John Cobb (Calare, National Party, Shadow Minister for Agriculture, Food Security, Fisheries and Forestry) Share this | Link to this | Hansard source

Drought and all the issues surrounding it are supposedly the purpose of the Farm Household Support Amendment (Ancillary Benefits) Bill 2010. I have dealt with drought most of my life in agripolitics, politics and as a farmer—I am still a farmer. The bill inserts a new part 9D to the Farm Household Support Act 1992 to treat farmers receiving income support, under a pilot of drought policy reform measures in Western Australia, as if they were receiving exceptional circumstances relief payments for welfare related purposes. Talking to my Western Australian colleagues, it is becoming apparent that Western Australia is having a slow start to the winter cropping season and there is a need for more rain. However, being a farmer, I am an eternal optimist and hope that the season can only get better.

Right upfront of this debate I want to place on record my upset and my anger at the Minister for Agriculture, Fisheries and Forestry’s repeated comments that exceptional circumstances interest rate subsidies are causing mental health issues and should be scrapped because of it. This is a load of rubbish. If he had the practical experience of living in the areas and being affected by drought and the consequences of failing under it, he would see that the exact opposite of what he has suggested is, in fact, the truth—that interest rates subsidies have provided relief for agricultural families rather than the opposite. That is not a comment I want to hear ever again.

The government will provide $18 million over five years, from 2009-10, to pilot new drought reform measures in selected regions of Western Australia. The 12-month pilot will commence on 1 July 2010, in a few weeks time, and will be delivered and funded in partnership with the government of Western Australia, which has agreed to contribute $5 million. This brings the total cost of the pilot to $23 million over five years, with the state government contributing approximately 20 per cent.

The pilot includes $4.9 million for income support for eligible farmers experiencing hardship. Recipients will be eligible for the beneficiary tax offset and may be eligible for a healthcare concession card, youth allowance for their children and early release of superannuation benefits, as it does under exceptional circumstances wherever it is—in Tasmania, Western Australia or New South Wales. I am pleased that the income support component of this trial is not capped, unlike the vast majority of the funding for this trial drought program.

It should be pointed out that the Western Australian trial is not a drought program; it is an efficiency program, and I would be loath to support it as the new drought policy across Australia. I welcome the acknowledgement by the government that investment in on-farm efficiency is a wise and sensible investment. However, it will do nothing for farmers in future in exceptional drought situations, be that for two, three or whatever drought years in a row. Heaven forbid we ever have eight or nine years as in recent times. Les White from the Weekly Times in an article headed ‘Drought aid trial, farms to get $60,000’ states:

The trial is expected to cost $23 million—$18 million from the Federal Government and $5 million from the West Australian Government—however as there is no cap on the number of grants, the costs could potentially be higher. Grants will continue to be paid even if the $23 million figure is exceeded.

In a media release issued on 5 May 2010, Minister Tony Burke stated:

Almost 6,000 farmers in the trial region are expected to be eligible for assistance under the package … for grants of up to $170,000.

If it is uncapped, there is a potential liability of $405,000,000 from just two of the components of the trial. The government has allocated just $12 million when they know they have a potential liability of $405 million, or 40 per cent of their projected surplus, if each of the 6,000 eligible farmers took up only two of the components they were eligible for, namely, as the media release states:

Building Farm Businesses—grants of up to $60,000 to help farm businesses prepare for the impacts of drought, reduced water availability and a changing climate, and on-farm Landcare activities—

allocated up to $8.4 million, with a total liability of $360,000,000—and:

Farm Planning—support for farmers to undertake training to develop or update a strategic plan for their farm business with a focus on preparing for future challenges Farm Planning—

allocated up to $3.6 million, with a total liability of $45,000,000, if each of the 6,000 eligible farmers took up the grant offer. If it is capped, the program has been deliberately designed to fail and, as we found out at estimates, the Weekly Times had it wrong. These two components are to be capped, which, given there was no mention of the fact that the different programs within the drought trial would be capped—in fact, the minister for agriculture’s press release stated there were 6,000 eligible farmers—suggests the government is deliberately misleading farmers in Western Australia and around the country about the true nature of the government’s response to exceptional droughts. There is only enough money allocated in this year’s budget for one of the 6,000 eligible farmers to receive the full farm exit support grant of $170,000; eight per cent to receive the $7,500 farm planning grant and just enough money for 2.3 per cent to receive the full $60,000 Building Farm Businesses grant. Minister Burke’s media release stated:

… grants of up to $60,000 to help farm businesses prepare for the impacts of drought, reduced water availability and a changing climate, and on-farm Landcare activities—

and allocated up to $8.4 million, but only 140 out of 6,000 eligible farmers would receive the full grant if the program was capped, as we now know it is. Furthermore:

Farm Planning—support for farmers to undertake training to develop or update a strategic plan for their farm business with a focus on preparing for future challenges—

and allocated up to $3.8 million, but only 480, or eight per cent, of the 6,000 eligible farmers would receive the full grant if the program is capped, as we now know it is. The media release went on:

Farm Exit Support—grants of up to $170,000 to support farmers who make the difficult decision to sell the farm business—

And allocated up to $0.3 million, but only one of the 6,000 eligible farmers would receive the full grant if the program is capped, as we now know it is.

In his post-budget speech at the Rural Press Club, Brisbane, on 12 May 2010 the Minister for Agriculture, Fisheries and Forestry, Tony Burke, in relation to the drought policy reform pilot of new measures in WA stated:

So, under the pilot, lines on a map are gone and we have one test—a hardship test. If you’re in hardship you qualify and if you’re not in hardship then you don’t.

