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

The Rural Adjustment Amendment Bill 2009 amends clause 7 of the Rural Adjustment Act 1992 to allow for the appointment of National Rural Advisory Council, NRAC, members for three terms. The National Rural Advisory Council is a skill based independent advisory council to the Australian government Minister for Agriculture, Fisheries and Forestry. The NRAC was established in December 1999 as a statutory consultative body, following legislative changes to the Rural Adjustment Act 1992. It replaced the Rural Adjustment Scheme Advisory Council and expanded the range of roles and functions of the original council. The NRAC advises the Minister for Agriculture, Fisheries and Forestry on rural issues, including the exceptional circumstances applications and the extensions to EC declarations.

The proposed amendment will remove the current provision that a person may, on one occasion only, be reappointed as a member. The Rural Adjustment Act 1992 specifies that the NRAC’s main role is to provide advice on rural adjustment and regional issues, including whether areas should be assessed as being exceptional circumstances areas. This bill will ensure that current or previous members who have developed considerable expertise in understanding exceptional circumstances assessments through membership for two terms can serve a third term and continue to contribute to the NRAC.

Currently the NRAC consists of a chairperson and not more than seven other members. The members are appointed by the minister on a part-time basis. At least one member is appointed to represent the states; at least one member is an officer of the Department of Agriculture, Fisheries and Forestry, who is appointed to represent the Commonwealth; one member is appointed to represent the National Farmers Federation; and the other members are appointed because of their expertise in economics, financial administration, banking, sustainable agriculture, regional adjustment, regional development, farm management or training.

When the Australian government receives an application for EC the minister may refer it to the NRAC for assessment, if he agrees that a prima facie case has been established. As part of its assessment, the NRAC may conduct an inspection tour of the affected region. On completion of the assessment, the NRAC presents its recommendations to the minister, who, after consulting with the Australian government, has responsibility for declaring whether or not a particular area is experiencing exceptional circumstances.

A streamlined review process was introduced by the last government to make it easier for farmers who have not experienced a break in the drought to have their EC declaration assessed for a possible extension. Under the review process the NRAC reviews exceptional circumstances declared areas before their expiry date to assess whether an extension to the declaration is warranted. As part of the review the NRAC assesses information from a number of sources, including the National Agriculture Monitoring System, analysis provided by the Bureau of Rural Sciences, the Australian Bureau of Agriculture and Resources Economics, state and local governments and local producers. Additionally, the NRAC may undertake an inspection tour of the area. If the NRAC assesses an area as no longer being an exceptional circumstances area and the minister accepts the advice not to extend the declaration, assistance ceases on the date the declaration ends. If the NRAC supports extending the declaration and the minister agrees, assistance continues until the new declaration end date comes about.

The definition of ‘exceptional circumstances’ is that it must be rare, not having occurred more than once in an average of 20 to 25 years. So one can see that we are looking at changing that into the future with the advice we are receiving on climate change. It must result in a rare and severe downturn in farm income over a prolonged period of time; for example, greater than 12 months. It cannot be planned for or managed as part of the farmer’s normal risk management strategies, and it must be a discrete event that is not part of long-term structural adjustment process or normal fluctuations in commodity prices.

It is important to keep some continuing process going for the NRAC so that there is uniformity in decision making and so that the members of the council are fully familiar with previous decisions and how to read the exceptional circumstances situation. I am sure the member for Barker would agree with me.

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

Hear, hear!

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

On first appearances, Tasmania would not seem to be a possibility for being drought affected. But it is, and it has been for many years. On 25 September 2007, farmers and small businesses operating in full exceptional circumstances declared areas of Tasmania became eligible to apply for the full range of EC assistance measures, including exceptional circumstances relief payments, which are available through Centrelink, and the exceptional circumstances interest rate subsidy, the ECIRS. The EC declaration expires on 30 April 2010 and of course we hope that things can be back to some normality by that time.

Further, the federal Minister for Agriculture, Fisheries and Forestry announced on 12 February 2009 an extension of the exceptional circumstances declared areas of Tasmania to 30 April 2010. This includes Flinders Island and the previously EC declared areas of the central midlands and the east coast, but it excludes the north-east area of the mainland of Tasmania, including Clarke and Cape Baron islands, which expired on 31 March 2009. Eligible primary producers and small businesses in the extended areas will continue to receive EC relief payments and be able to apply for interest rate subsidies for the extended term.

This advisory council has recognised that we have been facing extraordinarily dry circumstances across Australia over the last three or four years, some areas for much longer. Now ‘the worm has turned’ a bit and we are getting back to normal in some areas, although the soil is still surprisingly dry at depth. I think we have to be realistic and say in these times of climatic change and strong fluctuations that we will need to approach issues such as exceptional circumstances in a different way into the future. This advisory council will have an important role to play in helping farmers start the process of adapting to change as part of its role in assessing the risk to farm sustainability. At the moment, the government helps by providing Centrelink style payments and advice; however, sometimes there may need to be more drastic decisions made. This can only be done by the individual farmer and the enterprise itself, and there have to be ways to help them revise the way they operate their business or ways to be able to move into something more sustainable. I hope the member for Barker agrees with that as well.

