australia, the Northern Territory and Queensland. Much work already has been done. What I said at the time of the announcement of that task force was that the first thing that the government needed to do to improve the task force’s chances of being successful was to plug a brain drain—one of its own making.

Last year, the CSIRO agricultural research station at Berrimah in Darwin was shut down and CSIRO funding has subsequently been restricted. Last year, the weeds cooperative research centre was defunded. In the near future, the Tropical Savannas CRC will come to the end of its useful life—and I will talk more about that CRC later. We cannot afford to lose one of them, but we are set to lose all three. Together, they have been providing the kinds of insights and information on maximising crop yields, efficient use of available water, pest and disease management, grazing regimes and fire management that underpin an environmentally sustainable and profitable rural industry sector.

We have yet, of course, to see much research into the social dimensions of any expansion in the rural economy, and I would suggest that this is an important element to consider before we contemplate how that expansion might proceed. There is the need to have a deep appreciation of the infrastructure needs of Northern Australia—which include commercial and essential services like roads and communications—to help bring the vision of development to reality.

That said, I am confident that the make-up of the task force, comprising, as it will, government in partnership with the scientific, commercial and Indigenous communities, will be a crucial ingredient of its success. But I am concerned about whether it has the research base to do its job and to do it well. The kind of research we need includes, but goes beyond, the primary industry and energy focus of the RDCs. There is already research in some important areas in the north, but our research portfolio needs to be boosted if it is to be of much use to the task force.

I have already mentioned the Tropical Savannas CRC, which spans the top of the nation, from Queensland, through the Territory and across to Western Australia, and which has been an invaluable research tool for the cattle industry in the savanna belt in particular. The Tropical Savannas CRC has been the host organisation for a very innovative and exciting development called the North Australian Indigenous Land and Sea Management Alliance, more commonly known as NAILSMA. NAILSMA’s brief is to support locally based Indigenous land and sea research and management programs and initiatives from the Torres Strait across to the Indian Ocean. Its research projects include dugong and marine turtle management, foreshore management across the variety of environments in Northern Australia, Indigenous knowledge conservation, scoping tropical rivers, and leadership, scholarship and communication.

It is also worth noting that NAILSMA member organisations, particularly the marine ranger groups from Weipa to Broome, provide an invaluable service to the entire Australian community when they apply their knowledge of sea country to tracking and surveillance of illegal activity in our waters. NAILSMA’s mainstream work, however, should be of great interest to the northern waters task force. I think the government needs to understand the importance of finding and supporting a proper home for NAILSMA once the Tropical Savannas CRC goes out of existence.

In the Territory there is also the Darwin based CRC for Aboriginal Health, which is halfway through its second funding period and which is providing valuable insights into preventative health, as well as managing chronic disease among Indigenous people. The work of the CRC is backed by, among others, the Centre for Remote Health, in Alice Springs. It is, unfortunately, one of the few remaining ‘public good’ CRCs—a CRC which is not and indeed cannot be expected to deliver a commercial return and morph into a commercial research and development organisation. Unfortunately, it is one of the few.

In Alice Springs the CSIRO maintains its Centre for Arid Zone Research and is a major partner in the Desert Knowledge CRC, which is essentially another ‘public good’ CRC that is looking toward commercial outcomes from research that will help to deliver sustainable livelihoods for people who live in desert environments. Its brief is to: provide sustainable livelihoods for desert people that are based on natural resource and service enterprise opportunities that are environmentally and socially appropriate; encourage sustainable remote desert settlements that support the presence of desert people, particularly remote Aboriginal communities, as a result of improved and efficient governance and access to services; foster thriving desert regional economies that are based on desert competitive advantages, bringing together Aboriginal and non-Aboriginal communities, government and industry; and apply social science insights into governance.

Alice Springs has also long been the home of the Centre for Appropriate Technology, which has pioneered research into, and the development of, low-cost, low-impact and energy-efficient technology for remote community living. There is support from the private sector on the energy front, too, with two Territory businessmen leading the field in energy conservation and alternative power sources. Alan Langworthy and Juergen Zimmermann began by supplying power generating equipment to mining sites, industrial complexes and remote communities and now they are pioneering wind-diesel systems and applying new technology to damping down power surges. They are actually exporting their technology to Malaysia, Alaska, Antarctica and Portugal, and they built the new power station for the Cocos Islands community, which is in my electorate.

There is a growing emphasis on social research at Charles Darwin University, with the School of Social and Policy Research looking at the reform of educational systems, hosting the National Accelerated Literacy Program and investigating more accurate and relevant demographic studies that take into account the nature of the Territory’s population. The internationally renowned Menzies School of Health Research, now under the auspices of CDU’s Institute of Advanced Studies, has made an international impact with pioneering work on malaria and melioidosis to complement its important work in all aspects of Indigenous health. Batchelor Institute of Indigenous Tertiary Education has also recently announced itself as a new player in Indigenous research. Over in Queensland, James Cook University, with campuses in Townsville and Cairns, has an enviable reputation.

I have listed these examples of what we are doing to illustrate what is currently happening in research in the north. It has always had a regional and national impact and, increasingly, is having an international impact. It is entirely appropriate for government to support and build on this research base to meet the challenges of northern development. We need more hydrological research to support what we are trying to do already, let alone what we might be expected to achieve through the workings of the northern waters task force. We need sustained research into pastoral and agricultural programs and we need research into models of appropriate and sustainable regional development. What we do not need is a return to the days of the carpetbagger and the quick fix approach.

It used to be a standing joke that the Northern Territory News had an all-purpose headline set in type: ‘Territory set to boom’. The accompanying story was often about a big dollar pie in the sky scheme that was going to be the magic bullet that would end our economic dependence and allow us to forge ahead as rich and free citizens of Australia. The schemes, as you might imagine, never got beyond the inflated headlines. If they did, they proved to be modest in the extreme. But the common factor is that rarely did they consider the need for a sound and comprehensive research base for the future wellbeing of the north. We need that research base if we are to sustainably expand our agricultural and pastoral yields and make some contribution to beating the drought. That means, I say again, we need the government to support and extend our existing research capacity.

But the government should also note that, within the requirements of good governance, the north is equally—and rightly—concerned with how we do the business of research. For research to be meaningful and appropriate to our needs, we have found collaborative approaches to be the most successful. One of the common features of CRCs, for instance, is that they bring together partners from government, industry and academia to work together collaboratively to determine research agendas for the common good. In the north, that means we have to involve Indigenous people as true partners if we are to get anywhere near sustainable outcomes from appropriate and meaningful research.

