Second Reading - Regional Investment Corporation Bill 2017
Mr PITT (Hinkler—Assistant Minister for Trade, Tourism and Investment) (18:02): It's great to follow the new member for Calare—an absolute fighter for regional Australia and of course following on from the former member, Mr Cobb. I'm sure that the new member for Calare will be just as consistent, just as strong, and will do a wonderful job in his role.
But I do rise to speak on the Regional Investment Corporation Bill 2017, which is another important 2016 election commitment that we, the coalition government, are delivering. By establishing this corporation the government is recognising the significant contribution that regional communities, where about 33 per cent of the population live, make to Australia. The Regional Investment Corporation will deliver up to $4 billion in concessional loans under the government's farm business concessional loans program and the National Water Infrastructure Loan Facility. It will streamline the administration of farm business loans, delivering national consistency and ensuring that loans are carefully and promptly assessed to help farmers in need.
Currently there are different agreements with the states and territories, and there has been inconsistency with loan decisions. The corporation will have a client focused culture that is receptive to and understands the unique nature of farming. As a former farmer, I can tell you that it is unique. It certainly teaches you a couple of things, and the first one is resilience. You absolutely need resilience to be in that game. The second is acceptance—to manage the things you have no control over, particularly the weather.
The corporation will also provide independent advice to government on projects for consideration under the National Water Infrastructure Loan Facility and then deliver approved grants of financial assistance loans to the states and territories to fast-track the construction of priority water infrastructure projects. The Commonwealth has offered concessional loans since 2013-14 to help farm businesses through these difficult times. Farmers have many variables to deal with in their business—the weather, which of course affects growing conditions, and fluctuations in price. Having been in the game most of my life, I can tell you that it was on only one occasion that I saw all those things come together—price, crop, delivery, and in the bank. But at the moment agriculture is the shining star of our economy, along with tourism. Our growers are going incredibly well, and I congratulate them on their persistence. In recent years the canegrowers in my electorate of Hinkler have been faced with the decision to either irrigate or hold off and wait for rain, because electricity costs are playing a huge role in those decisions as to whether they even turn the pump on. At the start of this year, a third-generation Bundaberg farmer, Dean Cayley, told me he's not sure that there will be a fourth generation of cane farmers in his family due to electricity prices. In his view, electricity prices are out of control. Of course, it's not just cane farmers; it is right across rural production. One of the electricity bills for a 90-day period in which he estimated that he only irrigated for about half of that time was $20,307. He was expecting the bill for the next quarter to triple to $60,000 just in electricity costs for irrigation.
Farmers live and work with this type of uncertainty every single day. There are occasions when they do need a hand. There is no doubt these loans are successfully providing practical support to the farm businesses that have received them, with over $680 million in loans approved to 1,275 farm businesses as at 30 April 2017. The farm business loans offered by the corporation will help viable farm businesses return to normal operating conditions. That's important. They will also boost farm productivity and cash flow and provide positive economic and social flow-on effects for regional Australia. They will help those businesses take advantage of emerging opportunities at a time when the ag sector is performing incredibly well.
Ag is a key pillar of our economy. It is performing extremely well, and, in fact, had record farmgate production value in the last 12 months. In June the gross value of farm production was forecast by ABARES to reach $62.8 billion in 2016-17. Ag is growing faster than any other sector at 15 per cent in the 12 months to the March quarter. While a slight dip is forecast for the gross value of Australian farm production in 2017-18, it is still expected to be nine per cent higher than the average of $55 billion over the previous five years. The gross value of livestock production is forecast to increase by 3½ per cent to $30 billion in 2017-18, driven by forecast increases in prices for livestock products, particularly wool and dairy. Export earnings from farm commodities are forecast to remain at $48 billion for 2017-18. A number of agricultural commodities are expected to see rises in their export earnings—beef and veal up four per cent, wool up six per cent, dairy up 14 per cent, cotton up 34 per cent, wine up five per cent, lamb up four per cent and rock lobsters up two per cent. Export earnings for fisheries' products are forecast to increase by 1.2 per cent to $1.5 billion in 2017-18.
Last year I visited the Geraldton Fishermen's Co-operative in North Fremantle. It is the world's largest processor and exporter of rock lobsters. The cooperative has a membership of some 200 fishermen, employs 350 Australians and currently sells around $450 million worth of rock lobsters every single year. It's benefited greatly from Australia's free trade agreement with China, which has seen the tariff for fresh or chilled rock lobsters reduced to just six per cent. For the first six months of 2016, direct Chinese imports of live, fresh and chilled Australian rock lobster more than tripled compared to the same period in 2015 to reach $20.7 million. GFC have invested heavily in response to ChAFTA. They have a live lobster facility within the grounds of Guangzhou airport in China. I also visited that facility last year. Another live lobster facility is under construction at Perth international airport and, once complete, will aim to have the shortest tank-to-tank flight time, just 14 hours. They are an absolute success. They are an export success story. I have seen it firsthand. I congratulate them on the work that they do in delivering live rock lobsters to Chinese consumers.
