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

I rise this evening to reflect on the need to further diversify the economy of my home state of Western Australia and to highlight my concerns over some of the threats certain policy proposals are posing to our ability to achieve that diversification. As we well understand, Western Australia now confronts an economic reality that is very different to that which existed just three short years ago.

There was evidence of that over the past week, when the iron price rallied and went above US$50 a tonne. The fact this event provoked celebration in some quarters demonstrates our changed reality. This time three years ago, the iron ore price was hovering at around US$150 a tonne. In any case, market analysts warn us this rally is temporary and the price is likely to head back towards US$40, which is where it was heading before last week's temporary rally.

Of course, the collapse in the iron ore price is further compounding the already difficult situation that WA was facing in relation to its share of GST revenuer, but I will come to that later in my contribution. One of the keys to diversifying the WA economy is allowing our industries to adapt to international trends by using the latest technology available. Nowhere is this truer than in agriculture. Western Australia's farmers crop and graze in some of the harshest conditions on the planet and routinely deal with drought, frost, floods, and fires They must constantly adapt their production methods to meet increasing world-wide demands for protein and grains.

Modern farming is a dynamic undertaking open to change and always evolving. Farmers attend field days not to feel good about what they have been doing but rather to learn of new approaches and opportunities emerging from research and technology. This encompasses things like no-till cropping, precision agriculture, GPS driverless machinery, computer models to calculate cropping programs and Doppler weather monitoring.

Futurists agree that successful outcomes in agriculture in the coming decades will depend on a farmer's ability to understand, embrace and effectively deploy new technologies. Consequently, the biggest threat to continuing agricultural success at this point is the short-sighted, outdated dogma that dictates the Western Australian Labor Party's approach to agricultural policy. Specifically, that danger lies in WA Labor's continued opposition to allowing WA farmers to use the most universally accepted, safe and scientifically supported technology available: GM crops.

In 2009 with the support of WA's two major farming organisations, the Pastoralists and Graziers Association of Western Australia and the Western Australian Farmers Federation, the Liberal-National state government granted an exemption order to permit the cultivation of GM canola. Since that time there has been large-scale adoption of Roundup Ready GM canola by Western Australian farmers. In fact, in mid-2015 it was estimated that more than 436,000 hectares of GM canola would be planted that year—up from 350,000 hectares the previous year.

GM canola varieties now make up 22 per cent of the canola planted in the states that allow GM canola to be grown: Western Australia, Victoria and New South Wales. In the case of Western Australia around 30 per cent of the canola planted in the state was Roundup Ready canola seed. In addition to returning higher yields, GM canola boosts the productivity of farmland by providing growers with a more effective way to manage weeds, which are estimated to cost farmers about $1.5 billion to control and an additional $2.5 billion in lost agricultural production.

Yet, despite these obvious benefits, the WA Labor Party intends reintroducing a moratorium on GM crops should it win office at the WA state election in March next year. This fact was confirmed in the Farm Weekly on 9 April 2015 in a piece titled 'Battle brews as ALP seeks to dud GM'. It said:

WA Labor leader and Member for Rockingham Mark McGowan has backed comments made by his colleague last week, despite backlash from industry and Liberal representatives.

Mr McGowan said there would be a transition to a GM moratorium should a Labor government eventuate.

"We are not satisfied at this stage that the science demonstrates that GM food and crops are safe," he said.

WA Labor's policy was reiterated recently on February 15 2016 in the West Australian newspaper. It said:

Shadow agriculture minister Mick Murray said yesterday that Labor would revoke the exemption for GM canola if elected …

This outdated thinking from WA Labor would deny WA farmers the right to grow a legal and safe crop. What is even more bizarre is that this opposition from WA Labor is in direct opposition to their federal Labor colleagues. Former Labor agriculture minister Tony Burke made this comment to the ABC's Landlineprogram on 25 July 2010 regarding the commercial cultivation of GM canola in WA, NSW and Victoria:

My view is that the time for banning GM is long since past. We need to have appropriate regulation to make sure that crops that are planted meet all the food safety guidelines. That's important. But I just don't think there is an argument anymore that says you can turn a blind eye to an area of technology that's going to play a particular role in the future in reducing chemical use, reducing pesticide use and helping feed people.

Former Labor agriculture minister Senator Joe Ludwig made this comment to the Farm Weekly on 12 March in 2013:

We do support the use of GM within the federal OGTR—

the federal Office of the Gene Technology Regulator—

framework, requirements, and I'd encourage everyone to look at that research and the work that's being done.

Perhaps most surprisingly, the now leader of the Greens, Senator Richard Di Natale, in a comment to the Farm Weekly on 5 January 2015 confirmed that he, too, disagrees with the hardline opposition of WA Labor to GM crops. Senator Di Natale said:

I do not have a blanket objection to the use of genetically modified crops—I absolutely don't—and it would be hypocritical for me to say that because I support the use of genetic modification in medicine…

  …   …   …

It would be silly to say that all genetic modification will lead to serious human health impacts.

Quite why the West Australian Labor Party is so out of kilter with mainstream thinking—which now even includes the leader of the Australian Greens in the national parliament—is anyone's guess. I hope that WA Labor senators in this place will have a word with the Labor leader in Western Australia, Mr McGowan, and encourage him to change his stance to one that actually supports WA farmers as well as the diversification of the West Australian economy.

As I mentioned earlier, the task of diversification is made all the more urgent by the continuing pressures placed on WA by the present methodology for distributing GST revenue. As I have noted in this place previously, the present formula used by the Commonwealth Grants Commission to determine GST allocations is based on data that is between two and four years out of date. This means that, far from acting as a revenue stabiliser, which was the original purpose of the tax, it is instead generating revenue instability. Perversely, this means that when WA's mining royalties fell in 2014-15 and 2015-16 as a result of the slump in the iron ore price so did WA's GST share. The WA state government estimates that the use of this out-of-date data will see Western Australia lose $2.1 billion per annum in revenue over the period 2014-15 to 2018-19. In effect, the current system means Western Australia's revenue capacity is being overestimated. The state is forced to borrow money to make GST payments to other states based on mining royalties that do not exist in reality.

Recently the WA state government has suggested a possible improvement that is worth close examination. Its plan suggests the Commonwealth Grants Commission be instructed to prepare first estimates of each jurisdiction's GST entitlement in February for the upcoming year using state mid-year review revenue estimates. These relativities could then be reviewed twice within a financial year in line with the content of each state budget and mid-year review. A further, final, correction could then be made in the following financial year once each state's final budget outcomes were known and released.

This approach is easy to understand and would be far more transparent, given that it is based upon current data that is publicly released by the states themselves. It would reduce the impact of time lags that bedevil the current system and ensure that each jurisdiction's GST entitlement is based on revenue reality rather than the air of unreality that pervades the current calculations. I hope that this is an approach to which all WA senators and indeed this parliament can give full and proper consideration.