We cannot, for instance, consider what makes a sustainable environment in zones of extreme climatic conditions—the arid centre, the monsoonal Top End or the fabulously rich variety of marine environments—without tapping into the intimate environmental knowledge of Indigenous Australians. We should not even begin to think of how people can live in these conditions without looking at matters to do with traditional diet, food harvesting, social systems and population densities. Involving Aboriginal people as partners is not just a matter of equity; it is about learning from success. It is about an exchange of knowledge. Aboriginal physical and cultural survival in northern Australia is a success story whichever way you look at it. So when the north is targeted for another big spending task force, and the government sends out their heavies to talk it up, I just ask for a deep and abiding recognition of the way we do business and a respect for what we see as a diverse northern community that can contribute. It is no use talking things up unless you listen first to what the people of the north say and then learn from what they know.

The legislation we have been discussing today and which I have used as a mechanism to talk about the issues to do with research in northern Australia is to be commended—there is no question about that. It is very important, as the member for Corangamite pointed out, that we acknowledge the way in which these regional development corporations have worked in partnership with the industry sectors that they serve, and that is a very positive thing.

I say to the government that, in the context of getting the sustainable view of northern Australia, you need to do a great deal more than you have done. You need to ensure that you do not take the research capacity that exists away from us in the way you have done previously, that you actually build upon it and build upon the knowledge base that exists so that we can get a more sustainable use of our resources in a way which would profit not only the regional economies of northern Australia but the Australian economy generally.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

I rise this morning to speak on the Primary Industries and Energy Research and Development Amendment Bill 2007. This bill will lead to the improvement of eight statutory rule research and development corporations. Obviously, with my electorate of Maranoa, I have a very strong interest in research and development in the agricultural land management and stewardship areas.

This bill will provide for performance and accountability improvements. It will also ensure that these groups are better placed to enhance the important partnership between industry and government. Of all the changes stipulated by the act, it will further strengthen the delivery arrangements of research and development in rural industries. This can only be of great benefit to all agricultural industries in Australia. I repeat once again the importance of the partnership between science, industry and obviously the implementation of research after field trials with the farm sector.

Six of the eight research and development corporation industries include cotton, fisheries, forests and wood products, grains, grape and wine, and sugar. Smaller and emerging rural industries are covered by the Rural Industries Research and Development Corporation. All of these sectors, with the exception of sugar, are industries that are represented in my seat of Maranoa, which I might add covers some 50 per cent of the land mass of Queensland.

I would first like to specifically talk about the benefits of research and development in the cotton and grain industries and the impact that is having on the farm sector in my electorate. If time permits, I want to touch on the beef, wool and wheat industries and a little later perhaps on the land management natural resource area. Research and development assists in minimising the effects of pests and predators on crops. For example, in the cotton industry, Bollgard II is the name of the cotton that has been bred and genetically enhanced to produce a toxin that has the potential to kill the helicoverpa species of insects. It has now been commercially available for three years. Unfortunately, not many of the producers in my electorate, particularly in the Darling Downs, have been able to make use of it over the three years because of the extreme drought and the lack of available water for irrigation.

There are two genes that occur naturally in the environment that are a toxin specifically to the helicoverpa species. These genes have been introduced to the regular cotton plant to provide the plant with protection from helicoverpa that normally attack the cotton plant, which would reduce the yield. It would reduce the yield dramatically if it was not sprayed over the top with insecticides.

The introduction of Bollgard II has significantly reduced the need for the helicoverpa and heliothis pests to be sprayed by over-the-top insecticides. ‘Over-the-top’ is a spray applied to the plant either from the air or by a land based vehicle to remove these pests. Other, secondary pests such as mirids, green vegetable bugs, whitefly—which is one that has emerged in the last 10 years—and aphids all still need to be monitored and treated if they reach certain thresholds within the crop, particularly if those threshold levels are at an intensity that would cause damage to the plant and obviously damage to the potential cotton production.

Plant breeders and researchers are constantly trying to breed new varieties of cotton that are more tolerant—and this is terribly important—of our harsh environment, especially varieties that require much less water to produce the same amount of lint and seed as the currently available varieties produce. That is a particular challenge for research: to have a plant that will produce the same or improved amounts of cotton lint and seed as you can get from existing varieties. That is obviously very important, given that the drought is an issue for all as water available now and in the future will probably become a more expensive commodity. Through research we have to find not only water efficiency measures that will lead to how efficiently we can use water but how efficiently a plant can use that water. It is not just about the efficient transport of water to a farm, around a farm or the recycling of water that is not used and how it can be reused; it is about how important it is for a plant itself to be able to utilise water and produce improved yields with the given amount of water.

It is also important for pesticides and herbicides to be developed which not only are environmentally friendly but also provide for more efficient and economic delivery of those herbicides and pesticides. Whilst we would all like to think that we can live without some of these herbicides and pesticides in many of our rural industries, it is just a fact of life that we will probably always have to have some of them if we are to maintain our current levels of production, and obviously we would like to see these levels of production increased on an economic basis. Roundup Flex is one such herbicide that is a herbicide tolerant, genetically modified variety of a cotton crop. Roundup Ready is currently in its last year of commercial availability. What will it be replaced with? The new technology Roundup Flex has now been commercially available for the first time this year. Once again, it is not able to be used very widely in my electorate because of the drought, but obviously research does not stop, nor does the need to continue this research to gain an advantage in reducing the number of sprays used on a crop, as well as genetically improving the plants themselves.

I want to point out the importance of what has led to a reduction in the control applications of spraying herbicides and pesticides on, for instance, cotton—particularly on new genetically modified crops such as Bollgard II cotton. In 2001-02, at 13 sites across Australia, Bollgard II cotton needed, on average, 2½ sprays across the crops to control pests and other insects that were attacking the crop, compared to conventional cottons—in other words, not Bollgard cottons—which needed about 10 sprays. That is a dramatic reduction in the number of sprays that had to be applied to the crops in 2001. These sorts of results are constant. In terms of total insect control applications in the periods 2002-03, 2003-04, 2004-05 and 2005-06, the differential between Bollgard II and the conventional cottons is similar year after year, which demonstrates the importance of research and development and, obviously, the development of new technologies and new genetic strains of plants—in this case, cotton.

The Roundup Flex plant is also able to have glyphosate, which we also know as Roundup, sprayed directly over the top of it for its entire life without damaging the fruit on the cotton plant—a tremendous step forward. Once again, this has come from research and it is delivering the benefit of being able to use Roundup Flex. This technology has meant less herbicide usage in general in the cotton industry.

I know in my electorate of Maranoa, Emerald particularly was a community that was very concerned, 15 to 20 years ago, about the level of herbicide sprays being used in the production of cotton in that area. With new technologies, new strains and new herbicides, the reduction in the numbers of sprays that are used has been dramatic. This has been a result of all the research that has gone into it. I know the communities and the growers are certainly much happier with what research has been able to deliver for that community.

