Dean Smith (WA, Liberal Party) Share this | Hansard source

I'm pleased this evening to be making my contribution on the legislation before us tonight, the Regional Investment Corporation Bill 2017, not least because it goes to the nature of an issue that's very important to Western Australia. No-one can deny that the success of Western Australia is built on many things, not least the enthusiasm and entrepreneurship of its people in the mining and resources sector but also, significantly, the agricultural sector.

Let me begin by saying that I have some sympathy for the arguments that Senator Bernardi and the Australian Conservatives have put forward. I, too, am a very strong federalist—indeed, I came to this place a number of years ago and fought vehemently against the recognition of local government in our Commonwealth Constitution, on the basis that I decided—

Senator Carol Brown interjecting—

And I was pleased to be supported by many colleagues on this side, Senator Brown. I came to the very strong conclusion that recognising local government in our national Constitution would undermine local decision making and the independence of local communities. I am pleased to say, or pleased to remind you, Senator Brown, that, when that proposition was put twice before to the Australian people, they also rejected it. So, on that issue, I was just carrying the argument of popular opinion.

But what we are talking about tonight gives effect to the 2016 election commitment to establish the Regional Investment Corporation and gives an opportunity to streamline some of the payments that are made through the department of agriculture to support agricultural communities. Most important, of course, to my home state of Western Australia are those farm business concessional loans programs. But the RIC will support farmers and agricultural communities in states like Victoria and South Australia as well, because it will become the vehicle to which the National Water Infrastructure Loan Facility will be attached and future programs supporting agricultural communities.

It is interesting: over the last few weeks, I have had an opportunity on a number of occasions to meet with the new Western Australian minister for agriculture, the Hon. Alannah MacTiernan, our former member for Perth. I am happy to put on the public record that I have been very grateful for the opportunity that she has given to me to talk about wild dog control in Western Australia—a very important issue—and I am positively expectant that we might get some good news from the Western Australian state government on wild dog control. But also she shared with me some concerns she has about the RIC and how it might work—importantly, how the farm concessional loans scheme might actually operate and how that might affect Western Australian farmers.

But I think, at the outset, it is important to put on the public record just why an organisation like this is important generally but, more specifically, why Western Australia should be given a very strong voice in the governance of the Regional Investment Corporation when it's finally established. We know that, under the governance arrangements that will be put in place, it will have three board members. We know, through the committee inquiry process, that the governance arrangements were the point of discussion among and some commentary from Western Australian stakeholders. I might just go to that point first. In the committee process around this particular piece of legislation, various Western Australian organisations—not least, of course, the Pastoralists and Graziers Association of Western Australia, my home state, but also the Western Australian Department of Primary Industries and Regional Development—drew attention to and raised some concerns about the governance arrangements that might be put in around the RIC. It might just be worth quoting from page 18 of the committee report, which draws out some of these concerns:

The Pastoralists & Graziers Association of WA (PGA) argued that a board membership of three was too small, and that the governance arrangements 'enshrine political influence' into what should be a purely commercial operation. It suggested that the size of the board and its composition should be similar to that found in private financial organisations in order to cover the range of qualifications, skills and experience listed in section 17 of the bill. Similarly—

another submitter—

queried whether a board of three members would be 'sufficient to effectively govern' the RIC and that there was a risk that the board would 'end up having a limited range of experience'.

Of course, one of the merits that have been argued in regard to the governance arrangements around the RIC is that it will be seeking to draw out and bring to the board of the organisation a skill set that is broadly focused on agricultural interests—banking and finance, of course; agribusiness experience; financial consulting; auditing; economics—and brings to the governance experience that directly affects rural communities and rural industries.

I think it is worth sharing in my contribution tonight what the Western Australian Department of Industries and Regional Development had to say:

The Western Australia Department of Industries and Regional Development (WADIRD) also raised concerns about the proposed board in terms of both the membership under clause 16, and what constitutes a quorum under clause 29. It argued that as RIC is to manage a loan portfolio of $4 billion, and up to 1000 clients, while operating across all jurisdictions with variations in climatic and production zones, three members would provide an 'insufficient spread of skills and experience for effective governance'.