I would appreciate the minister clarifying a number of issues not just for me but for every farmer within the pilot program—that is, for the 6,000 farmers in WA—and for the whole sector generally. What is the definition of ‘a hardship test’ the minister referred to? What is the definition of ‘farmer’ used by the department in this trial? How many farmers located within the region of WA will be covered by the trial program? If during the 12-month trial period there were a hardship event—such as exceptional circumstances drought, locust plague, mice plague, bushfire, flood or dust storm—would the number of eligible farmers within the trial area increase? What is the name of the body that will decide whether a farmer qualifies for the help and is deemed to be in hardship, and how will this body be funded? Will the minister—and, if so, which minister, Western Australian or federal—has the final determination on whether an event qualifies as a hardship event to be eligible for the drought trial program? Will the minister—and, if so, which minister, Western Australian or federal—has the final determination? I am interested to know the answers to these questions as the definitions in the hardship test are extremely important.

The coalition do not oppose this bill and we will closely follow the so-called drought trial in Western Australia. We do not oppose the bill on these grounds. If there are farmers within this region of WA who are in strife and who can be helped, then far be it from us to deny them what the program is meant to do for them. But I have to say this: this is called a drought program, but drought as we know it is the kind of thing that would qualify as exceptional circumstances drought—and that is how we have dealt with it up until now—and it means pretty desperate times. It does not mean that you can spend $60,000 on a farm and drought proof it; you cannot.

I am not suggesting for one second that drought measures cannot be improved on, but I have a terrible suspicion following the Productivity Commission report. The minister called for it and got it; and the Productivity Commission does sit under Treasury, so it is not about handing out money. The report done by the Productivity Commission was scathing about drought, mainly because they are an arm of Treasury and they do not like money leaving. It was suggested that the interest rate subsidy had done harm rather than good; it has done good and it has held together areas within my electorate. There are areas that went into exceptional circumstances drought in June or July 2002—that is, eight years ago. There would be very few of them left, except for EC and except for the interest rate subsidy. That kept the banks on side, which kept farmers on the farms and gave them a chance when conditions improved to get some stock back and to do all those things. I take personal offence, as does the industry, to be told that the interest rate subsidy caused mental issues—and I would rather not go into those at this time. It saved them. It has done an awful lot for people. Whether or not you like the program, there is no getting around the fact that it has meant a lot to a lot of regional and rural Australians.

We support the bill because it will give a chance to those in the trial area of WA, who might be in particularly bad circumstances, to get the sort of relief that people get under exceptional circumstances.

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

I would like to deal with a couple of matters that the member for Calare dealt with. I would have liked to have seen a little more spirit of the future from him. I would have liked to have seen him looking to the future and looking for new ways. His point about exceptional circumstances not causing any problems I think lacked a little bit of political thinking and a little bit of political giving. There are people who sometimes cannot see their way through. There were people who were in debt before exceptional circumstances and before drought came to their properties and to their enterprises. One way of looking at new ways in this field is to try to find new direction. Exceptional circumstances payments actually pay people who are in debt and subsidise the debt on those enterprises. Those who may have worked hard to drought proof their property and to build risk management into their processes do not get any payment. They may be next door to somebody who does. This is a part of thinking that we have to move forward on. We have to be considerate of the nature of the human beings that are involved in the enterprise, but we have to have efficiency in the process.

The Productivity Commission’s main role is to make sure that the country is spending money wisely and is being productive. It is taxpayers’ money that is being spent. Therefore, the nation has to win from the programs. We have to make sure that that comes into play. It would be good if we could get some good modern thinking from the other side of the House. I am sure that not everybody would accept what was said by the last speaker.

The Farm Household Support Amendment (Ancillary Benefits) Bill 2010 inserts a new part 9D into the Farm Household Support Act 1992 to treat, for welfare related purposes, farmers receiving income support under a pilot of drought policy reform measures as if they were receiving exceptional circumstances relief payments. The pilot represents a dramatic shift in the way governments help farmers deal with the challenges of the future, from crisis management to risk management. The old system provides the most assistance to farmers who are in the most debt and fails to recognise those who have made the tough business decisions to stay out of debt. We need to reward those who are innovative and into using new ideas and moving forward, not those who may be mired in old thinking and who are unable to make decisions of a tough business nature.

This legislation very much takes heed of the findings of part of the Farming the future report, which was submitted to the parliament earlier this year. Drought relief as such has played its role and, although we need to phase out exceptional circumstances relief, we do not want to ‘chop them off at the socks’ as the president of the AIAST, Mr Geoff Thomas, said. He went on to say, however:

… there is no question that it has caused less adjustment than there would otherwise have been.

It would have been good if the National Party member for Calare had acknowledged that maybe that process had occurred. Mr Thomas also said:

Even some of the people who have received it—

exceptional circumstances payment—

would admit privately that it probably has not done them a favour … because it has reduced their capacity to adjust.

In the report, the pork industry, through Australian Pork Limited, was quoted as saying:

… future drought policy should be aimed at assisting the agricultural sector to adjust to climate change and prepare for extreme climatic conditions.

This new approach to be trialled in Western Australia will help to make the farming sector more resilient and addresses mental health issues in farming communities. Importantly, the pilot will not affect farmers currently receiving income support payments and interest rate subsidies under the old exceptional circumstances scheme, but we must start talking about risk management instead of drought support. The National Rural Advisory Council will continue to consider proposals for exceptional circumstances declarations submitted by state governments and to reassess current declarations coming up for renewal.

The pilot will run from 1 July 2010 to 30 June 2011. It includes the farm family support measures which provide income support to assist eligible farmers facing hardship with basic household needs. Assistance is available regardless of the cause of hardship. The farm family support payment will be delivered through an executive scheme arrangement under the Financial Management and Accountability Act 1997, rather than being fully legislated, due to the complex nature of the income support legislation and the short-term nature of this program. Guidelines will be published which will provide details of the operation of the executive scheme.