The other important result of research is that there are now fewer residual herbicides used in cotton fields because farmers are able to control weeds that are susceptible to glyphosate throughout the life of crops without having to apply a herbicide with a long residual cycle. Once again, this is an important aspect of research because it has not only reduced the numbers of sprays but has also reduced the residual sprays that had been used in the past. That is another very positive step forward.

There are companies that are working at the fringes of genetic technology regarding insecticide and herbicide insertion of genes but we all know that that is very costly. It would cost a great deal of money—money which has not always been available—to continue with this research at the present time. I am sure that as time goes on it will become economical to look at this area of research, particularly in relation to many horticultural and agricultural crops.

I want to touch on grains research because, as I have mentioned a couple of times in my address, one of the worst droughts on record is affecting farmers right across Australia. Obviously my electorate has a very large number of farmers in it, so the development of drought resistant crops has been crucial to assist farmers’ ability to grow crops. They have been using new farming technologies and new strains of grains, particularly wheat and barley—cereal crops—and other crops so that they can sustain some production, even in dry years or drought years such as we have now, and particularly with long fallows.

Research into wheat goes on at the Queensland Wheat Research Institute in Toowoomba. A lot of field trials are conducted across my electorate. In fact, when I was farming actively many of the field trials in the western Maranoa took place on my property, so I had a direct involvement prior to coming into this place and was able to witness first hand the benefit of research. I saw the different strains of wheat—wheats that were more drought tolerant—using some of the genes that had been identified in places like Syria, including ICARDA, the research station outside Aleppo. Researchers were able to insert these genotypes into some of the Australian wheats to give our wheats more drought tolerance.

I will never forget that in the early part of that research the Mexican dwarf wheats were used but in our really dry times in Australia they were very dwarf wheats. They would produce grain but often they would be less than a third of a metre in height, which made it almost impossible to harvest the yield that they would produce in the worst of the worst droughts. So, by removing the dwarf gene from the strains of wheat and putting it into strains of wheat that had a longer stem, researchers were able to get the benefits of drought tolerance bred into a wheat that would be sustainable in our environment. I had many years of watching these trials conducted on our own property in western Maranoa so I certainly come to this debate with some practical experience in relation to wheat research.

In relation to sorghum—another crop which we grew on our property—particularly hybrid sorghums, research has gone on very successfully recently in my own electorate of Maranoa, at the Warwick Hermitage Research Station. That research is into green leaf technology. Farmers are always battling droughts, dry times and the availability of water. We all feel for them in these times of extreme drought. As a plant starts to die because of the lack of available moisture it is important that the plant does not die off. When a plant starts to die off the first thing that happens is that the leaves lose their green and turn brown. The leaf, of course, is a very important part of any plant because what it absorbs from the sunlight and from the atmosphere goes to the overall health and wellbeing of the plant. This green leaf technology has meant that the sorghum strains that they have bred have been able to withstand long periods of no rainfall and the plant still has an active capacity to produce grain if rains occur late in the season. So this is an example of research benefiting the grain sorghum industry. Because of this research many of these crops, if people have been fortunate enough to be able to plant, have produced a yield.

I want to touch briefly on the sheep and wool industry and the importance of research in that area. We all know there has been a worldwide campaign to get consumers around the world not to buy merino wool from Australia because of the practice of mulesing. I am opposed to those groups because they have little understanding of the impact of a flyblown sheep on production. The wool industry, to its great credit, is now developing a replacement for the surgical procedure of mulesing that will ensure that sheep can be run without having to be mulesed. If this new product is successful, it will result in the animal having the same sort of protection from flystrike in the breech that mulesing has provided for the wool industry for many decades.

As a former wool grower and practitioner who has used the surgical procedure of mulesing to ensure sheep were not flyblown, I certainly welcome this research and I congratulate the wool industry for it. They know that, if they do not take on this research, the lobby organisations around the world will continue this pressure—very wrongly, and for which I condemn them. I believe that by 2010 we will be in a situation where mulesing can be phased out and replaced by this new procedure that I am sure will be acceptable even to these extreme lobby organisations.

Time does not permit me to talk about the beef industry and land management systems, which are also important research areas. Suffice to say that the beef industry has been at the forefront of breeding cattle that are more tolerant to ticks and heat stress in northern Australia. I see my time has expired. I look forward to continuing some comments on this at a future time. (Time expired)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Duncan Kerr (Denison, Australian Labor Party) Share this | Link to this | Hansard source

I thank the honourable member for Corio for his most colourful speech. But I observe that I understand that the procedures of the House require members to be referred to by their formal titles. I am not certain that ‘the squire of Corangamite’ is the formal title of the member.

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

Mr Deputy Speaker, through you, there was no offence intended in that remark.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

And none, I am certain, was taken.

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

Mr Acting Speaker—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Yes, yes.

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

As the member for Corio departs, can I say that I appreciated very much what he had to say. With his level of understanding of the real issues confronting agriculture—the opportunities and the contribution it has made—it is a great shame the Labor Party does not value him more highly. Indeed, so good is his understanding that perhaps we might recognise his value and ask him over here, as I am sure the ‘General’ of—I beg your pardon, the member for—Corangamite might acknowledge.

Duncan Kerr (Denison, Australian Labor Party) Share this | Link to this | Hansard source

Might I apologise for not formally calling the member for Gwydir.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tony Windsor (New England, Independent) Share this | Link to this | Hansard source

I am pleased to support the Primary Industries and Energy Research and Development Amendment Bill 2007. I was very interested to hear previous speakers talking about the various research and development opportunities that Australia has. I was quite interested to hear the member for Gwydir’s contribution about his intensive visit to the United States looking at ethanol plants. I was a little disappointed to hear him say that American technology is a little outdated, but I think he was referring to the energy life cycle arrangements.

Having been to the States myself last year, I would agree with him that some of the early plants may be outdated, but there has been a lot more progress made in the more modern plants with the energy in and energy out. Obviously if plants are built in Australia they would be of the new generation, positive energy type that the member for Gwydir alluded to. What he did not allude to, and what I think is important in this debate, is that the main driver of biofuels and renewable energy in the United States has been government policy. Australia is sadly lacking in government policy. The member for Corio raised declining global research in his contribution. The member for Gwydir countered that by saying that in the States there are a lot of commercial investments—and he referred to a number of very wealthy people that are investing in private and commercial research. I saw that in the States as well, and I think it is a very positive thing.