The House of Representatives Standing Committee on Primary Industries and Resources is currently conducting an inquiry into the current and prospective adaptations to the impacts of climate change on agriculture and the potential impacts on downstream processing. We are also looking at the role of government in augmenting the shift towards farming practices which promote resilience in the farm sector in the face of climate change. It will also look at promoting research, extension and training, which assist the farm sector to better adapt to climate change, particularly through rural research. The evidence we are receiving shows that there are a lot of interesting developments in the rural sector, ranging from new ways of irrigating in order to use less water to changes in plant types to looking at drought resistant species as well as whole-farm practices dealing with climate change. It is very much a new era in the rural sector and we must be prepared more than at any time before to deal with floods, drought, fire and tempest.

To cope with these extreme climatic events, the key is to ensure that we have more reliable and specific forecasting information. However, in 2007 a survey to assess the forecasting needs of farmers found that 17 per cent still did not use forecasts to make decisions. One of the two main reasons for this result was the perception that the information was not reliable or specific enough for their region for them to use to make decisions. The sort of information we need is rainfall amount and intensity that can be collated so that people can get regular monthly pictures or, of course, more often than monthly pictures. Information should also include air temperature, frost occurrence and wind types. So there are many areas that need to take a new approach, much of which will involve the collection of specific and localised data that people can use as tools to make decisions. However, enterprises need to take that on board and make those decisions. They have to become the ones that adapt.

Giving this advisory council members who have the expertise to enhance their role for longer is a really good concept. They have a lot of expertise and are assisting a lot of people. In my electorate, we have had some farming families who have done it very hard over a very long time. We have had a lot of people—and I do mention the Rotary club of Evandale—work very hard in assisting many people in this way and there have been many others. Aussie Helpers have been great. I remember the distribution of hay in the Oatlands district. These were all positive and wonderful ways of assisting people. But the future is new ways of thinking. There are some commodities that are not going to carry forward into the future on some of the properties that make up my electorate. We certainly need the economic activity within these regions coming from the farms to add to the wellbeing of those country towns and the future of many young people.

Another area is the research that is being done by Forestry Tasmania in the Warra silvicultural systems trial. It has been the focus of very intensive long-term research into the responses of a number of biodiversity elements to several alternative silviculture schemes. The objective is to assess the degree to which mature forest diversity can be maintained within coupes harvested by various systems. The Warra has been, and still is, a good example of how long-term research can be used to develop new ways of dealing with environmental and climatic issues as they present themselves.

This advisory council will be continuing to play an essential role, as we all debate the changes going on in our world, and its members will benefit from it with their continuing presence and by developing their knowledge and skills base. This is a very good option that is before the parliament, and I commend the bill to the House.

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

It is always a pleasure to follow my friend the member for Lyons. He often makes quite good sense. In fact, I have had the pleasure of serving on committees with the member for Lyons ever since I have been in this parliament. We have certainly seen a lot of this country together and met a lot of people along the way. It is very interesting that my electorate, which is a little bit bigger than the whole of Tasmania, was all declared in drought for the first time a year ago. When I first came into this parliament we had never had an area declared drought affected in the way that it has been in eastern states. I have always had a bit of concern with the way that the EC applications are assessed, because in my electorate we actually have a drought every year: it is called summer and autumn. It is quite normal for us to not receive any rain of any use between, say, the months of November and April. We always look forward to and hope for rain around Anzac Day, which we got this year. In fact, in many parts of my electorate it rained on Anzac Day. We have five months of dry every year.

The way that the system was originally set up was based on eastern-states’ climate criteria. The fact is they have a quite different climate to South Australia. We have a Mediterranean climate which, as I said before, is dry in summer and cold and wet in winter, whereas the eastern states, with the north-east trades and the south-east trades, tend to have a greater spread of rainfall over the whole year. So when they miss out for five months, like we do, they declare it a drought. We do not because that is normal and we have adapted to that sort of climate in South Australia, as indeed has your state of Western Australia, Mr Deputy Speaker Washer.

I think we have always been a bit behind the eight ball when it comes to getting assessed as EC affected. The fact is that one of my areas in the lower south-east, Mount Gambier, has actually lost it this year, even though I would have considered the conditions tough. As I understand it, it was because of a rainfall event in December. I can tell you that, from my experience, rainfall in December in my electorate is useless. It is about as useful as a wheel on a walking stick—absolutely useless. Obviously it will help an irrigated area, but in a normal dry crop area, when you get rainfall in December, January or February, it actually causes the dry feed to go off a lot quicker than it would have. I think it is as a result of that that we lost the EC assessment for the lower south-east. I will talk much more about that later.

The National Rural Advisory Council, or NRAC—you will hear that phrase used a lot in this debate—was established by the Howard government in 1999 as a statutory legislative body. It is a skills based, independent advisory council to the Minister for Agriculture, Fisheries and Forestry. It advises the minister on rural issues, including exceptional circumstance applications and extensions to EC declarations. This bill removes the current provision that a person may only be reappointed once and will ensure that the current or previous members who have served two terms can serve an additional term. I also think that we should beware of keeping people in the same position for too long. I agree with this legislation in that we have some flexibility to allow those people to be reappointed if the minister thinks that would be a useful exercise. It seems logical that we would want to extend the current members’ terms, given the expertise and skills of the members, which cover a broad range of areas including economics, financial administration, banking, sustainable agriculture, reasonable adjustment, reasonable development, farm management training and more.