The government wishes to ensure that the recipients of farm family support during the trial can access the full range of so-called ‘ancillary benefits’ which are already available for exceptional circumstances relief payment and to other welfare recipients under existing legislation. As it is not possible to use the executive scheme arrangement to provide the full range of ancillary benefits to recipients, legislation is required to ensure those will be available.

In order to meet the objective of making Commonwealth welfare assistance to this group consistent with exceptional circumstances relief payment, the bill will amend the Farm Household Support Act 1992 to effectively treat the farm family support as if it were exceptional circumstances relief payment for the purpose of providing access to a range of measures—the ancillary benefits referred to earlier—that are not available as part of executive scheme payments. These include an automatically issued healthcare card and some concessions relating to income and asset testing for student allowances paid to, or in respect of, the student children of recipients.

Ancillary benefits available to exceptional circumstances relief payment recipients will automatically become available to farm family support recipients. This will be achieved through the linkages in the Farm Household Support Act 1992 to other legislation—the Social Security Act 1991, the Social Security (Administration) Act 1999, the Income Tax Assessment Act 1936, the Income Tax Assessment Act 1997, the Small Superannuation Accounts Act 1995 and the Age Discrimination Act 2004. The bill does not make any amendment to any legislation other than the Farm Household Support Act of 1992, but we must keep looking at the way government can drive change to help farmers help themselves in future. Although it is a gradual process, it is good to see the start put forward by this bill. Provisions of this bill can only be applied in respect of payments and services made under, and for the duration of, the Farm Family Support Scheme, an executive scheme created under the Financial Management and Accountability Act 1997.

The drought policy reform pilot will test a comprehensive package of drought reform measures. These are designed to: (a) support farmers in managing and preparing for future drought and a changing climate; (b) increase the resilience and capacity of rural communities to cope with adversity; (c) better coordinate social support services in rural areas; (d) help families meet immediate basic household expenses during financial hardship; and (e) connect farmers and former farmers to discuss opportunities outside of farming. As we know from many reports, farmers always underestimate their skill base and their ability to change direction especially, possibly, after generations on the one property.

Farm Family Support is a program under the drought pilot which provides other key elements of: (i) income support paid at a fortnightly rate based on the Newstart allowance base rate to help farmers and their families meet basic household needs; (ii) case management to assist farmers to develop a plan to identify action which will improve their financial position on-farm and off-farm; and (iii) support for the implementation of these plans with assistance of up to $2,500 to fund the cost of financial advice to assess farmers’ long-term financial positions and $5,000 to fund professional advice and/or training.

The Farming the future report concluded that drought policy should be about developing industries and enterprises that can cope with drought, and both sides of the House would support that approach. It emphasises capacity building and long-term resilience rather than short-term survival. Climate change is an issue we have to contend with, and farmers are on the pointy end of that change. We have to ask ourselves how long we can subsidise farms with old methods and old mechanisms. We must come up with ideas whereby we can move our rural producers into a phase where they are discussing risk management in their farming practices, new processes, sustainable methods and recycling so that nothing is wasted.

Our land is fragile, but it can be strengthened and the soil can be assisted and improved. But there is a limit to some of the farmlands and these limits have been pointed out before, even as far back as the early 1800s. Drought has always been a part of the picture and we need to understand it so we can live with it, survive it and work within it. We need to help to innovate and fund opportunities for farmers to do this. Funding interest rates on debt where, possibly, people do not make decisions that they need to is not moving us forward in this country.

In the Farming the future report of the House committee, the committee made the point that change is not easy and we need to fund bodies like Rural Alive and Well, which is a support and counselling service in my state of Tasmania and in my electorate. It is leading in new ways of delivering these processes of help and support for the farming communities. It deals with real people by going down the track, sitting at the kitchen table, having a cup of tea and offering support, which is usually done by a local person that knows the region and usually knows the family and their needs.

A key role of the service is to connect the support services of government with those people so that they get the services and the help that they need, and then also to keep an eye on the situation and make sure that things are happening and that there is change, help, direction and opportunity for those people. Exceptional circumstances are sometimes harming people and are not really giving them a way forward or helping them change and make the directions that, possibly, they should. Farms need to build a business plan. Farmers need to look into that sort of operation, work to achieve the plan goals and to accept the true risk of business and understand that risk is a part of enterprise. Government and, of course, the Australian people are better served by a robust farm sector using modern business practices than by paying to keep invalid or unviable enterprises going that are not re-adjusting as they need to.

There are many, many farmers who are looking for new directions and new ways, especially younger ones, and they might need a bit of help to do that. This is the way that government should be funding assistance to the rural sector to make it a robust sector and to bring people forward into new ways. We know the challenges of water into the future. We know the challenges of productivity and that the rural sector will have to use less water but increase productivity because the need is going to be there for us to meet those demands into the future. We have that opportunity and it will need government to be innovative and find new ways to achieve that.

This bill gives support to people in a trial that is endeavouring to do that. It is a very good intervention in an innovative way, and I congratulate the minister and the department for bringing it forward. I wish those involved with it the best of will. I certainly hope that we can get strong support for innovation and new ways of thinking in the rural sector in Australia so that we can go forward with this sector as they adjust, as do many other sectors of our economy.

The taxpayer pays for exceptional circumstances. We have to make sure that there is a public good at the end of the line. In that sense we have to show that we care about people and assist people in whatever way we can to go forward. We need to make sure that they are not staying where they probably need not stay and that they do readjust for the future. I think this bill does that very well and I commend it to the House.