But the reason it is not happening here is that we do not have an adequate policy mix that addresses or invites research into renewable fuels. In fact, we have quite the opposite. We have a rather ridiculous MRET, as they call it: a renewable energy target that was put in place in 2000 to achieve 360 million litres of biofuel by 2010. We are currently running at a rate of, I think, about 47 million litres, and we are into our seventh year. We have a rather ridiculous situation in that we have a policy platform which means that, when 2011 arrives, those who invest in renewable energy biofuels in Australia will be seen as a source of tax—they will be taxed for producing a renewable energy. This is a policy mix that has to be changed. We do not have a mandate. The member for Gwydir failed to mention that the main driver in the United States was that, some years back now, some of the states decided to mandate the usage of certain percentages of biofuels in their fuel mixes for health reasons—emissions in their cities and carcinogenic additives in some of the octane boosters put into the fuels. We do not have that leadership in this country. We have a Prime Minister who occasionally has a cup of tea with the major oil industry bosses, and they say to him, ‘Leave it to us; we’ll do something.’ The last cup of tea was about 18 months ago, and not one contract has been signed—not one off-take arrangement signed—in Australia since. A lot of companies are saying that they are looking at doing things, but not one contract has been signed for off-take arrangements with the major distributors. Why do we need that? We need that because they are the ones who control the bowsers in this nation; they control the distribution network.

So, in terms of research and development and investment in commercial activities in this country, we do not have a policy at all. We are quite prepared to mandate the usage of Opal fuel to stop Aboriginals in Central Australia from sniffing, we are quite prepared to mandate lead level usage as a fuel standard for health reasons and we are quite prepared to reduce the amount of sulfur in diesel for health reasons, but we are not prepared to tell the fuel companies to start using a certain proportion of biofuel in their fuel mixes for a whole range of reasons—health, environmental, global emissions, regional development, localised investment and to shortcut the corrupt world grain market activities we have seen in recent years. We are not prepared to do that by policy at all. The message that comes from the current government—and I am not persuaded that this government is any different from the opposition—is that the market will provide for those sorts of activities. The biggest market-driven economy in the world, the United States—

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

Madam Deputy Speaker, I rise on a point of order. The member has not been addressing the bill for a considerable time, and I ask that you draw him back to the bill.

Mrs Bronwyn Bishop (Mackellar, Liberal Party) Share this | Link to this | Hansard source

I thank the member for his point of order. It is within the standing orders to allow a wide-ranging debate, but it is necessary for any member addressing a bill to reference his points back to the nature and subject matter of the bill.

Tony Windsor (New England, Independent) Share this | Link to this | Hansard source

I am sorry that the member for Barker does not have the capacity to see the linkages between research and development and the private sector and government policy. This is a piece of legislation about research and development. What I am talking about is the legislative mix in this place that leads to either commercially- or government-driven research and development.

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

A very tenuous link.

Tony Windsor (New England, Independent) Share this | Link to this | Hansard source

It is a great shame that the member for Barker does not have the capacity to embrace those particular issues.

Mrs Bronwyn Bishop (Mackellar, Liberal Party) Share this | Link to this | Hansard source

The point of order was a valid point of order. It is necessary, as I said, to reference back to the nature of the bill. But we do allow a wide-ranging debate nonetheless, referencing back, of course.

Tony Windsor (New England, Independent) Share this | Link to this | Hansard source

I am sure, Madam Deputy Speaker, that you would be fully aware that the legislative arrangements in here talk about research and development and the investment in it and the activities of land and water et cetera. Research and development is a very important issue, and it is most appropriate that it embraces the day in which science meets parliament. I noted that the member for Gwydir has met with some people. I met with some scientists this morning and found them very interesting to talk to. I was talking to them about an issue in relation to renewable energy which embraced some of the research that is happening and that maybe should have happened and some of the research we have lost in recent years in a global sense from Australia, particularly in solar and wind energy.

In the electorate of New England, I have seven cooperative research centres that have done enormous work at the University of New England: the cotton catchments, the community CRC, the poultry CRC, the beef genetics technology CRC—which is probably the best known and a world leader in research—the sheep CRC, the wheat management CRC, the irrigation futures CRC and the spatial information CRC. It is a worthy program, and I congratulate the government and the former government on this particular arrangement, where there is a mix of private sector funding, commercial funding—I hope the member for Barker can follow this—and government funding that has some degree of commercial activity at the end of it.

I thought the member for Gwydir made an important point when he said that we have to be careful not to fully commercialise all of our research and to have it all based on the need to show a return within a short period of time—that we need to have research for research’s sake. That is not to say that we should just throw money at any researchers who are wandering past. But, particularly in the renewable energy area—for instance, the lignocellulosic area, which the member for Gwydir mentioned—there is a need to have raw research on what can be done into the future. Even though I am a great fan of the CRC movement, I think the way in which the cycle renews itself in terms of their applications for renewal may be slightly too biased towards asking: ‘What have you done in recent years in terms of commercial activity in the economy?’

Particularly in some of these climate change issue areas, we need to make sure that there is some research being conducted right at the cutting edge and not necessarily at the commercial edge. As I mentioned a moment ago, we have this extraordinary policy mix in this place in which we are encouraging research and development and then hoping that some of the issues will be picked up commercially, particularly in the renewable energy area. Then we intend to use them as a cash cow at the end by taxing those who move into those areas, rather than providing incentives.

One of the areas of research that I believe we should look closely at in terms of the future—and the member for Barker may be able to comprehend some of what I am about to say, because it relates to wheat breeding—in relation to renewable energy and biofuels is the plant breeding mix that is currently carried out in Australia. What we tend to do in Australia in the wheat industry, for instance, is to breed wheat that is relatively high in protein levels. In doing that, we tend to provide relatively high levels of nitrogen, particularly in the better soils, to achieve both yield and protein in the grain, with protein being the marketable product, particularly overseas where there are premiums paid for protein.

When I went to the United States I also went to Canada and looked at a very large ethanol plant that was going through its commissioning stages. It was located in a fairly poor agricultural part of Canada in terms of weather damage. I questioned the people—and I think the member for Barker will be interested in this—as to the location of the plant and asked why they had not located the plant in a more favourable area for wheat production. The answer was that in that particular area the wheat crop experienced weather damage from time to time. The member for Barker would know that weather damage causes the protein level in the grain to drop. Even though there is a by-product of distiller’s grain from the ethanol plant, because they were producing ethanol from grain and not food, they were only after the starch.

So weather-damaged grain, which is low in protein but reasonably high in starch, was something that they believed they would be able to access at a cheaper price. That had some logic in it, but when you apply that to research in Australia, because we have been growing grain for food, you find the concentration of research activity has been on protein. I am suggesting that our research bodies should look closely at research into starch production in our grain crops, because if we do move from exporting protein based grains to consuming fuel based grains domestically, there could quite dramatic increases in yield if we are growing grain for starch rather than protein. I raise that as an issue that the research people may look at.