I might add that I am a little surprised that the Rudd Labor government has not simply changed the name of NRAC—rebadging it and pronouncing it a new initiative—because that seems to be the norm lately in this government. Perhaps I should not tempt fate by suggesting it. One of the roles undertaken by NRAC is a recommendation to the minister regarding drought declaration. In so doing, NRAC draws information from a number of sources, including National Agriculture Monitoring System analysis provided by the Bureau of Rural Sciences and the Australian Bureau of Agriculture and Resource Economics, or ABARE, state and local governments, and local producers.

Frequently NRAC may undertake an inspection tour of an area. I have certainly welcomed them to my electorate. They have obviously seen it firsthand. It is very important that we do not just make decisions by looking at a piece of paper but actually have people visiting the area. I think you get a better understanding by talking to people who are directly involved.

Drought impacts on individuals and communities, creating significant financial and personal hardship. Hardship experienced as a result of drought also brings communities together to support each other, but mutual support alone is not enough. Government policy and legislation are generally based on the expectations that farmers will prepare for and manage a risk inherent in farming and, as far as possible, have self-reliant strategies for coping with changes in fortune. I agree with that. In fact, I was brought up to say that you should put two years worth of hay away. If you get the opportunity to make enough hay you should make at least enough for two years in case the following year you do not get much hay production. If it so happens, perhaps in that second year you could actually sell some of the hay if you have been able to upgrade your hay stocks.

However, the policy must recognise that extended drought such as we are experiencing now are exceptional circumstances which require both financial assistance and support in coordinating efforts to reduce its impact and ensure a rapid recovery when circumstances improve. To give you an example of this, where my farm is at Keith I think that it had about a two per cent chance of going into drought. We had our dry years and we had our wet years but we had never really experienced a drought in my lifetime. Came 2006 and the world changed. We got opening rain in about the first week in May and it forgot to rain after that. I have never experienced anything like that before in my life in that area, which was noted as a very reliable area.

It was the Howard government that introduced a significant number of Commonwealth programs to assist people who were experiencing difficulties as a result of drought. Of course we also added small business into that, because if the farmers are not doing too well then the small businesses in the towns suffer as well. I think that was a great initiative which I put forward with other members of the coalition and it certainly was well accepted and well intentioned and greeted with a lot of applause.

We included programs such as EC, interim drought support, Farm Help, FarmBis, tax relief, drought concessions and more. Exceptional Circumstances Assistance was the Howard government’s key program for providing direct assistance to farmers experiencing drought, and EC support has been provided to ensure that farmers with long-term prospects for viability would not be forced to leave the land because of short-term events beyond their ability to manage. EC was never lightly given. I think it was about 2004 when farmers had had a couple of really bad years that they got interim support but in the end missed out on getting the full support, which meant that they could not get the interest rate subsidies.

Nor was EC assistance available for all adverse events. In fact we had areas that suffered very badly from frost two or three years in a row, but that was not enough to get them the EC support. I might add that farmers in my area are very good risk managers. Those in the Mallee, for example, which is a fairly dry area, to say the least, have always been very good at saving for the future. Earlier this year when the minister made the unfathomable decision to discontinue the EC declaration to the south-east of South Australia—and as I told the minister at the time there was simply no reason for the lower south-east of South Australia to be denied this support and this funding—they continued to experience the worst drought in a century. They cut very little hay there last spring because it was a very bad finish to the year. In fact the Bureau of Meteorology reported that for South Australia rainfall was mostly ‘very much below average’ with many locations recording their lowest or equal lowest rainfall amounts for January and many locations recorded no rainfall at all.

The bureau further reported that rainfalls over the agricultural districts were predominantly very much below average with many places recording no rainfall. Widespread heatwave conditions were recorded in both January and February with the highest ever maximum and minimum temperatures in several places. The minister’s decision created hardship for the farmers in the lower south-east. It was even more unfathomable because the adjoining region across the border—same climate, same area—still received the EC support. They were in exactly the same climatic conditions. There is only a border, a line on a map, that stops one side of the border getting EC support and the other side not getting it. That is just crazy.

There are ways to get around that. You could have put the South Australian side into an area where each farmer could still be judged according to their conditions, whilst the whole area was not considered to be in full EC conditions. The fact is there are farmers that have got land on both sides of the border. They can get EC support on one side of the border but not on the other. How ridiculous is that! It is the same climate, the same rainfall—the same climatic conditions.

Three months later the drought is still not over. The drought statement issued just three weeks ago on 31 May 2009 by the Bureau of Meteorology’s National Climate Centre states that the rainfall was ‘below to very much below average across most of the continent during May 2009’. That report goes on to say:

Another month of low rainfall for southern Australia exacerbated already dry conditions—

which is what the member for Lyons was referring to. The report continues:

Victoria has now experienced its third driest start to the year on record and southwestern WA its fifth driest since reliable records commenced in 1900. Short-term rainfall deficits are now evident over most of southeast and southwestern Australia—

as is much of my electorate of Barker, and has been for many years now. The National Climate Centre report of 31 May 2009 states:

Most notably, rainfall has been below average across much of southwest and southeast Australia since 1997—

12 years—

while the Murray Darling Basin has experienced below average rainfall since 2002.