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

The Farm Household Support Amendment (Additional Drought Assistance Measures) Bill 2008 is important legislation about which I will give credit where credit is due but take some part of my speech to identify a direction that I think would be more worthwhile. The Minister for Agriculture, Fisheries and Forestry, Mr Burke, is, nevertheless, to be congratulated. Through this pilot scheme, which I think is properly located in Western Australia, he has tried something different and something better, and recognised that the exceptional circumstances scheme has never been effective in giving appropriate support to the rural sector. One of its greatest failings, of course, is the fact that, if you are rather profligate and borrow a lot of money, you will get half your interest paid for you. If, on the other hand, you have been careful and even accumulated a few off-farm assets to protect yourself from seasonal and price cycles, you get nothing. The very nature of Western Australian farming is that today it generally covers very large farms and cropping programs of 10,000 or 15,000 hectares. The leading farmer puts in 100,000 hectares. Each of those people, I might add, are betting their farm virtually annually against the weather and against price movements, currency and everything else.

The fact of life was that we in government sent the ‘drought bus’ up to the northern sector of what was then my electorate. They had had three years of devastating drought when nothing grew. So in they went to the public servants to see what assistance they might give—and this program had been very successful in the dairying country—and one after another they were told, ‘You’re too rich.’ You had not grown a crop for three years but the asset valuation, which was often unsaleable, was such that you could get no money. The scheme failed through means-testing and it failed in other ways.

The minister, to his credit, has come up with an alternative. I am not going to criticise that alternative, because I am prepared, as I think most farmers in my electorate are, to give it a go. I recognise that NRAC as we know it, the National Rural Advisory Council, will be a participant. I have also got a note down here in speaking of the minister’s achievements that it was he with the cooperation of the Liberals—and it is interesting today when the Neanderthals were out there again complaining about the loss of the single desk—who had the courage, as did his predecessor John Kerin, to bite bullet on this. It is pretty handy if your opponents will take on the issues that are so hard for those with the constituency. But I wish the Labor Party took the same opportunity after we had fixed up the industrial relations sector for them. They should have just left it alone and said, ‘It seems to be working.’ Might I add that some credit there goes of course to Paul Keating and Bob Hawke. People forget that both Whitlam and Hawke attacked the industrial relations stupidity by lowering tariffs. Whitlam also revalued the dollar and both of these put pressure on people to stop doing silly deals and try and get more efficient.

Nevertheless, what has happened with the single desk deregulation is that farmers, particularly in my electorate, are now getting a separate account for their off-farm costs—their storage and the loading on ships and the freight. One of my constituents was horrified that that cost equalled his fertiliser account—and take it from me, that is a lot of money. The focus in my state now is not about crying tears of blood over the departure of the single desk, as it was known; in fact, 50 per cent of the crop is now handled in a single desk concept by the farmer cooperative CBH. That 50 per cent of farmers, as in other areas, has continued with the pooling system, but they have all got to understand that there is a huge cost burden being borne off the farm. It was all secret under the single desk—all bundled into the pooling. We knew that the corporate entity, AWB Ltd, was actually milking $40 million a year out of overseas freight contracts by contracting in their name for chartered shipping and then billing it at their chosen price per tonne to the pool. All those things are now exposed.

It is pretty interesting to note that, as farmers measured the cost of delivering their wheat to a storage, they started to buy silos and said, ‘I’ll pay for them in three years.’ Interestingly enough, the farmer co-op then lowered the price of storage. But they put a bit more on the price of loading a ship, where they have still got a monopoly at this stage. I have got farmers going out there now to protect their business, by their own right, by simply looking to alternative loading arrangements. They are talking to people with a woodchip belt and with an iron ore belt. They are looking to the development, which is being slowed down by the Barnett government—and I am after them about it—of the Buckeridge private port, where they will be able to get access to loading facilities sufficient to load a shipload of wheat. That is all great; that is getting on with it.

If you are growing 5,000 or 10,000 tonnes of wheat, which is typical, and you can save $5 a tonne, it is a lot of money and it is the difference between going broke and not. The other matter I want to talk about at length is to do with the farmers’ right to insure their return and to have a form of cash management, which is typical around the world. I would have preferred that to this legislation, but the minister has gone with a pilot scheme. But I will come back to that.

The reality is that the farming sector in my electorate now realises where its costs can be reduced. On-farm, they have gone from, in my living memory, 40 horsepower tractors and a three-pass approach to putting a crop in to 500 horsepower tractors and actually seeding dry on a certain date and waiting for the rain. That effectively adds about two inches of rainfall to their cropping period. They are doing all that. They have learned every form of no-till farming and all those things to make sure that they are as efficient on their property as they can be.

But now we have got to improve their local roads so they can use bigger trucks, if necessary, to go all the way to port. Again, I thank the minister because I convinced John Kerin to deregulate the transport of export wheat and Mr Burke, the now incumbent Minister for Agriculture, Fisheries and Forestry, reincluded that provision in the wheat marketing legislation, meaning that a farmer cannot be captured any more by a grossly inefficient rail system. When that came in under Mr Kerin, the then state government regulated rail authority of previous years thought it might be a good idea to put a loop down at Kwinana where the major exporter port is so they could actually bring a train back while a full one was going down. They did not care about that while there was a regulation.

CBH is a good organisation. Its executive know that they have got to get it cheaper. At the moment and at present rates, if they do not get eight million tonnes of wheat into their system each year, they cannot even break even. These are the issues that are being exposed by the government’s decision to deregulate the market and generate the transparency that is now allowing farmers to do it.