The other part of this legislation is about energy and the impact on agriculture. There has been a lot of talk in recent months since the Prime Minister’s conversion last October on global warming and climate change. There has been a great debate taking place about carbon dioxide and the pros and cons of activity—the clean coal debate, for instance, and the research that is going into that. I actually met with some scientists this morning on that very issue: the geosequestration arguments that are out there at the moment. It is good activity. The government has put money into that worthy research that is going on, and I congratulate it for that. But one thing that the Prime Minister did not do when he put his carbon task force together was to involve the agricultural sector.

There is research going on, and I compliment a scientist in my own electorate at the University of New England. Dr Christine Jones has been doing work for some years on soil carbon sequestration and the way in which that could potentially be a short- to medium-term carbon sink. I am not so sure that the National Farmers Federation are doing terribly much about this. But agriculture should be included in that debate and should be there encouraging research into climate change. This legislation is about land and water, issues to which the government’s rules apply to—that is, through Land and Water Australia.

Surely, if there is the potential through improving the organic matter and humus status of our soils and, in doing so, assisting in the carbon debate with a natural sink of carbon in our soils through changes in land management and farming techniques, they are the sorts of issues that the government should be showing a lead in. I was very disappointed that the farm sector was not even included in the broader debate when the task force was put in place. There are in fact some carbon trades taking place on agricultural soils in the United States at the moment. I ask that the Prime Minister revisit that, because within Australia’s better agricultural soils there may be solutions to some of the problems.

The other issue that I would like to mention briefly is cloud seeding, which was the subject of a motion moved by the member for Mallee on Monday. If we are talking about climate change and the impact of industrial pollution on the way clouds form, I think we really do have to extend our research and knowledge in relation to how we can artificially seed clouds and overcome some of the negative effects of industrialised living in relation to the formation of rainfall.

With all of those issues there is an enormous amount of work that needs to be done. As a number of speakers have said today, the new horizon that could embrace agriculture and agricultural research in this century, particularly in regional Australia—by way of the solar and wind energy debates as well—could be the very thing that rejuvenates our regional communities. That could include carbon geosequestration and the development of starch based grains and various grass plants, such as the member for Gwydir spoke about in Northern Australia in relation to increasing biofuel production. There is a whole range of opportunities out there, and I would encourage the government to look very closely at putting in place a policy that will work into the future.

In the minute I have left to me, I would also suggest that the government renew the call that was made some years ago for a renewable energy authority, an independent body, to look at the various research capacities and opportunities that are out there, particularly with renewable energy. I think it has been left out on a limb with a policy mix that really does not send the correct messages in terms of incentives to the research areas and the investment sector, and that is something that we as a parliament really do need to address.

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

I have noted with interest the many speakers before me on this bill, the Primary Industries and Energy Research and Development Amendment Bill 2007, and I think the debate has been, without exception, very positive on all sides of parliament. That is always a good thing to see. Many of our constituents expect that we are always at each other’s throats and that we always have disagreements, when in fact there are many times when we do agree. This important issue is one of those areas where we do agree virtually in total—although I did note that the honourable member for Hotham claimed that investment had fallen from 1996 to 2000 because the Howard government had reduced the allowance for investment from 150 per cent to 125 per cent. That is factual, but of course he did not tell the chamber why the Howard government had to make many cuts in 1996. It was because the 13-year Hawke-Keating Labor governments increased debt from $16 billion to $96 billion in five years. So there needed to be some tough action by a responsible government. Whilst it would have been good to keep the allowance at 150 per cent, in many areas it has been increased to 175 per cent because we can now afford it as a country. We could not when we were going further and further into debt under Labor.

I met with some of the scientists last night and I had some very interesting conversations with them. I grew up with the idea that the CSIRO was probably the best institution of its type in the world, especially for agricultural research. Whilst there has been a slight shift towards manufacturing by CSIRO, it still does a considerable amount of research in agricultural areas. My home area, the Tatiara, which is Aboriginal for ‘the good country’, is a prime example of what scientific research can do for us. The Tatiara used to be known as the Ninety Mile Desert, but scientists did research which showed that there were some trace element deficiencies in the soil, namely copper, molybdenum, manganese and zinc. By using those trace elements, generally only once every seven years, the Ninety Mile Desert has been transformed into a very healthy bit of country for both stock and crops. It might seem simple now that we have this knowledge, but it did take the scientific research to discover the problems and to come up with the solutions, and it has really transformed that country. We are talking about an area of 90 miles, probably 150 kilometres in circumference.

Even on my own farm in that area, I can point to many areas where agricultural research has been absolutely wonderful and has been taken on board by many of the farmers in the area. The research and the introduction of first myxomatosis and then calicivirus to control the rabbit scourge in many areas of Australia has had a wonderful effect. We will need some more research because, unfortunately, as is their wont, rabbits tend to build up a resistance to these diseases after a while. But it certainly has increased productivity by reducing rabbit numbers. When I went to school we were told that about eight rabbits equal one sheep, so if you had several hundred rabbits on your property you were reducing the amount of feed available for your sheep.

Keith in South Australia is the lucerne capital of Australia, if not the world, for producing seed for other producers. In Australia we have a very substantial lucerne breeding exercise and we are continually upgrading our lucerne varieties. At one stage we relied on one variety. Unfortunately, we had the introduction of blue-green aphids, and the Hunter River lucerne that was used virtually on its own around Australia was decimated by this bug. So we needed to bring in and breed new varieties that were resistant to the aphids, and that has been a great success story for lucerne production all around Australia and probably all around the world.

As the member for New England also mentioned, Australia’s wheat-breeding regime has been very successful. We continually upgrade our varieties for both yield and protein. I note the member for New England’s comments on what may be needed in a different direction—lower protein and higher starch—if we go further into the development of ethanol using wheat in Australia. That may need a shift in research.

In Australia we probably grow the best barley in the world. A lot of this development goes through the Waite institute in South Australia, a fantastic institute next door to one of the schools I went to, Urrbrae Agricultural High School. A former Speaker also went to that school. I think we can almost claim the same number of students as Melbourne Grammar in this parliament. Beyond that, the Waite institute is involved in a large number of areas of agricultural research. I have been to the institute about four times, and it is always interesting to see their latest programs to help our farmers.

We have the LAMBPLAN and BeefPlan, the equivalent setup for beef. As breeders of sheep and cattle we can improve our animals through certain breeding processes. It might interest this chamber to know that Professor Rob Banks’s thesis, I think, was on breeding flies—yes, those pesky little things that annoy us at times. It is very interesting that we brought Professor Rob Banks’s research into the breeding of flies into the LAMBPLAN process, which is used by many stud breeders all around Australia with various breeds, whether they be White Suffolk, Poll Dorset or even Suffolk. Many of the sheep breeders use the LAMBPLAN to improve things like growth rates and meat density or width so that we get bigger chops—‘more chop for our dollar’ is one way of putting it. It can also be used for things like fertility.