The current drought is like no other one I have experienced. It is not a one in 25-year drought. It is now a one in 100-year drought, and I believe it would be getting very close to the severity of the Federation drought from 1895 to 1903. In fact I think it could be argued that that was worse than the one we have now, but whatever the judgement is we are going through very tough conditions.

The decision to abolish crucial drought support has to be one of the lowest acts yet perpetrated by the Rudd government. I pleaded with the minister to no avail. The budget papers show very clearly that there has not been one cent allocated to drought support from July 2010 onwards. Indeed on page 60 of the portfolio budget statement for Agriculture, Fisheries and Forestry, it unequivocally states that the reduction in expenses between 2009-10 and 2010-11 is due to the cessation of drought programs. So there will not be any of that support.

I spend a great deal of time in my electorate listening to the hardship of growers in the Riverland, the Mallee, the Barossa, the Murraylands and the south-east arising from the drought. On budget night I was gobsmacked that the Rudd government could be so callous. We have a social and economic catastrophe in parts of my electorate, as in other areas of Australia, after seven years of drought. Record low water inflows in the Murray-Darling Basin are leading to extremely low irrigation water entitlements. It is actually two per cent at the moment for all of my estate, and, of course, that is exacerbated by the collapse in commodity prices, particularly in milk. I am extremely worried not only about farmers but also about communities reliant on agriculture. Coming back to the milk issue, the fact is that most of that milk is produced in the lower south-east of my electorate—that is where it is mostly produced—and that is the only area in my electorate that has had the EC taken away from them. So they are getting the double whammy—no support from EC and the collapsing of their milk prices.

Australia’s food bowl in good times not only provides us with the best food in the world—and I do not think there would be anyone in this chamber who would disagree with that—but it also supports thousands of food manufacturing and processing jobs as well as generating billions of dollars of export revenue. When it continues to need our help as the drought goes on, it gets a slap in the face. When the Labor Party needs to make cuts it is the usual victims who get hit: the self-funded retirees, people with private health care, business, exporters, and of course, those who live outside the capital cities. They copped a $1 billion hit in last year’s budget—and that was in good times—and they copped it again in last month’s budget.

Even the students copped it with changes that have been made to the independent youth allowance, which will mean that hundreds of country children have had their dreams of a university education shattered. That is an absolute disgrace. They have no capacity to find the money somewhere else. The children of drought stricken farmers and others will not be able to get youth allowance and the injustice that is already there in relation to country education will be further increased.

There is no new regional partnership program, even though Labor promised there would be one. The government axed the area consultative committees across the nation even though Minister Albanese promised only a couple of months ago—to their face—that their jobs were safe and the network would be continued. In last month’s budget the Labor government announced a $460 million in new programs to help farmers not in Australia but in other parts of the world. They are spending $460 million in new programs to help farmers in other parts of the world whilst they rip $900 million out of the assistance for Australian farmers. What are the priorities of this government?

Their priorities are all about seats on the United Nations and the future of the Prime Minister. They could not care less about the debt being inflicted on people around this country. Small block irrigators exit grants are to cease.  The EC has been extended to 31 March next year in my electorate but the government is getting rid of the exit grants. There is a lot of concern about that. In fact, the Riverland Futures Taskforce have said that this decision should change. I support them in that. The package is intended to assist small block irrigators in the Murray-Darling Basin who are affected by drought and climate change and who wish to cease irrigated farming. The package is intended to assist small block irrigators, in particular horticultural producers in the Murray-Darling Basin, who own irrigation properties of 40 hectares or less and wish to exit irrigated farming. The exit grant is a one-off payment for irrigators, but as I said, it will cease on 30 June this year—just a few days away. One of the conditions for receiving the exit grant is that you are willing to give an undertaking that neither you nor your farmland will be involved in irrigated farming for at least five years after the exit grant is paid. Many Riverland growers and small-business operators have strived to stay in business despite ongoing drought and reduced water flows. For many, the non-viability of their operation will not become evident until well after 30 June 2009, when financial records are finally annualised and acquitted. What will happen after 30 June 2009? This is a city-centric eastern seaboard-focused government. Rural and regional Australia is not a priority—(Time expired)

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

In his second reading speech, the Minister for Agriculture, Fisheries and Forestry said:

The Rural Adjustment Act 1992 specifies that NRAC’s main role is to provide advice on rural adjustment and regional issues including on whether areas should be assessed as being in exceptional circumstances (EC).

