Barnaby Joyce (New England, National Party, Minister for Agriculture) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

Productive and prosperous rural industries are a pillar of the Australian economy and a key part of our national identity. Continuous innovation underpinned by research is essential to maintaining competitive and profitable industries and maintaining the rural communities that depend on them,

To provide research and development services which are vital to keeping primary producers in business, the rural R&D corporations were established under the Primary Industries and Energy Research and Development Act 1989. Since then they have supported research and development to keep rural industries profitable and sustainable.

There are 15 R&D corporations, five statutory and 10 industry-owned, supporting a wide range of rural industries. Through them, producers collectively invest in research, development and extension. Government helps by setting up and collecting a levy if an industry gets together and asks for a levy. After recovering costs, the government pays the levy funds to the relevant corporation. To encourage producers to invest in their own productivity the government matches the corporation's eligible R&D, research and development spending up to legislated limits.

The research and development corporation partnership of government and industry has stood the test of time, but improvements can be made. With a changing environment, improvements need to be made. This bill will enhance the existing R&D corporation model to provide better services and ensure that the model works for primary producers into the future.

Australia's success in agriculture is built on research and development.

In the early days, our industries innovated by necessity. Early pioneers brought crop varieties to Australia that were developed for the European climate and soils. Most of these performed poorly in Australian conditions. They had to be adapted.

In the late 1800s, Farrer—who has an agricultural high school in my area named after him—led the revolution to breed varieties for the Australian climate, which transformed our wheat industry. At the same time, Richard and Clarence Smith developed the stump jump plough to deal with the tough Australian soils and resilient mallee scrub.

By the 1970s our research and development expanded from productivity-focused innovations to include innovations to meet the needs of the consumer. This was epitomised by the development of the Pink Lady apple by John Cripps from Western Australia.

More recently we have made innovations in electronics and computerisation with advances like robotic dairies and satellite technology, keeping the farmers at the cutting edge.

For the future, the prospects are very exciting. Research and development is providing advantages in precision farming to minimise soil disturbance and compaction and cut chemical and fertiliser use to what plants actually need. During my previous time in St George, all the time we were in contact with further advances in the cotton industry by reason of research and development. We are seeing the potential to use drones to manage weeds and pests. We are breeding plants and animals to develop taste attributes that markets require and to tackle specific health issues such as overcoming the increasing emergence of allergies.

The national interest demands a healthy agricultural sector. Rural industries are engaged with, and firmly support, our R&D corporation model. This model is the envy of other agricultural nations. It has a strong track record. Over recent decades Australia's rural productivity has increased at twice the rate of other Australian industries and rural R&D has been a major contributor to this. In the absence of productivity growth over the last 60 years it has been estimated that the gross value of production of the Australian agricultural sector would be approximately $12 billion per annum rather than the current more than $40 billion.

Research, development and extension have a fundamental role in preparing Australian rural industries for the future.

There are many challenges facing our rural industries. These include the effect of the high Australian dollar, a variable climate and strong competition in the global marketplace. There are big opportunities too, such as a growing world population to feed and increasing demand for our agricultural exports especially in Asia. Australia has a strong capacity to produce food that is tailored to the needs of new markets.

While our system for research and development is world class we cannot be complacent. The R&D corporation model must be updated to help producers make the most of opportunities and meet challenges as they arise. This, in turn, will help reinforce our food security and keep agriculture profitable and sustainable.

In 2011, the Productivity Commission and the Rural Research and Development Council reported on the rural research, development and extension system in Australia. Both the Productivity Commission and the council acknowledged the strong foundations of the existing system. Both recommended improvements to the system.

Ten consultation meetings were held in Sydney, Melbourne, Perth, Adelaide, Brisbane and Canberra for industry and other stakeholders to give feedback on the recommendations. Since then there has been ongoing consultation with the R&D corporations and industry including an opportunity for corporations and industry representative bodies to comment on an exposure draft of all three bills.

This bill and its companion bills, the Primary Industries (Excise) Levies Amendment Bill 2013 and the Primary Industries (Customs) Charges Amendment Bill 2013, will commence concurrently.

Marketing activities

Nine of the industry-owned R&D corporations can already carry out collective marketing services for the benefit of their industry. This bill will give the five statutory R&D corporations the same ability to provide marketing services provided that producers propose a marketing levy, there is demonstrated industry support and the government agrees to collect it. Marketing services will not attract government matching funding, which is only for research, development and extension services.