I was a most unpopular boy in my electorate at the last election. Funnily enough, the two parties that supported deregulation were the Labor Party and the Liberal Party, and we still got 66 per cent of the vote. Fortunately, I got nearly 50 per cent. But the fact of life is that, in these circumstances, people did not thank us. As I said, we still have the Neanderthals parading outside the parliament when farmers in my electorate are already making more money because it is deregulated, because they can negotiate a price or they can choose the old-fashioned pooling system. They are better represented now because their co-op owns shares in flour mills overseas, which will not guarantee the price but will certainly guarantee a sale, and in the present environment we have a very significant oversupply of wheat and grain around the world, driven I might add by one year’s spike in prices.

Farmers, who typically and in recent years would have looked at a tonne of wheat per hectare as the break-even point, last year had to harvest two tonnes per hectare because of price and other influences. For much of the so-called better part of the area, there was a very bad finish and they did not get it. In that region it is estimated by a constituent of mine, whose estimates I trust, that they lost $1 billion. Individual farms lost half a million dollars. If they do not get a good crop this year, then things could be very dangerous.

Consequently, the response of governments around the world is to give support to what is generally referred to as multiperil crop insurance. That can be delivered in many ways. Typically, around the world it is underwritten. In other words, if the losses of the private insurers exceed a certain point, then governments come in and pay. I will make further comment about that. Multiperil crop insurance is compulsory in South Africa. You cannot put a crop in without giving evidence that you have insured it. So you literally bet with the insurer against your crop being less than one tonne per hectare, two tonne per hectare or whatever.

I believe that, consistent with our policy on private health insurance, government funding would be best delivered upfront as a subsidy on that premium to make it attractive because, as we know with any form of insurance, the higher the rate of participation the lower the premium cost. Let us say the premium cost was—and this is purely a subjective figure—10 per cent. That would probably be beyond its worth. But at the moment farmers are deemed by the banking sector to be high-risk lending and they charge them accordingly—typically four or five per cent over what a home owner would pay for a home mortgage rate. Of course, if they have a bad crop, the friendly banker says, ‘You are an even worse risk now and you are struggling to pay me back, so I will charge you more.’ It is a policy I have never been able to understand, but the reality is that, if a farmer went into his lender and said, ‘Here is my insurance policy, backed in a fashion by the government, which says I will recover the full amount of your loan even if I get no crop at all,’ how can the bank then say, ‘You are a bad risk’? One might say in that example that five or six per cent of that 10 per cent would be offset by interest rates.

In my mind, this is a much better response. And, having congratulated the government on trying something new, might I say that there is a substantial accent in this pilot program relating to assisting people off their properties. Of course I do not think that should be the purpose of legislation, but I understand the reasoning. The words ‘to depart with dignity’ are used, and for some people the circumstances are beyond retrieval. But I am saying that if this House were to legislate a progressive and transitional arrangement, even in legislation of this nature, to give farmers the option of a subsidised or underwritten insurance scheme by which they could cover their input costs or such greater amount for which they were prepared to pay a premium, then in fact their security would be guaranteed. This occurs in Canada, it occurs in the United States, it occurs in many parts of the world. It is a common practice.

It is interesting. There have been numerous inquiries into this particular system, all designed to fail. In fact, one in Western Australia used as an excuse the fact that they sent out something like 1,300 or 1,500 survey forms to farmers to see if they would participate and they then said, ‘No, farmers aren’t interested; they only sent 230 forms back.’ I am surprised it was 230. You know what farmers do with survey forms; they chuck them in the bin. To use that as a judgment when they had figures in there that said that the premium rates could fall to two per cent if there were high levels of participation—now I am not recommending the South African system of compulsory participation but, if it happened, that would be extremely cheap. The thing has to be risk rated; you just cannot have a flat premium structure, because some properties represent a higher risk than others. Funnily enough, in the last couple of years in my electorate the so-called marginal country to the north has been doing pretty good after some very dry years, but the safe country has got another problem. It is called frost. One day they have a magnificent crop standing in their fields just maturing to head, and the frost comes along overnight and wipes it out.

Unfortunately, and I think unwisely, in better times for cropping and with all the efficiencies achieved, many farmers walked away from their livestock component, their mixed farming component. At the moment they are all rushing to get back into sheep—not to sell the wool, but to sell the meat, for which there is an ever-increasing international demand, particularly in the United States where the Latino population prefers mutton to beef. That is changing the buying habits of the United States, and of course they are such a huge consumer. We are talking now over $100 per lamb, and that in itself would make the difference.

All of this comes into the management process, but more particularly, considering the huge costs involved in putting a crop in and the past variations, farmers need a system that initially must be supported by government. My view is that all the EC outlays could be transferred to that, but there would be a double whammy period for government because you cannot say to those, particularly in the Eastern States, who are still on EC, ‘You get off it and go and insure yourself.’ No, you have to phase those sorts of people out. Maybe this is a step in that direction because it talks about self-reliance. I think we should be moving in that direction and, in the first instance, having a cost-neutral arrangement progressively so that the ongoing EC funding is committed to either a premium subsidy or an underwriting.

It is funny. When I talk about all of these concerns, the insurance industry in Australia have typically said, ‘It’s all too hard, we don’t want to be part of it.’ Yet I am pretty sure I read the other day that QBE have bought a company in the United States or Canada that specialises in crop insurance. I think they paid $700 million for it or something. So obviously they think those companies over there are profitable, but that is probably because of government underwriting.

I congratulate the government on trying to do it better because exceptional circumstances is a dog and it does not work and it was very unfair, but I would say to the government and I would say to my colleagues, as I do frequently, that we need to take another step and give people proper self-sufficiency through being able to insure, as everybody else does, and protect their actual asset through insuring their crop production. And if that requires some government assistance in the first instance, I think it would be worthwhile. (Time expired)

Mike Kelly (Eden-Monaro, Australian Labor Party, Parliamentary Secretary for Defence Support) Share this | Link to this | Hansard source

I thank the member for O’Connor for his comments. I would like to echo what he has had to say in relation to the exceptional circumstances regime, based on the experiences of my own region. I would also like to congratulate the minister, Minister Burke; he has been an outstanding Minister for Agriculture, Fisheries and Forestry. He has tremendous competence, and his straight talking and honesty have been well-received by all the men and women on the land who I talk to.