The purpose of the legislation, nevertheless, is to ensure some continuity in the membership of that board. Current arrangements require that members do not serve more than two terms. Consequently, four out of the eight members would find themselves in a situation of having to retire if this legislation were not passed—that is, 50 per cent of the board. As the member for Barker has just indicated, these are still very difficult times—new board members would come without the experience of past decisions—so there is some sense in this arrangement. Probably it would also make sense under these arrangements to seek the retirement, maybe voluntarily, of a couple of those members to start a flow of new members. The coalition has no objection to this proposal. However, the issues that concern me today—and we have heard about some of them from the member for Barker—are that the members of NRAC can only work according to the legislation as it exists. To my mind, it is highly deficient in allowing farmers to assist themselves, it is means tested and there are other aspects that typically militate against a careful farmer. It all sounds a bit silly to me

During our term in office a bus, termed the ‘debt bus’ was equipped with a lot of computers and sent out, originally, to some of the areas around Barker and other dairying areas to give assistance to people in distress resulting from exceptional circumstances, which are primarily drought based. The reception was such that the then minister decided he would send the bus up to the north-eastern sector of what was then my electorate—an area that had had three years of continuous drought and practically no crop production at all. When the bus got up there it was a political disaster because person after person went in hoping to get advice as to how they could be assisted and of course when the figures came up on the computer they were told they were far too wealthy to get help. When they looked out the window halfway through the growing season there was no crop at all but in most circumstances they had invested very large amounts of money in their crop. Cropping is now dominating the agricultural scene, particularly in Western Australia. The fact is that farmers virtually buy their property back every two years if they get a total wipe-out because the investment in a crop is typically $500,000. That is a problem. Here were these people confronted with crop failure and accumulating quite large debts but they did not qualify because, according to the net value of their farm and particularly the very expensive machinery they purchase these days to be viable, they were still rich. But if you were one of those farmers who had been on a spending spree and every time some distressed farmer sold his property you borrowed money to buy it then your net debt passed the threshold and you got 50 per cent of your interest rates paid.

Throughout the life of the Howard government we administered that and made some alterations in compassion for the circumstances that certainly existed. Notwithstanding that, in my mind it has never really served the purpose. That is no reflection on the members of NRAC. As I said, they are operating within their present legislative constraints.

I note that the government has limited the financial support for the existing EC programs for just one year. That might not mean that it is to be cut off, but I have written to the minister putting up my proposal that there is a better way. That better way is to implement an international solution called ‘multiperil crop insurance’. The need for rain is one problem. The member for Barker mentioned frost. A constituent of mine is from a family that has been farming in their region for, probably, a century. They are losing their farm. The person who wrote to me complaining, I might add, about excessive interest rates said, ‘We had a couple of dry years and then a super crop this past season. Then in three hours we lost the lot.’ EC does not accommodate that—a severe frost at a certain stage of the development of wheat burns off the flowers and you are looking at a magnificent crop with no or very little grain in it. This was the final financial blow for these people. And they were not eligible under those circumstances for EC anyway. But were they able to insure on an ongoing basis they could, in my mind, always fund at least the input cost—that $500,000 in round figures I mentioned—so that the next year they are no worse off. They have made no profit but they have got cash in the bank to have another go.

A minute ago I mentioned interest rates. I have never been able to understand the thinking of a bank that says to people, ‘Look, here is a loan; you are a good customer so it is at x per cent,’ and things turn against the borrower and the bank writes them a letter saying, ‘You have now become a bad risk; we want to add two to four per cent to your interest bill.’ That is going to be a great help! You have just had a blow from the weather and suddenly your bank wants to charge you more than they contracted in the first instance. But if we put that in reverse and had a multiperil crop insurance system in place, I imagine that banks would, as they do with household mortgages, insist on the farmer covering themselves for that particular risk. The banks could be guaranteed at least to get their money back and as such should be able to levy much lower interest rates.

In fact, it is my view from research I have conducted, which I will refer to in a moment, that were there a significantly high enough participation rate the cost in percentage terms would probably be about the same as the interest increases that banks apply when they suddenly determine you are a bad risk. The reality is that banks could deal with customers who were fully insured as good risks and that would greatly discount the premium cost of insuring in this fashion. It is quite interesting because this has been researched time and again and there is always the argument that it would not work in Australia. It works throughout the world and it is compulsory in South Africa. You have no choice. Yes, many of the schemes are underwritten by government and in severe circumstances governments have been called upon to make a financial contribution.

My own view is that, on the figures that I was able to obtain over that period of 16 years or so, government have put about $3 billion into exceptional circumstances. On the basis of ensuring just input costs, that amount would be sufficient to give a 100 per cent premium subsidy to all practising farmers. That is not the purpose of my comments, but in setting such a scheme up there is an excellent reason for government to start converting progressively, or however they want to, from budgeting for exceptional circumstances, as we know it, to offering to farmers who choose to ensure for multiperil crop insurance a rebate similar to the private health insurance rebate. Whatever the circumstances—be they lack of rain or be they fire, frost or hail, you name it—that would be covered in a single policy.

This issue was discussed at an inquiry during the period of the Howard government, and it said: ‘No. You can’t make it work.’ The Western Australian government, to which I want to refer to directly, held a similar inquiry. I have been of the view that the guidelines for these inquiries frequently guarantee that this scheme does not work. For instance, to make a condition that there should be no government component is, I think, ridiculous, particularly in the start-up phase. When I got some figures from the Parliamentary Library, I found that, over the 16 years, an average of 12 million hectares of wheat had been grown. My argument is that a tonne of wheat typically represents the input costs—in other words, to make a financial return, growers have to exceed a tonne per hectare return from their property—and so, when I do the calculations and look at the returns over the years for Australia, I find that it has had an average yield below a tonne per hectare. It is quite surprising how few years that applies to. But, nevertheless, it appeared to me that, had there been an insurance policy for all of Australia—in that case, arguably, every farmer would have been covered—the payout for the difference between a tonne per hectare and whatever the amount that was harvested might be would have been about $2 billion. That is $2 billion on the value of 20.4 million tonne of wheat. As I have already said, over that same 16-year period, the government expenditure for EC was about $3 billion. That is simple arithmetics and it does not take account of profit margins or anything else of that nature.