That process for improving our lamb and our beef in Australia was originally created using flies for breeding. That is now also being used to improve the growth rates of trees. So we have gone from flies to sheep to trees using the same process. When some people look at this research they think, ‘Why would we be doing research into flies?’ That is the answer—we have used that process to improve other areas of agriculture. I think it is very interesting to look at the range of areas that scientists use to improve our lot in Australia.

In a consumer-driven market, the agricultural industry is fast becoming more accountable for its produce and it is searching for and adopting the most up-to-date, innovative and efficient techniques to improve quality and processes to make its produce the best in the world. I think it is a fairly good claim that we can make in Australia that we produce, if not the best, amongst the best food for the whole globe.

Research and development into improved industry practices play an imperative role in such progress. Because of this it is essential that we and the industry leaders look to improve our practices, our accountability and our efficiency and how those affect industry down the line. Amendments to the Primary Industries and Energy Research and Development Act 1989, the PIERD Act, aim to improve governance of the eight statutory rural research and development corporations, otherwise known as RDCs. The PIERD Act provides the legislative basis for the funding and administration of RDCs. RDCs are already highly successful. They are a major contributor to the 2.3 per cent average productivity growth rate per annum of the agricultural sector for the last 30 years. To get that sort of growth over that period is quite an incredible achievement. Through the RDC partnership, industry and government spent more than $540 million in 2005-06 on research and development. But there is room to improve—there always is.

The amendments to the PIERD Act reflect the government’s endorsement of the assessment of the governance arrangements of RDCs in the Review of the corporate governance of statutory authorities and office holders, the Uhrig report. The Uhrig review was undertaken by Mr John Uhrig AC, who was engaged by the government to assess the governance arrangements of Commonwealth statutory authorities.

In his report of June 2003, Uhrig made six major recommendations. Firstly, government should clarify expectations of statutory authorities by ministers issuing statements of expectations, and statutory authorities should respond with statements of intent. These would be public documents. Secondly, the role of portfolio departments as the principal source of advice to ministers should be reinforced into strong information flows to portfolio secretaries in parallel with ministers. Thirdly, governance boards should be utilised in statutory authorities only where they can be given the full power to act. Fourthly, government should establish an Inspector-General of Regulation. Fifthly, government should establish a centrally located group to advise on the application of appropriate governance structures. And finally, financial frameworks should generally be applied based on the governance characteristic of a statutory authority.

We may look to the Financial Management and Accountability Act 1997 being applied to statutory authorities where it is appropriate that they be legally and financially part of the Commonwealth and do not need to own assets—these are typically budget funded authorities, the executive management template—while the Commonwealth Authorities and Companies Act 1997 can be applied to statutory authorities where it is appropriate that they be legally and financially separate from the Commonwealth and are best governed by a board—the board template.

These recommendations, apart from the establishment of an Inspector-General of Regulation, were adopted by the government. In August 2004 the government announced that ministers would assess their own portfolio agencies against the governance templates of the Uhrig report and implement appropriate improvements to existing governance structures. The government’s Uhrig review process, under the Minister for Agriculture, Fisheries and Forestry, the Hon. Peter McGauran MP, has involved extensive and very thorough consideration of corporate governance and accountability.

In making his assessment of the eight RDCs in his portfolio, Minister McGauran concluded their future governance arrangements should continue to be based on the board management template. This reflects the need to provide RDCs with sufficient entrepreneurial freedom to go about their key roles—setting investment strategies and priorities for primary industry R&D, as funders and investors in R&D services and as facilitators of the adoption of R&D outcomes by industry. That is probably the most important part of putting what you have learnt into practice.

Minister McGauran also agreed that the board structure, in line with the Uhrig report’s board template, was best placed to enhance partnership between industry and government, determine investment strategies and priorities, keep pace with changing industry R&D demands and maintain key relationships with the extensive range of primary industry stakeholders and research providers. This is a wide-ranging mandate, requiring RDC boards to set corporate strategies and directions and to operate again with entrepreneurial freedom.

In keeping with Uhrig best practice, Minister McGauran recommended the discontinuation of the practice of appointing an Australian government director to each RDC board, thus removing potential for conflict of interest for serving public servants. Also, the skill set for board selection would be expanded to include expertise in government policy processes and administration. All amendments proposed to the PIERD Act respond to the Uhrig report intent to improve corporate governance and board expertise, experience and management arrangements.

These amendments also provide a practical response by government to recommendations by the recent report of the inquiry into women’s representation on regional and rural bodies of influence—the At the table report. A number of other statutory agencies within the minister’s portfolio were also assessed against the Uhrig report, including the Australian Wine and Brandy Corporation—something that I take quite a bit of note of, as I represent nearly half of Australia’s wine industry; as I fondly say, the best half—and the Australian Pesticides and Veterinary Medicines Authority, which are both very important sectors. Amendments to their legislation will be introduced into parliament shortly.

There is no doubt that our RDCs are already operating very successfully, but in order to make progress we must continue to review and improve the way they work. This is what we are doing here. These particular amendments to the PIERD Act will enhance the effectiveness of the RDCs even further, which can only be a very good thing for the rural agriculture industry. The amendments will commence on the day the bill receives royal assent, and I urge all members to support the bill.

Alby Schultz (Hume, Liberal Party) Share this | Link to this | Hansard source

The purpose of the amendments to the Primary Industries and Energy Research and Development Act 1989 is to improve the governance of the eight statutory rural research and development corporations. The PIERD Act provides a legislative basis for the funding and administration of the RDCs. These amendments in the Primary Industries and Energy Research and Development Amendment Bill 2007 reflect the government’s endorsement of the governance arrangements of RDCs against the Review of the corporate governance of statutory authorities and office holders.

The government’s Uhrig review process has involved extensive and very thorough consideration of corporate governance and accountability. Mr John Uhrig AC was engaged by the government to assess the governance arrangements of Commonwealth statutory authorities, with particular focus on those that impacted on the business sector. A key task was to develop a broad template of governance principles that, subject to consideration by government, might apply to all statutory authorities and office holders.

In his report of June 2003, Uhrig made six major recommendations. He recommended that the government should clarify expectations of statutory authorities by ministers issuing statements of expectations and that statutory authorities should respond with statements of intent. These would be public documents.

The role of portfolio departments as the principal source of advice to ministers should be reinforced through strong information flows to portfolio secretaries in parallel with ministers. Governance boards should be utilised in statutory authorities only where they can be given the full power to act. The government should establish an Inspector-General of Regulation. The government should establish a centrally located group to advise on the application of appropriate governance structures, and financial frameworks should generally be applied based on the government’s characteristics of a statutory authority.