This Farm Household Support Amendment (Ancillary Benefits) Bill 2010 is very welcome, setting up this pilot project. It is a pilot of drought policy or risk policy, if you like, because we need to move away from an exceptional circumstances system that is based on consequence management to a risk management approach to better arm our farmers for the future. As has been mentioned, this trial will be operating in Western Australia from 1 July this year to 30 June 2011. They will have access to the same welfare related ancillary benefits as those receiving exceptional circumstances relief payments. All this includes the automatically issued healthcare card and concessional income and asset testing for youth allowance—so important, as you would know, Mr Deputy Speaker Scott, in relation to rural and regional areas in particular—and the farm family support scheme will be demand driven.

As part of the trial, we will continue to provide income support to help eligible farmers facing hardship to meet basic household expenses. That support is provided under the farm family support measure. The assistance is available regardless of the cause of hardship, which is another important point. Due to the complex nature of the income support legislation and the short-term nature of the program, farm family support payments will be delivered through an executive scheme arrangement under the Financial Management and Accountability Act 1997. This bill will amend the Farm Household Support Act 1992 to effectively treat—that is, deem—farm family support as if it were exceptional circumstances relief payments for the purpose of providing access to a range of measures.

The farm support scheme that we are introducing in this trial includes farm family support, which is income support for basic household expenses, and farm social support, which will be directed towards stronger social networks for mental health and other social needs—mental health being a huge issue in the rural and regional areas, especially during these stressful years of the drought that we have had. For farm planning, farmers will be able to access $7,500 to undertake training to develop or to produce a strategic plan for their farm business. Building on that we will have funding available for grants of up to $60,000 for on-farm investments identified as a consequence of the strategic planning that will help them apply that strategic plan. We also support stronger rural communities, so there will be grants to local councils for activities that make rural communities more resilient during the agricultural downturns that they may experience. If the worse comes to the worst, we will have the farm exit support grants of up to $170,000 for farmers who decide to sell their farms because they are no longer viable. Then we have a beyond farming component, which puts current and former farmers in touch to discuss opportunities outside of farming and help to make that transition much easier.

This is far superior to what we have had with exceptional circumstances. My region is a perfect illustration of the downfalls of that system. It is important to note, though, that that system will continue as this trial progresses, so all those receiving exceptional circumstances support now will continue to receive that support until we can determine how well this trial has gone and where we need to go from there. In my region, we suffered badly from the blunt instrument approach of exceptional circumstances. Partly this is because you tend to reinforce failure by not having an approach that looks at the real reasons for why particular farms might be in debt and whether or not they are in fact viable, but it is also because of the artificial lines on maps. In my region, which is now totally drought affected or marginally affected, you had boundaries that were drawn all the way up to the Sydney Basin, where the rainfall was much greater than was occurring in the Bega Valley or the Eurobodalla shire, for example. In fact, last year was the driest year on record in the Bega Valley. This has been compounded, of course, by the effects of climate change because the increasing temperatures have affected ground moisture quite severely. So whatever rain that was falling was rapidly evapotranspirating or not being soaked into the soil, which also gets back to another factor in the degradation of our soils through the loss of carbon in the soil. I will come back to that.

We also have the situation where, having tried to refine it a little more, we managed to get the Bega Valley under an exceptional circumstances declaration but the Eurobodalla farmers missed out. So you would have a qualifying farm that would effectively be right next door to a farm in the Bega Valley that would not qualify for exceptional circumstances relief because of the artificial lines on the maps. These are just a couple of illustrations of why the system was just dysfunctional and not worth continuing with. There must be a better way and this trial will help lead us there.

It is part of a raft of support measures this government has taken to support the men and women on the land. We truly have become the farmer’s friend through these many measures. Through Australia’s Farming Future, for example, we have a four-year initiative that features four programs delivering research and development, training, capacity building, adjustment advice and assistance. We have the Climate Change Research Program, which funds research development and demonstration projects to help primary producers to manage climate change, reduce emissions and improve productivity—and quite often these measures relating to climate change are associated with better productivity. We have the FarmReady program supporting training opportunities for primary producers, enabling industry to develop strategies to deal with the impacts of climate change. I will come back to that. We will have the community networks and capacity building aspect, which aims to build the leadership and representative capacity of target groups to strengthen community resilience and the productivity of primary industries. These groups include women, youth and Indigenous Australians. Under the Climate Change Adjustment Program, there is professional advice available and training delivered to individuals to help tailor individual farm businesses to adjust to climate change, set goals and develop action plans to improve their financial circumstances, either within or outside of agriculture.

There is also the Caring for our Country scheme, which carries over $2 billion of funding over its first five years and is particularly aimed at natural resource management. It seeks to achieve an environment that is healthy, better protected, well managed and resilient and provides essential ecosystem services in a changing climate. Caring for our Country is delivered in partnership with a wide range of stakeholders. The Australian government encourages information sharing and cooperation at individual, regional and national levels through this program. It focuses in particular on six national priority areas. These include national reserve systems; biodiversity and natural icons; coastal environments and critical aquatic habitats; sustainable farm practices, very importantly, including through the Landcare mechanisms; natural resource management in remote and Northern Australia; and community skills, knowledge and engagement. The Caring for our Country sustainable farm practices national priority area in particular seeks to assist farmers and fishers to increase their uptake of sustainable resource management practices that deliver improved ecosystem services; increase the number of farmers adopting stewardship and covenanting property management plans or other arrangements to improve the environment both on farm and off farm; and improve the knowledge, skills and engagement of Landcare managers, farmers and fishers in managing our natural resources and the environment.