It's important to put those concerns on the table to remind people that there has been an important debate about the governance arrangements in regard to the RIC, but I say to the Pastoralists and Graziers Association and to the Western Australia Department of Industries and Regional Development: you have nothing to fear. There is nothing to fear in a board membership of three if we make sure there's a very, very strong Western Australian voice amongst those three board members.

Tonight I want to make the case that having a Western Australian board member on the RIC doesn't just suit our parochial interests. It is very, very important when you contemplate or are reminded about the significant contribution that Western Australian agricultural communities make in supporting Australian agriculture and Australian exports. Western Australia's agriculture and food sector not only is a world-class producer of high-quality, safe agriculture, food and fibre products that are vital to our state's economy but also is important to feeding not just Western Australians but people across the whole country, and it significantly supports our export arrangements. The purpose of this body is to better administer farm loan arrangements to farmers in a state like Western Australia, which has such a huge potential. We hear a lot about the export potential of other states and territories, but you have only to look at wheat and the importance of wheat exports not just to the Western Australian agricultural economy—the great bulk of wheat that is produced in Western Australia is exported. That is a very, very different scenario to the rest of the country. When you think about the contribution that wheat and other grains make to supporting the breadth of the wealth that is generated in this country through agriculture, I would argue that it is very, very important to have a strong Western Australian voice and strong Western Australian skills not just on the board of the RIC but in its management and its infrastructure.

It might be worth focusing on the export focus, which is the bread and butter of Australian agriculturalists. The agriculture sector in Western Australia places a high value on its overseas markets, agriculture being WA's second major export industry. It's worth reflecting on that. Australians know all too well that Western Australia's wealth and productivity are very much built on the success of its mining and resource development, but, after that, agricultural exports account for the second-largest volume of exports.

In Western Australia, our state exports account for 80 per cent of our agricultural production. Eighty per cent of our agricultural production is exported. In 2015-16, WA exported an estimated $7.6 billion in agriculture and food products. The top three products were wheat, barley and canola. In the past decade about 70 per cent of the state's agrifood exports have been destined for Asia, with China, Indonesia and Vietnam some of our largest markets. With growing demand for premium agrifood products, especially across Asia, WA is in a good position to build on its reputation as a reliable supplier of clean, safe and high-quality food to overseas markets.

That's important not just in terms of the volume of agricultural exports. We know that as incomes start to rise across Asia—as middle-income earners and the size of that middle-income bracket start to increase across the Indian subcontinent, across North Asia and across South-East Asia—there are very, very real and tangible opportunities for Western Australian agricultural producers, particularly those that are producing high-quality, premium products. And of course the free trade agreements which the coalition government has successfully stewarded are critical in embedding that future success for the Western Australian economy.

I might just reflect briefly on the current farm debt experience across broadacre and dairy farms across the country. People might be surprised to learn that over recent years New South Wales has witnessed a 9.7 per cent increase in farm debt over broadacre farming properties; Victoria, 16.9 per cent; Queensland, a reduction by 9.2 per cent; Western Australia, an increase of 8.6 per cent; South Australia, just one per cent; Tasmania, a reduction of 16.6 per cent; and the Northern Territory again a reduction, by 3.3 per cent. But of course the average across Australia is a rise in farm debt across broadacre properties of, on average, about 4½ per cent. That demonstrates that the issue of supporting agricultural producers, supporting farmers, is very, very important.

Many of us in this place will appreciate—perhaps not all of us to the same degree—that farming communities and farmers and their families have to live with uncertainty. They live with uncertainty not just in terms of the variable climate, which we hear a lot about in this place, and not just in regard to severe drought experiences but also, we know, in dramatic fluctuations in commodity prices. It is the price we pay for being an open, export-orientated market economy, one that I would argue has benefited regional communities for many, many decades. I firmly put myself on the side of the ledger that says that open markets, low tariffs and export-orientated controls that are deregulated are by far the most effective means in being able to deliver success to farming families and to farming communities.