The Financial Management and Accountability Act 1997 should be applied to statutory authorities where it is appropriate that they be legally and financially part of the Commonwealth and do not need to own assets, typically budget funded authorities—the executive management’s template. The Commonwealth Authorities and Companies Act 1997 should be applied to statutory authorities where it is appropriate that they be legally and financially separate from the Commonwealth and are best governed by a board—the board template.

The government accepted all these recommendations, except for the establishment of an Inspector-General of Regulation. In August 2004, the government announced that ministers would assess their own portfolio agencies against the governance templates of the Uhrig report and implement appropriate improvements to existing governance structures. In making his assessment of the eight statutory RDCs in his portfolio, the Minister for Agriculture, Fisheries and Forestry, the Hon. Peter McGauran MP, concluded that their future governance arrangements should continue to be based on the board management template. This reflected the need to provide statutory RDCs with sufficient entrepreneurial freedom in their three key roles of setting investment strategies and priorities for primary industry R&D, as funders and investors in R&D services and as facilitators of the adoption of R&D outcomes by industry.

A board structure in line with the Uhrig report’s board template was best placed to enhance the partnership between industry and government, determine investment strategies and priorities, keep pace with changing industry demands for R&D and maintain key relationships with the extensive range of primary industry stakeholders and research providers. This is a wide-ranging mandate which requires the RDC boards to set corporate strategies and directions and to operate with entrepreneurial freedom. In keeping with Uhrig’s best practice, Minister McGauran also recommended that the practice of appointing an Australian government director to each statutory RDC board should be discontinued. This would remove the potential for conflict of interest for serving public servants and, at the same time, the skill set for board selection would be expanded to include expertise in government policy processes and administration.

Other amendments proposed to the PIERD Act also respond to the Uhrig report’s intent to improve corporate governance and to improve board expertise, experience and management arrangements. These amendments follow an internal review by the Department of Agriculture, Fisheries and Forestry of the PIERD Act’s operational and reporting requirements to consider the appropriate balance between the minister’s role, effective communications and accountability and the role of the RDC boards. The interactions of the PIERD Act with the Commonwealth Authorities and Companies Act 1997 in regard to accountability and management obligations were also considered. These amendments also provide a practical response by the government to recommendations by the recent report of the inquiry into women’s representation on regional and rural bodies of influence, the At the table report. Minister McGauran has also assessed against the Uhrig report a number of other statutory agencies in his portfolio, including the Australian Wine and Brandy Corporation and the Australian Pesticide and Veterinary Medicine Authority. Amendments to their legislation will be introduced into parliament shortly.

The RDCs are already highly successful. They make a major contribution to the agricultural sector’s average productivity growth rate, which has been 2.3 per cent per annum over the last 30 years. Through the RDC partnership, industry and the government in 2005-06 spent over $540 million on rural research and development. Most rural RDCs were established in 1990-91 as statutory single-focus research and development corporations, with the intent of improving the performance of the national R&D effort for rural industries. Under the enabling legislation, which is the Primary Industries and Energy Research and Development Act 1989—the PIERD Act—the RDC model was intended to provide best value for money for government, industry and the broader community in pursuing the objectives of increasing economic, environmental and social benefits, achieving sustainable use and management of natural resources, making more effective use of human resources and skills and improving accountability for expenditure. This model has evolved to include industry-owned multipurpose companies responsible for managing R&D and/or combinations involving marketing, promotion, regulation and industry representation.

There are currently eight statutory R&D corporations: cotton, fisheries, forest and wood products, grains, grape and wine, Land and Water Australia, rural industries, and sugar; and there are six companies: Australian Pork Ltd, Australian Wool Innovation, Australian Egg Corporation Ltd, Horticulture Australia Ltd, Meat and Livestock Australia and Dairy Australia. The features of the model include that its key elements centre around the broad scope of rural research activities and may be funded by RDCs; a rational and integrated approach to R&D priority setting and a strong focus on outcomes; close involvement of industry through the whole process of priority setting and reporting; independent boards that are charged with taking a strategic approach to rural R? and dual accountability to both industry and parliament.

The evolution of the model to include private companies to provide marketing and/or service the R&D needs of rural industry was premised on the need to give industry more control over its affairs as well as involving industry reforms and rationalisation of existing organisations. The rural and R&D expenditure model has been most successful in generating significant funding of rural R&D by industry. In a number of industry sectors, such as grains and wool, industry contributions have far exceeded the government’s general matching of industry R&D expenditure up to a limit of 0.5 per cent of an industry’s gross value of production.

The model has seen RDC expenditure grow from $173 million in 1989-90 to $541 million in 2004-06. Performance reporting by the corporations and companies has also highlighted the success of many R&D projects in improving industry competitiveness and sustainability. The PIERD Act provides for clear and strong accountability by the R&D corporations to parliament and industry, including through requirements for preparation of written R&D plans covering five-year periods, which must be submitted to the minister for approval; preparation of annual operational plans, which must also be submitted to the minister for approval; inclusion in annual reports of particulars on R&D activities coordinated or funded; an assessment of the extent to which R&D plan objectives have been achieved; ministerial declaration of at least one representative organisation for each R&D corporation, with associated reporting requirements to that organisation; and ministerial appointment of directors of R&D corporations other than the executive director. A further layer of accountability in reporting obligations was added for the R&D corporations under the Commonwealth Authorities and Companies Act 1997, which is largely modelled on arrangements applying to companies under Corporations Law.

The accountability of companies to parliament is enhanced through the obligations included under the statutory funding agreements. The SFA obligations include: requirements for the establishment of systems, processes and controls to manage the levies collected by the government on behalf of the company and the matching by the government of funds on eligible R&D expenditure, subject to a maximum 0.5 per cent of GVP; planning processes which substantially mirror those applying to the R&D corporations; and reporting directly to the minister for regular meetings and annual reporting processes, including compliance and statutory auditing. Those are the key principles in the bill.

Today I was pleased to gain a further insight into how the R&D program works. I attended a breakfast with the Grains Research and Development Corporation. It was a very interesting breakfast because it centred on climate change and what this R&D corporation is doing to assist farmers. As the former President of the National Farmers Federation, Peter Corish, said, ‘Possibly the biggest risk facing Australian farmers in the coming century is that of climate change.’

The goal of the R&D program is to increase the capacity of Australia to capture opportunities and manage risks related to climate change and variability. The objectives are two-fold: develop more accurate climate forecasts with longer lead times and translate forecasts into tools that assist farmers and natural resource managers to make decisions that capitalise opportunities and reduce exposure to risk from climate.

The highlights of future R&D investment under this R&D program include: improved monsoon break prediction for Northern Australia; improved prediction of water yields; improved decision support tools for the cropping and grazing industries that link productivity and sustainability; ‘masters of climate’—connecting researchers, advisers, farmers and resource managers to foster understanding and uptake of climate related opportunities; improve national climate data sets; and scenarios for change that include regional climate drivers.