The Landcare component covers off on many different areas, and these include Landcare projects—specifically, community based projects—also sustainable practice projects, the national network of Landcare facilitators, a $2.6 million program over four years to support the uptake of sustainable fisheries practices, and the community action grants. There was a bit of a scare campaign running at one point that the Landcare budget had been reduced in this year’s budget. This should be laid to rest very clearly. That is simply not the case. The Landcare budget increased from $35 million in last year’s budget to $36 million in 2010-11 and to $39 million in the further out-years. Caring for our Country funding also increased for next financial year by $15 million to $423 million for that year. So the Landcare funding situation is well and truly secure.

Our FarmReady training program—this is a particularly good program which many farmers in New South Wales are taking advantage of—provides $1,500 each year for farmers and their families, with extra funding for travel, accommodation and child care, and equips primary producers with tools to manage and adapt to the impacts of climate change. The sorts of courses that are available address particular key learning areas, and these include the implications of climate change, integrating new techniques, natural resource planning, farm business management, on-farm research and analysis, strategic planning, holistic whole-farm planning, financial management and human resource management. Under this scheme there are 500 courses now approved nationally; 225 are available on demand anywhere in Australia. More than 12,300 farmers had signed up as of 9 April this year. It is a very successful program. I know that in New South Wales alone 120 courses have been created targeting regional New South Wales. This includes face-to-face and online support by phone or email. It covers a vast range of areas which include dairy; risk management; compost tea—I have never tried any of that, but it sounds interesting; farm planning; computerised mapping; quality and food safety; grains; healthy soils; water management; weed control; permaculture; organic farming; irrigated lucerne; environmental performance; managing people and projects; transition to resilience; and profiting from soil carbon, among many others.

I am also very proud of what we have done in relation to the weeds threat. This is something that just simply is not well understood in metropolitan Australia—but I am sure you understand it very well, Mr Deputy Speaker Scott. It is a big challenge for my region. We face issues to do with the serrated tussock, African lovegrass, St John’s wort, Paterson’s curse and in particular the insidious threat of fireweed. Fireweed is a particular problem because it is a toxic plant that will kill not only animals but people as well. Originating from southern Africa, it has been given a leg-up by the drier conditions in recent years. If it were to spread more widely in Australia it could create a dire threat to our agricultural sector. I have seen estimates that range from $4 billion for the cost to our agricultural sector of weeds annually. So it was a big problem and I was distressed—and no doubt there were members on the other side who would have been distressed—that the weeds CRC was going to be canned under the Howard policy.

I am very proud that through heavy lobbying I have managed to save a scheme targeting weeds, which is the $15.3 million that we have allocated over four years to establish the new comprehensive National Weeds and Productivity Research program, which will reduce the impact of invasive plants on farm and forestry productivity and also, importantly, on biodiversity. The program focuses on improving the management of invasive plants in agriculture, forests, pastures and native vegetation by investigating the most serious invasive plant problems in Australia, uniting national experts, land managers and stakeholders to improve the understanding of how to manage the risks associated with invasive plants. It also ensures better coordination and information exchange between researchers, land managers and regulatory agencies for the management of invasive plants. Also, I am very proud that under this productivity research program we have already funded 39 weed research projects worth nearly $3.6 million. These projects build on existing work and also enhance the innovation of approaches to the management of weeds. I am particularly pleased that I was able to secure $300,000 specifically for the fireweed problem. Many of my own family are dairy farmers down in the Bega Valley, which seems to be the epicentre of the fireweed problem. So this $300,000 will help build on the research that had been previously undertaken into this insidious threat.

This brings us back to a focus on where this challenge is emanating from for our farmers. It certainly comes back to climate change but also to the isolation of the challenge farmers face in dealing with dry conditions from crises over the years. So what we need to get to—from my old military background—is a situation of planning for the worst-case scenario, enabling our farmers to survive and profit or to be able to take advantage of the good times and sustain their operations during the bad times. In the eastern half of Australia we experienced a long, dry situation from 1895 to 1948, and it got wetter from 1948 through to 1976. But now we have been on this downward cycle. It has been compounded by the higher temperatures of climate change which, as I mentioned, has affected this ground moisture situation.

There is a debate about whether rainfall is affected by climate change. This is an ongoing debate and an open question. I did note that the CSIRO recently did research which revealed that the subtropical ridge—which is affecting south-east Australia in particular and the Murray-Darling Basin and my region—had been intensifying and resulting in lower rainfall. The only way that they could replicate that effect in their modelling was by introducing human-induced or anthropogenic carbon emissions, climate change factors. So there seems to be some suggestion that that may well be the case. But, as I mention, whatever the case, the higher temperatures are having a dramatic impact on ground moisture.

I also mentioned previously that the situation has been exacerbated in that respect by the deterioration of the carbon content of our soil. Carbon in the soil helps to retain the moisture. It also, of course, is a nutrient for our crops. I know from my own family’s experience that they are having to lay on more phosphate than previously to get the same results from their pastures. This is a direct result of the deterioration of carbon in our soil. So we are having this combined effect of the higher temperatures, greater evapotranspiration and deterioration of carbon in the soil.