But when I looked into it further, at the inquiry conducted in Western Australia, I noticed that the final report of the Multi Peril Crop Insurance Task Force also said that such a scheme would not work. It had come to the same conclusion that not enough farmers would participate in it. Of course, it is a fundamental of insurance that, if there is not a high level of participation, those who do participate are subject to very high premiums, and that clearly would not work. I have already made the point—and I do not propose that the scheme be compulsory, as it is in South Africa—that, if there were a viable scheme available for all those farmers who are requesting finance from a financial institution, there is absolutely no doubt that the bank would say to them, as it does to homeowners, ‘Where in your budget is your multiperil crop insurance arrangements?’

Nigel Hallett, a colleague in the Western Australian parliament, has been doing a lot of work with the private sector. He has had surprising levels of interest from major international insurers that are already in this line of business. When the task force in Western Australia looked at the options and started to talk about a participation rate, they reasoned that people would not participate. They had sent out a survey and—I have forgotten how many farmers it was sent out to; let us say it was 500 or 600 farmers—and only 10 per cent replied. When farmers used to elect the directors of AWB, which was pretty important to them, only about 15 per cent used to vote. You cannot come to a conclusion about what farmers might do by sending them a survey form. At the time, the interesting thing in areas of my electorate—that has been changed as a result of recent boundary changes—was that, having assessed a variety of take-up levels in a district like Katanning shire, with a maximum take-up level of 10 per cent, the task force predicted that a premium of 7.1 per cent would be required. But when they got to 40 per cent—and that is still less than half—that premium fell to 3.4 per cent. I would suggest that it could probably be discounted by a couple more per cent at least in interest rates. That is a pretty good result. Dalwallinu shire is known as a high-level wheat producing area. At a 40 per cent participation level, they got down to a premium cost of 2.7 per cent. That surprised me. I could give other examples from the table that was produced, but the whole thing about it is that this sort of premium level could be afforded for the security it would provide. That is only insuring at a cost of farming level.

I believe, if the government were interested in reform—and I have to pass a compliment, as I usually do, to the incumbent minister. He is the bloke who, with the aid of his colleagues, passed legislation to deregulate the wheat industry and he pointed out to us the other day—as I know—the benefits already accrued in that regard. But that is only the start of it. With the mere transparency that has now been created, suddenly growers know what their freight and handling cost is and, to quote one grower in my electorate, he said, ‘My God! It equals my fertiliser bill.’ The big campaign over there now is, ‘We want savings!’ Even their cooperative, their one-time single desk in freight and handling, is under huge pressure and they have been unable to arrive at a freight rate with the established rail system over there. That would never have been a question in the past: it was just a case that it went on rail and that was that.

What I am really talking about is if the minister wants to review a very necessary component of support for the agricultural sector—and might I add, when all the boasting was on here the other day about how we avoided a technical recession, anyone who studies the figures on exports will find that 5.4 million tonne of wheat was exported roughly entirely in the March quarter, as compared to 1.5 million tonne on average in previous quarters. The previous marketer was getting $65 million to sell the crop and did not have any responsibility to achieve a price outcome. Furthermore, while it stayed in the bin, they were charging interest on the harvest loans they had advanced—tell me about it! What I am saying in the last couple of minutes is that there is a great opportunity here for the government to look at multiple crop insurance with a premium subsidy. There are complexities and there are questions—risk assessment, pricing of the premium, and I do not suggest it should be the same everywhere. These are the things they might look at, things which would be great reform, and farmers would be looking after their own affairs and not having to prove that they were poor and needy to get government assistance.

John Forrest (Mallee, National Party, Shadow Parliamentary Secretary for Regional Development) Share this | Link to this | Hansard source

I am pleased to have an opportunity to speak on the Rural Adjustment Amendment Bill 2009 . To the uninitiated, it probably seems like a very simple piece of legislation. There are really only two effective pages, but it is designed to allow NRAC, the National Rural Advisory Council, to continue their appointments beyond the current limitation of two years. I think that is a good thing. NRAC have been playing a valuable role in providing important advice to government for many years now, most particularly in response to drought and exceptional circumstances. In addition, advice on rural adjustment and regional issues has been vital. Members of the council are appointed by the Minister for Agriculture, Fisheries and Forestry and I am pleased the minister has recognised the importance of the role of current members to extend their appointment for one more term. Council members have built up a considerable pool of knowledge over two terms and it is important that that corporate knowledge is retained. Rural Australia is in a very fragile state at this stage and that important knowledge will be very useful as the government struggles with the challenges with which it tells us it is confronted. But there are some more significant comments I would like to contribute on the issue of EC and drought. This bill provides that opportunity.