It is worthwhile just briefly sharing with the Senate tonight the success that has been enjoyed by the Western Australian wheat industry, by the Western Australian barley industry and by the beef community. We know that wheat is the major grain crop produced in Western Australia, making up 65 per cent of annual grain production and generating between $2 billion and $3 billion for the Western Australian economy—not the national economy—each year. Wheat production occurs across the Western Australian Wheatbelt region on 4,000 mostly family-run farms ranging in size from just a thousand hectares to almost 15,000 hectares. WA generates 50 per cent of Australia's total wheat production, with more than 95 per cent of this exported, predominantly to Asia and the Middle East. Western Australia produces white-grained wheat varieties that generate high flour-milling yields and a bright white flour that is suitable for a range of products, particularly those of great interest to our trading partners in Asia. The area sown to wheat in Western Australia for the past 20 years has remained relatively stable at between four and five million hectares, but over the same period production has increased strongly with improved yields. As a result, we're seeing production of eight million to 10 million tonnes per annum. The WA wheat industry has been the bedrock of WA's agricultural success. I argue that it's been a significant contributor to the success of the Australian agricultural sector.

Barley is Western Australia's second largest cereal crop after wheat, accounting for 25 per cent of the state's total cereal production and delivering just over $0.6 billion in barley grain and malt export earnings each year. Forty per cent of the barley produced is delivered as malting grade destined for the Japanese, Chinese and Indian beer markets, with the remaining 60 per cent delivered as feed grade, the majority of which is sent not to Asia but to the Middle East.

Finally, the Western Australian beef herd consists of approximately two million head, half of which range freely on extensive pastoral stations in the northern rangelands of Western Australia, while the remainder roam the lush pastures of the agricultural region of the south and south-west of the state.

The issue of governance around the Regional Investment Corporation is one that the new Western Australian government will pay particular attention to. It's one that I'll be paying particular attention to because I think we know that the Western Australian agricultural communities provide a tremendous level of economic activity that supports the entire Australian agricultural industry. But, more than that, I argue that there's a level of innovation that happens across Western Australian farming communities. There's an appetite to try new techniques to make sure that we get the best productive value out of land. And I would add this point: what we're seeing in Western Australia is a generational change in farming communities. Once upon a time, we would see older farmers and their families, but now, I'm pleased to say, communities like Bruce Rock, Merredin and others are coming to life because young people—predominantly men but not exclusively—are taking on the challenge of raising their families in regional communities. They are taking on the challenge of looking after larger agricultural properties that, in good times, bring tremendous benefits to local communities.

I reiterate two important points. The governance arrangement is one that I hope to talk to the federal minister for agriculture, Barnaby Joyce, about. I have also been in communication with the state agricultural minister to talk about what we can be doing to make sure that the concessional loan arrangements that would be put in place under this new scheme properly benefit Western Australian farmers.

In a continent as large as ours, it is hard to argue that there shouldn't be a consistent form of eligibility requirements. Farming conditions are variable enough and different enough on the west coast of Australia to those on the east coast of Australia and, indeed, in Tasmania that it warrants having eligibility criteria that better reflect local conditions in the particular states. This is a point that I know the Western Australian government is keen to argue and keen to debate with the Commonwealth. But you don't have to be an agricultural scientist or a senior climatologist to know the value of having a consistent set of eligibility criteria across a continent as large as ours, with such varying weather conditions—I hope you're nodding in furious agreement, Mr Acting Deputy President. We know that, when farming communities get afflicted with drought or floods in one part of the country, it is very likely, and probably entirely possible, that another region is experiencing bumper times.

There is one particular case in point, and that is that the calculation between annual versus seasonal data in determining the eligibility criteria of Australian farmers has to change. That's important for WA farmers. Dare I say, I'm pleased that the new Labor state minister for agriculture, Alannah MacTiernan, is taking on this particular point. On this issue, I'm happy to barrack in her corner to make sure that Western Australian producers get the best possible deal that they can out of these new arrangements.

I think the idea of putting the RIC in Orange is debatable. I have got to be honest with you. I don't know if putting it in Orange is the right thing to do or even totally necessary—ask Senator Williams or Senator Fawcett! If it has got to be in Orange, that's totally okay. In regard to the governance arrangements, let's make sure there is one prominent Western Australian with sound experience in agricultural industry that is one of those members on that three-member board.