My farmers are not sitting still. On their own initiative they are doing some great work out there. There is a fantastic group called Monaro Farming Systems. This is a group of farmers who have gathered together to combine with the CSIRO to develop a modelling tool called Grassgro to help them manage their properties. This tool enables them to examine strategic decisions on their farming systems and to look at the effect of anticipated weather conditions over long cycles so that they can plan their herd sizes and their pasture management around that. It is proving to be a powerful facility for analysing risk. This has given my farmers great mental reassurance because one of their problems was not knowing what to do. Uncertainty was creating even more mental stress. So this tool is not only helping them plan better as a business but also helping them deal with the mental stress emerging from the challenge that they are facing. I salute the team—David Mitchell and the crew and the CSIRO—for their support for Monaro Farming Systems. I am looking forward to having the minister meet with the group soon. I would hope to network this initiative in order to get the information and the strategies that these farmers are engaged in more widely known in the broader farming community. It will show that there is something that we can do to plan for these circumstances and that there is information out there on how to manage the risk.

Another great initiative in my region is the Bega Cheese environmental management systems project.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Housing) Share this | Link to this | Hansard source

The Bega factory.

Mike Kelly (Eden-Monaro, Australian Labor Party, Parliamentary Secretary for Defence Support) Share this | Link to this | Hansard source

Our Bega Cheese factory is a wonderful icon for the country and for our region.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Housing) Share this | Link to this | Hansard source

The trade visitors centre.

Mike Kelly (Eden-Monaro, Australian Labor Party, Parliamentary Secretary for Defence Support) Share this | Link to this | Hansard source

There is a beautiful visitors centre, with wonderful pictures on the wall that include a photo of my great, great-grandfather who founded the Bega Cheese Co-op and who was its first chairman. It is a wonderful part of our community and history. The Bega Cheese environmental management systems project is doing wonderful stuff with all of the members of the former co-op and now publicly listed company. They have identified environmental risks on 22 dairy farms. They have invested $2 million of public money and leveraged $6 million of private money. They have delivered approximately 75 on-ground projects, including 83 kilometres of riparian wetland fencing to protect approximately 300 hectares of riparian land; 124 hectares of revegetation and remnant vegetation management; 197 off-stream watering points; remediation of 13 priority erosion sites; 23 dairy laneway upgrades; 17 stream-crossing upgrades; 37 effluent systems upgrades; soil testing and nutrient mapping across 90 farms; and a very exciting dung beetle assessment across 22 properties. That is a really interesting outcome from those projects.

I salute what Bega Cheese and the farmers who are participating in that program have done. I was lucky enough to be at the presentation ceremonies of certificates to the farmers for what they have done under that scheme. There are things that farmers can do and are doing for themselves—and we should not think that they are not and that they are not alert to the challenges of climate change.

Finally, I come back to the Carbon Pollution Reduction Scheme. We need to come back to this in the new parliament because it will help us to address this carbon in the soil issue. We need to unlock the investment that will flow from the CPRS and invest it programs that will help to get that carbon back into the soil. Various techniques and possibilities exist out there for helping us to achieve that. We need to get the CPRS in there to unleash all that potential investment, including in relation to reforestation. It will assist in this as well. It could also help with a range of other things like the wingless grasshopper problem that I had just recently, which gets a leg-up from the lack of vegetation in the area. We must take on board the Carbon Pollution Reduction Scheme.

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

Order! The time of the parliamentary secretary with the cheesy grin from Bega has expired. I had to put that one in for you!

Rowan Ramsey (Grey, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Farm Household Support Amendment (Ancillary Benefits) Bill 2010. Just before the Parliamentary Secretary for Water leaves the chamber, I would like to say to him in the most helpful terms I possibly can what farmers would generally do—I was a farmer before I came into this House—about deficiencies in the soil. You should say to your family on these dairy farms that what we do when we have a phosphorous deficiency is put phosphorous on the soil. When we have a nitrogen deficiency, we put nitrogen on the soil. We would not address a nitrogen deficiency by putting phosphorous on the soil, because that would probably lead to acidification. When you talk with your family, get this matter straightened out and that will be a good starting point.

This bill has my support in so much as it is focuses on trying to improve farm business models. It is an attempt to improve on the exceptional circumstances scheme that we have been working with for some years to address drought in Australia. The trial in Western Australia is an opportunity to see whether or not it is a viable model. I must say that I am not a great fan of the exceptional circumstances scheme, which may come as a surprise to some people as I am someone who represents a large area of Australia that has been suffering from drought. But I am not a fan of this scheme largely because of the inconsistent way in which the assistance is provided, the distortions in the market caused by these inconsistencies and the ability of some and not others to access the exceptional circumstances package. For instance, boundaries are well defined but you may fall on the wrong side of a boundary. There are also different financial structures in any particular farm which may or may not give you access to the kind of help you might need to survive.

I have regular contact with a number of rural councillors and most of them are of the opinion that it is in fact far harder to get exceptional circumstances assistance in South Australia than it is in the other states—in particular, New South Wales. I think that is brought about by the primary industries in South Australia that tend to have a different view on some of these things. Access to EC actually causes a great number of conflicts in a district between those who receive the assistance and those who do not. However, having said all that—and I have raised this issue before—I am campaigning to restart the exceptional circumstances scheme for some areas in my electorate, largely because I feel that we have dragged these people halfway across the desert and now we have abandoned them, areas around Cleve, Cowell, Arno Bay, Ceduna and the upper north cropping district. As I have just said, there are some difficulties with EC in that it can be inconsistent. The EC was cancelled in these areas last year after a visit in November by NRAC, the National Rural Advisory Council. NRAC advised that the drought was over, but clearly for those districts, which I have raised with the Minister for Agriculture, Fisheries and Forestry, the drought was not over. In fact, for those confined areas the better year passed them by entirely. NRAC visited the upper north cropping district in November and within a week that district was faced with a heatwave.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! It being 2 pm, the debate is interrupted. The adjourned debate will be made an order of the day for a later hour this day, and the member will have leave to continue his contribution.