Quite a number of my farming communities out there, especially in dryland agriculture, as they finish their cropping season are probably listening to this debate as we speak. We have had some rain across my constituency, which has created new hope, a new positive feeling, after seven years and in some areas nearly nine years of drought. In fact, a real grain crop across the north-west of Victoria has not really been achieved since the mid-eighties. So rural Australia, particularly the part I represent, is in a very vulnerable state. Proper advice on ongoing future policy directions will be paramount. I support the minister in his intention to give current members another term.

Trying not to be cynical about the circumstances in which we find ourselves, the government, particularly this minister, has made it quite clear that its ambition is to dismantle exception circumstances. It has not been able to tell us yet what it intends to replace it with. In fact, this was all well described 12 months ago, but the minister could not resolve the difficulties with which he was confronted and he extended all existing EC regions until about April of next year. The whole of my electoral division, the entire electorate of Mallee, has been in exceptional circumstances for four years with some of the smaller areas even longer than that.

There are a number of pointers to the government’s intentions and the minister’s own comments of his intentions are pretty clear. The second is in regard to the budget papers. In fact, if you go to page 60 of the portfolio budget statements, you see that there is absolutely no equivocation. I have heard the minister try to defend this situation, that it is because drought funding is considered in each term, but the reality of the words has terrified the people I represent. Page 60 of the portfolio budget statements says:

The reduction in expenses between 2009-10 and 2010-11 is due to the cessation of drought programs.

Those are the words that my constituents read in the budget papers. If you add to that the recommendations of the Productivity Commission—which has to be quite an economically dry organisation—it quite strongly recommends the termination of drought EC, the termination of interest rate subsidies, the termination of income support and the termination of the whole way in the EC declaration process operates. It also recommends in the Productivity Commission report that no new areas of EC be declared either for full or even interim declarations.

I am convinced a little bit more about the cynical view of the minister. It defies credibility that he sat on that Productivity Commission report from as early as February this year. In fact he did not publicly release it until budget day itself. I imagine he thought the release of a report of such significance to the people of my constituency might have been missed and gone under the radar given the media focus on the budget itself. I have made this plea in this place to the minister on other important legislation in this place: he must adopt a much more sympathetic attitude to that sector of the Australian economy that he purports to represent. We are dealing with real people—real working families who are beside themselves in the circumstances they are confronted with.

Every day I am confronted with people’s uncertainty when they come into my electoral office about what they quite clearly see as the government’s intention to abandon the safety net—the support base—and which they have had to accept. Given that the people of the north-west of Victoria are a very determined, resilient and quite proud people, the minister needs to get into the family environment and understand how it makes them feel that their only option is to rely on social security when they have had generations of independence and support from their own industry. I am asking the minister and making that plea loud and clear: please understand you are dealing with real people.

I will give you an example that happened to me last Friday week. I had an appointment with an agent from Telstra to tutor me in the replacement of my PDA. I was quite content with the jazz jams facility I had but the department told me I had to now accept what they allege is better technology—the Blackberry. I insisted that somebody come out and convince me that it was going to work in my remote region.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

From the chair, I can say that it is much better.

John Forrest (Mallee, National Party, Shadow Parliamentary Secretary for Regional Development) Share this | Link to this | Hansard source

He drove all the way up from Melbourne for an appointment on the Friday afternoon at 2.30. At about 2.45 I got a phone call from a desperate family who could not find their father. They were extremely concerned about his welfare. This is a family that has their financier on their case and threatening to send the sheriff in, foreclose, throw them out of their home and property and take complete possession of their entire possessions. I did not hesitate. I jumped in the car with my old phone because I knew that was still working and drove like a mad thing—thankfully his property is only 20 minutes away—hoping that I would not find him hanging in his shed. That is the sort of thing that members from my part of the world and so many of my colleagues are confronted with. I was just so grateful to catch some of his family on the phone. By the time I arrived there, his granddaughters were with him just to let him know that somebody cared. I am not going to have that on my conscience.

That is happening consistently. Minister Burke, that is the kind of state of mind that many of my primary producers are in and they expect you to make a stand and fight for them. They did not see that in the outcomes from the budget a month or so ago. What they saw was the very support base that would assist them to cope with the challenges of climate change being dragged from under their feet. The only department subjected to productivity gains was the department that you, Minister Burke, are responsible for—the Department of Agriculture, Fisheries and Forestry.

Last year’s budget was bad enough, when we saw $60 million slashed out of the CSIRO’s research funding. Within a month we saw the CSIRO try to adjust their monetary and financial circumstances to that scenario by closing five research facilities. That process is well in place. One of those facilities is located at Merbein, in Mildura, and provides assistance to horticulturists not only with the challenges of climate change but also in planting and inventing new varieties to help them compete in the very competitive export market.

The government’s announcement that it wants to make adjustments to exceptional circumstances might be acceptable to the desperate people that I represent but it needs to say early what it intends to replace it with. I was quite impressed with the member for O’Connor’s contribution to the potential replacement tools. They are quite diverse. This minister has not given us any indication that we can relay to the constituents we represent that he is thinking along these lines. The member for O’Connor has made some suggestions on multiperil crop insurance for broadacre agriculture. It is not easy to achieve. Other nations have tried something like this, particularly Canada, and we are told that the capacity for industry to participate on the scale that is needed to support such an insurance based system has some challenges. That is true.