A quote by farmers Brett and Fran Francis of ‘Rocky Glen’, Kimba, Eyre Peninsula, South Australia, was included in the documentation and information sheets distributed this morning. They said:

You can’t dismiss climate information. I try and look for the positives and if someone can get a forecast half right, well then they’re getting there. The more we know, the better we can manage.

That is indicative of all research and development programs. A very interesting research and development initiative which needs to have more done with it and which has been raised with me in my role as the Chair of the Standing Committee on Agriculture, Fisheries and Forestry concerns the Australian honey bee industry. In 2003, the Rural Industries Research and Development Corporation published several reports which, between them, provide a snapshot of the honey bee industry in Australia. This is a brief summary of the report:

The overall impression is of a small but well established industry which potentially faces significant problems in the near future, but which also has significant potential for future development.

              …              …              …

The commercial beekeeping industry in Australia comprises a relatively small number of professional beekeepers deriving most of their livelihood from beekeeping and a larger number of people who keep bees for profit but who do not depend solely on beekeeping for their livelihood.

              …              …              …

Australia produces around 30,000 tonnes of honey each year. New South Wales is the largest producer and the Northern Territory the smallest. Tasmania is the smallest honey producing state, but has the advantage that its main crop is dependable and fetches a premium price. South Australia is a significant producer but lacks the diversity and area of melliferous flora enjoyed in the east. A relatively small proportion of Western Australia is suitable for beekeeping. A significant proportion of the Western Australian crop is exported.

There are a significant number of issues centred on the need for research and development in this industry. We know that the gross value of the industry was approximately $63 million resulting from the 27,800 tonnes of honey that it produced. But the industry is facing a very serious situation. It would appear from the information that the committee received that there is a potential problem with the Varroroa destructor mite. This mite could wipe out all the honey bees across Australia. What would happen then? Farmers would have time to adjust but so, too, would the honey bee producers. It is likely that a market for pollination would develop rapidly in heavily honey bee dependent industries, lowering the impact of exotic excursions largely to losses incurred while honey bee producers expanded their capacity to meet the demand for pollination services.

The evidence we took during our rural skills inquiry—the report of which has just been released—indicated a sad lack of research facilities for the honey bee industry. The committee has recommended to the government that it consider the establishment of a CRC to ensure that research and development is available for the industry. We have an ageing population in the honey bee industry, as we have in other industries right across Australia, and because the industry has not had the option of going into research and, indeed, educational facilities to train people in the workings of the industry it has been forced to import from Third World countries people who have some expertise in honey bees.

The other issue is that the honey bee industry has not been given appropriate professional recognition by people across the country because the supply of honey is taken for granted. They forget that honey bees pollinate about 70 per cent of all crops grown in rural and regional Australia. It is important that we recognise that pollination role and we must do all that we can through our R&D structure to assist the industry. I am focusing on the honey industry at the moment because it has received little publicity. It is a very small industry, but it plays a significant role. Importantly, R&D facilities have not appeared to focus on the industry.

Another important issue that the R&D system needs to concentrate on was raised by the member for O’Connor at this breakfast this morning and relates to moving away from fuel powered tractors and undertaking research on and development of electric powered tractors. That technology exists and I am sure those involved in research and development will take up that challenge as a vital part of our effort to reduce global warming. 

I thank the House for the opportunity to speak on the bill today. As most members who have spoken in this debate have done, I support the thrust of the legislation because I know it has brought and will continue to bring great benefits to our rural and regional communities and, more importantly, the farmers and producers who are looking to improve the productivity of this country. (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 members for their contributions to this debate on the Primary Industries and Energy Research and Development Amendment Bill 2007 dealing with the important issue of research and development and its effective governance. While there have been some differences of emphasis on future approaches and priorities for R&D, there seemed to be broad agreement on the positive contribution of R&D to productivity and sustainability. Many members mentioned that, and the member for Hume quite rightly highlighted the value of rural R&D in the honey bee industry—something in which he has taken a great deal of interest since my time in this place. At the breakfast meeting this morning involving our R&D agency, Land and Water Australia, in conjunction with the Grains Research and Development Corporation and others, we were shown a display of tools that farmers are accessing to help them manage climate variability and to put them on the front foot in these uncertain times.

The proposed amendments to the Primary Industries and Energy Research and Development Act 1989, the PIERD Act, will improve the governance of the eight statutory rural research and development corporations, RDCs. Together with the seven industry owned companies, these bodies currently spend more than $540 million on agricultural R&D. With this money provided through a partnership of industry and the government, it is crucial that corporate governance remains at the leading edge to deliver accountability for producers and taxpayers.

Best practice was identified in the 2004 report by John Uhrig AC, and his recommendations have been used as a benchmark for RDC corporate governance practices. A key PIERD Act amendment will see the removal of the potential for any conflict of interest through discontinuing the appointment of Australian government directors to each statutory RDC board. This proposed amendment is complemented by the expansion of the skills set for board selection to include expertise in government administration. As a result, representational elements are removed and the focus on board expertise enhanced.

To back these specific legislative amendments, I have recently provided each of the RDCs with a statement of expectations as part of my responsibilities as parliamentary secretary. These statements reflect Uhrig report best practice and provide the RDCs with clear guidance on what the government expects on performance. This process will then be completed with the RDCs responding to me with a statement of intent advising how the government’s expectations will be met.

I also highlight the amendments to the PIERD Act in the areas of board selection committees, nomination requirements and reporting on selection committee performance. These will deliver best practice. A more diverse pool of candidates on selection committees should deliver broader expertise, experience and gender to underpin more effective board membership and governance. The inclusion of assessments of the effectiveness of selection committees’ processes to identify the widest pool of candidates in their annual reports will increase transparency and accountability. These proposed amendments will also provide a practical response to the recommendations by the report of the inquiry into women’s representation on regional and rural bodies of influence—the At the table report.

A third aspect of these legislative amendments I emphasise will also deliver accountability improvements. These elements require the RDCs to consult with the minister in preparing or varying their key strategic plans and include reporting in their annual reports on the impacts of their R&D expenditure for their industry. Increases in performance monitoring and analysis by the RDCs and enhanced communications will again contribute to bolstering accountability of decision making by their boards.

In conclusion, I emphasise that the package of proposed amendments to the PIERD Act will deliver best practice in governance. Increased communication, accountability and responsiveness by the boards in governing the RDCs will ensure the continuing success of these organisations in delivering productivity and sustainability improvements for rural producers and the broader community. The proposed amendments to the PIERD Act will commence on the day the bill receives royal assent.

Question agreed to.

Bill read a second time.