Coming from a farming family, as I said, and having a major primary producing region in my electorate, I understand firsthand the vital role that ag plays in our economy, our communities and our way of life in regional Australia. I know all too well that water is absolutely critical. I certainly remember well having very little water supply—20 per cent of allocation—drought-stricken crop and a price which was the worst that the world had ever seen for sugar at 4½c a pound. That certainly left me and my wife scratching our heads. But, like many others, we worked our way through that. But these are the challenges of agricultural production.
Water and water infrastructure is critical for our future prosperity not only for ag industries but right across regional Australia. So we as a government are committed to working with the states and territories to identify and build water infrastructure for the 21st century. We need to secure Australia's water resources. The coalition government has committed $500 million under the National Water Infrastructure and Development Fund, including $247 million for priority projects committed to in the 2016 election, $130 million for Rookwood Weir, $59.5 million for 39 feasibility studies across the nation and approximately $30 million for 16 studies in Queensland, and 15 feasibility studies and one water resource assessment have been undertaken by the CSIRO.
One of those projects is a feasibility study into upgrading the capacity of the Bundaberg Channel in my electorate of Hinkler, which has been around for many decades. The study will look at the most effective options for channel upgrades and improve water security and augmentation of the Bundaberg Water Supply Scheme, with the possibility of 100,000 megalitres of additional water becoming available for use. That is a substantial boost to the local economy, if we can manage to pull that project off. Also, we will look at the potential for the additional water to supply new and existing customers within the scheme, or new areas outside of the scheme, because, clearly, efficiencies make all the difference. We can expand our agricultural area if we have less loss. The first milestone for that project was completed in April 2017 with the payment of $140,000 to the Queensland government. This included completion of a demand assessment for uptake of allocations for Paradise Dam and the review of previous supply studies completed by Psi Delta for SunWater. The demand potentially includes supply of water from the Paradise Dam to the Gayndah regional irrigation district. The demand assessment also identified possible infrastructure required to enable water supplies to potential new demand areas and customers. The business case to examine options for system upgrades and expansion, including into underdeveloped cropping areas, is underway right now. The business case will examine the development costs, the approvals, the benefits and what the expansion options are for phase 1. That business case and study are due to be completed by 30 April 2018.
Another feasibility study we have undertaken is into the Gayndah Regional Irrigation Development project. This is an incredibly important project for Central Queensland, particularly for the sugar industry. The study will look at the feasibility of new water storage and irrigation infrastructure options which could provide up to an additional 28,000 million litres to develop 6,400 hectares of sugar cane in the Gayndah region of the Burnett River catchment. That would boost production for one of our local mills by some 500,000 tonnes of cane. That is a substantial investment. That cane would be then sent by rail to the Isis Central Sugar Mill, just outside of Childers, for processing. This could result in the creation of an estimated 92 jobs and an injection of $60 million a year into our regional economy. This project will investigate reinstating the crest level of the Claude Wharton Weir, utilising existing water reserves and the transfer of un-utilised water allocations to service priority irrigation areas in the Reids Creek and Byrnestown/Wetherton areas to expand cane production to that 6,400 hectares. The first milestone was completed on time in May 2017 and the first payment of $600,000 has been made to the Queensland state government. This included analysis by GHD to identify options for increasing the supply of water to priority bring irrigation waters in the North Burnett, including Reids Creek, Byrnestown and Wetherton. Options assessed as technically feasible include either harvesting water from the Burnett River at Mount Lawless or accessing water for the Paradise Dam via pumping releases from the river at Mingo crossing to Byrnestown. The business case will assess all of those and will be completed by April 2018.
We've committed 100 per cent for the funding for these feasibility studies. However, the Queensland state Labor government had to be forced into committing to deliver the projects—for free money! There was 100 per cent funding from the Commonwealth and we still had challenges with the Queensland state government. The Queensland state minister for water supply attempted to accuse us of failing to tell proponents of water feasibility studies that funding would be once yearly in arrears. This was despite the same minister actually signing, on behalf of the Queensland government, the National Partnership Agreement for the National Water Infrastructure Development Fund in May 2016. So, clearly, the minister really should read his contracts a little bit more closely.
The agreement sets out that the federal government will make annual payments for projects on the advice from the Queensland government that the agreed milestones have been met, and that's exactly what happened. Under that fund, the state or territory government is the project proponent and funding is provided to them directly. The fund is intended to support state and territory governments to deliver key water infrastructure projects, which is their responsibility, and to help them attract co-investment from project partners. The feasibility studies are an important step. They will create the groundwork for states to draw on the National Water Infrastructure Loan Facility, for which $2 billion has been committed as concessional loans to accelerate the construction of new water and infrastructure into the future.
Regional Australia deserves well paid and highly skilled jobs just as much as any other area of the country. To achieve that, we need to deliver consistent water supply and infrastructure. It will allow regional Australia to expand and provide more jobs, and we can continue to produce the wonderful produce that everyone around the world desires and wants to pay a premium price for. It is up to us to ensure we deliver the infrastructure that is required, and certainly this bill is part of that process. I commend to it the House.