Some industries are keen to allow statutory R&D corporations to undertake marketing to promote their produce. The prawn industry has already started discussions in the sector about the potential benefits of the marketing levy. There are well-established, clear and transparent processes to guide industry bodies through the consensus-building steps needed for a levy proposal.

Enabling statutory R&D corporations to carry out collective marketing will allow primary industries to tell consumers about their products' safety, nutritional and other production values.

Matching voluntary contributions

Primary producers and the government know that our R&D model is sound, creating a healthy return for the investment made. As a result, some businesses in the rural sector are willing and able to make extra voluntary payments to the R&D corporations.

Currently some corporations receive government matching funding for voluntary contributions to R&D. The bill will make the model fairer by allowing the extension of the arrangements to all the R&D corporations. Overall matching funding will still be limited by a cap on industries' gross value of production. This change may allow the corporations to maximise the R&D they fund by strategically using voluntary contributions to top up R&D spending. Matching voluntary contributions for R&D may also encourage supply chain partners to work with an industry on issues of common interest.

Funding agreements

Funding agreements were brought in by the then minister, the Hon. John Anderson, in 1998, and have been used since to agree governance and performance matters with the industry owned R&D corporations. This bill extends funding agreements to the Commonwealth's relationship with the statutory R&D corporations. Funding agreements will create a flexible mechanism, which can be easily altered if the needs of the parties change.

Funding agreements will be used to drive transparency and accountability. The agreements will be tabled in parliament and contain requirements relating to corporate governance and performance. These agreements will also allow the government to provide guidance to the corporations regarding the research priorities and needs of the broader Australian agricultural community. The bill allows until 1 July 2015 for the statutory R&D corporations and government to enter into funding agreements.

Appointment process for statutory R&D c orporation boards

Current procedures for appointing directors to statutory R&D corporation boards have proved expensive and time consuming, diverting resources from the corporations' core function—providing R&D, research and development, for their industries. Amendments in the bill will streamline the selection process. Selection committees will be limited to five members and the committee itself will be established for up to three years. This is designed to cut the cost of establishing a new committee for each selection process. In addition, the selection committee will create a 'reserve list' of suitable candidates that the minister can use to fill unplanned board vacancies for 12 months. If a candidate with the necessary skills is not available from the list, the process must begin again.

The presiding member must have regard to equity and diversity when recommending members for the selection committee of a statutory R&D corporation. Similarly, the selection committee must do the same when recommending candidates for the board of a statutory R&D corporation. Diversity of skills and background can broaden and enhance the board's skill base to ensure an effective statutory R&D corporation board.

Fisheries research and development

The Fisheries R&D Corporation receives most of its funding through the Commonwealth, state and territory governments. The farmed prawn industry is the only individual fishery with a statutory R&D levy.

The bill creates a new class of fisheries R&D levy that can be matched by the government without having to form part of a jurisdiction's contribution. If a fisheries industry requests a new statutory levy, the amendments will allow the levy to be collected and matched by the government up to a cap specific to that fisheries sector.

Each separately levied fishery will be subject to existing eligibility rules for matching funding. In effect, the fisheries sectors which so choose, will be able to invest in specific R&D and marketing by proposing a levy for that purpose.

Minor amendments

To cut red tape, this bill provides that statutory R&D corporations will no longer have to seek ministerial approval for their annual operating plans. This has become a burden for both the corporations and the government. The minister will oversee each corporation's strategy rather than its day-to-day management. Annual operating plans will still be required, but ministerial approval will not.

Minor amendments will remove redundant parts of the legislation. For example, energy is no longer part of the Agriculture portfolio, so all references to 'energy' will be removed from the act. References in the act to R&D councils and R&D funds are out of date and will be removed, making the act easier to understand and administer.

Other minor amendments encourage equal and consistent treatment of R&D corporations, including standardising requirements to comply with ministerial directions and standardising delegation powers. 'Scientific and technical capacity building' will be added to the objects of the act.

Conclusion

The changes in this bill will make R&D corporations more adaptable and better able to deal with the new realities faced by Australian primary producers. The way R&D corporations are run will be streamlined, promoting certainty and consistency for levy payers and other stakeholders. We will keep a strong focus on transparency, effectiveness and accountability to producers and the government. I commend the bill to the House.

Debate adjourned.