Each commodity that is produced is different but consider today how we have irrigators along the Murray Valley, particularly in my constituency, who have been on EC and are into their third year on it because of circumstances beyond their control. The water supply system that served them well for over 100 years because of judicious investment has failed them and for the third year in a row the initial allocation of their water entitlement at the start of the allocation season, which they have bought and paid for every year, is zero. Just in the last month that announcement has been made of zero allocation. It is true that in the last two years that allocation has progressively increased as we have had more rainfall in the upper catchment to augment the storages. But for two years in a row it has only got to the mid-thirties in percentage terms. There is still the uncertainty on a month-by-month basis. It is no way to run a business. You cannot prepare a business plan, particularly if you are engaged in irrigation horticulture, if the first announcement is of a zero allocation. How do you go to your banker and ask for some finance to engage in pruning or harvesting or the installation of a more efficient irrigation system when you have to say to him, ‘Oh, well, we don’t have any water at this stage but we might have some later’? That is no way to plan a business with that absolute uncertainty. What is happening in Sunraysia now is many are giving up. In fact, I remember the member for Denison, who is sitting opposite, met me in the street of Mildura one day and said how delighted he was to come to such a vibrant community. Do you remember that, Duncan?

Duncan Kerr (Denison, Australian Labor Party, Parliamentary Secretary for Pacific Island Affairs) Share this | Link to this | Hansard source

No.

John Forrest (Mallee, National Party, Shadow Parliamentary Secretary for Regional Development) Share this | Link to this | Hansard source

I do. I will never forget it. If you were to visit Mildura today you would have a different perspective. You would see dead vines and you would see dead citrus trees as farming families, hard-struggling working families, have given up. Their only source of any significant income is to trade their water on the annual water market. So what these communities are looking for is some absolute certainty from this minister. Minister, don’t leave them dangling on the fishhook of uncertainty about what the government’s intentions are and what it wants to replace EC with. Get out there, like some of us are doing and, as the member for O’Connor has indicated, talk to people.

In Victoria I have been talking with the Victorian Farmers Federation about options for some sort of insurance basis or commodity funded multiperil insurance. We have got to offer these people some certainty that this government has their interests at heart. But we are not getting those signals from the minister so I will make this plea one more time. In fact on a couple of occasions in the corridors I have invited him to come to Mildura. He says he has been there. But it was not a visit long enough for him to get a comprehensive impression of what has been happening to the district. If you close down horticulture around a strong provincial centre like Mildura, Swan Hill or even the other provincial centre in Mallee, which is Horsham, that has an impact on the small businesses that are associated with the economic activity that goes on around the centre. So, Minister, we are talking about real people. We are talking about human beings in situations which city based people have not yet established the capacity to even understand.

Take the challenges they are confronted with in getting their children through to the tertiary level of education. They were delivered another body blow by the budget. I have never seen before such a strong reaction from country youngsters as their recent reaction to the budget’s intentions for youth allowance. If we want these children to fix the various challenges that our generation did not confront, we need to ensure they come back to our regions with a strong tertiary education, yet the process by which country youngsters have been doing that over the last period of time has been withdrawn from them. Worse than that, the goalposts have been slightly shifted for those who were working their way through their gap year and wanted to go on to university and create for themselves the capacity to consolidate their future.

So, Minister, my last challenge to you, and I have received this request from my constituents, is to please fight for your portfolio. Get into cabinet and argue your case and do not be the minister presiding over the only Commonwealth government department that has to endure productivity gain constraints which will ultimately reduce the numerical size of their department—in this case, the department of agriculture—and its capacity to provide ongoing positive advice to meet the challenges faced by these people. Don’t let the economic review committee shave the budget to the extent that we lose important research, particularly into land and water. Fight for the constituency you are allegedly trying to represent. Send them a signal that this government cares. Don’t wait for the eleventh hour before you make announcements about what the government intends to replace the exceptional circumstances system with. It has served a very good and useful purpose. It has cushioned the impacts of the drought that has affected the whole country. It has been coming since the mid-seventies and my primary producers are fairly well convinced by now that climate change is upon us all and they want to see some positive action to address that.

Bill Shorten (Maribyrnong, Australian Labor Party, Parliamentary Secretary for Disabilities and Children's Services) Share this | Link to this | Hansard source

Mr Shorten interjecting

John Forrest (Mallee, National Party, Shadow Parliamentary Secretary for Regional Development) Share this | Link to this | Hansard source

The parliamentary secretary interjects about the CPRS. I am not getting much strong support about that, because that will be another body blow to horticulture and agriculture in general, which this minister purports to represent. So he should fight in cabinet and stop this erosion of the resources that are going to assist our country people and our primary producers to get through the challenges that confront them.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

Given that it is after 8 pm, I will now deal with the division that was called after 6.30 pm. I took the view that the deferred division should not be proceeded with until the member speaking at 8 pm, the honourable member for Mallee, had completed his speech, and so I did not interrupt the member. The debate is adjourned and the resumption of the debate will be made an order of the day for a later hour.