Second reading – Primary Industries Levies and Charges Collection Amendment Bill 2016

Tuesday, 15 March 2016

Mr PITT (HinklerAssistant Minister to the Deputy Prime Minister) (18:35): I rise today to speak on the Primary Industries Levies and Charges Collection Amendment Bill 2016. This bill makes it possible for rural research and development corporations or RDCs to identify and connect directly with the primary producers who fund their work.

My region is one of the largest and most diverse agricultural regions in the nation. It produces a wide range of fruits, vegetables and nuts, and beef, sugar, pork and dairy, just to name a few. Data from the 2015 ABARES report for the Wide Bay region—which takes in the five local government areas of Bundaberg, Fraser Coast, Gympie, North Burnett and South Burnett—states that, in 2012-13, the gross value of agricultural production in Wide Bay was $1 billion, or 10 per cent of the total agricultural production in Queensland. Of that $1 billion, vegetables contributed 23 per cent or $239 million, with the major crops being tomatoes at $90 million, potatoes at $25 million, and beans at $20 million. In 2012-13, the Wide Bay region accounted for almost 98 per cent of the total value of Queensland mandarin production, and 85 per cent of the total value of macadamia nut production. The region is home to about 4,356 farms, or 16 per cent of all farm businesses in Queensland. About 24 per cent of all people employed in the Queensland agriculture, forestry and fishing sector are based in Wide Bay. The sector employs about 12,700 people locally, representing about 12 per cent of the region’s total workforce. All the producers of these products, the hardworking farmers of Hinkler, pay levies on their production that are invested in research and development—invested in the future of agriculture; invested in securing the livelihoods of our farming families and the jobs in our communities.

This bill allows a levy payer’s contact details and the amounts of levy paid to be provided to RDCs. This information is currently only available to the wool and dairy RDCs. Access to levy information would provide RDCs with the ability to identify and consult directly with levy payers on the strategic direction of research activities. It will place levy payers—our farmers—in a more central role on how levies are spent for their benefit. It will allow RDCs to better rely on research investments to industry priorities, improving returns to primary producers and contributing a more profitable, competitive and sustainable agriculture sector.

Australia’s primary industries have a strong tradition of being innovative and of being able to adapt to new challenges. They are highly efficient and competitive international markets. The outlook for the sector is strong, with the demand for good-quality food on the rise. Investment in research, development and innovation is vital for the ongoing growth and improvement in the productivity, profitability, competitiveness and sustainability of the nation’s agriculture, food, fisheries and forestry industries.

The coalition government currently provides around $250 million every year in matching funding for RDCs. This is on top of the approximately $500 million provided directly by producer levies. This is a significant commitment from both farmers and government and we need to make sure it is used as effectively as possible and delivers the best outcomes for our farmers, rural communities and the nation. This funding is used by the RDCs to commission and manage targeted investment in research, innovation, knowledge creation and extension. There are also Rural Research And Development Priorities to balance new and ongoing R&D investment needs for the primary production section and to ensure R&D objectives of the Australian government are met.

These priorities, which were developed in consultation with state and territory governments, industry, research funders and providers,    are: productivity and adding value, improving the productivity and profitability of existing industries and support the development of viable new industries; supply chain and markets, to better understand and respond to domestic and international market and consumer requirements and improve the flow of such information through the whole supply chain, including to consumers; natural resource management, to support effective management of Australia’s natural resources to ensure primary industries are both economically and environmentally sustainable; climate variability and climate change, to build resilience to climate variability and adapt to and mitigate the effects of climate change; biosecurity, to protect Australia’s community, primary industries and environment from biosecurity threats.

The June 2015 report from the Senate Rural and Regional Affairs and Transport References Committee stated just some of the gains in the agricultural sector brought about by research and development investments. In the cotton sector there was an increase in domestic cotton yields at almost three times the world average, a 95 per cent reduction in the use of pesticides, a 40 per cent improvement in the use of water, and the generation of over $2 billion in annual export earnings.

In the vegetable sector there was greater access to vital crop protection products; export development and capacity development activities have contributed to increased export of Australian vegetables, improved soil health and productivity solutions as well as innovative soil DNA testing for potato disease. In the dairy sector the total factor productivity for Australian dairy farms increased at an average annual rate of 1.6 per cent from 1978-79 to 2010-11. While there were other factors involved, research and development provided the basis for much of this productivity improvement. Independent experts estimate the overall benefit of R&D expenditure to the levy as being in the range of 3.3 to six to one.

In the horticultural sector, the cross-benefit analysis of R&D investments undertaken within the apple and pear industry suggest the benefits of $1 invested range from $2.10 to $5.20. An assessment of Cotton Research and Development Corporation research projects has shown CRDC R&D research returns around $13 for every dollar invested to levy payers, but $30 for the wider community.

In the same Senate committee report, the Australian Lot Feeders’ Association made the observation:

In the pioneering days of Australia’s history, technology and innovation were used to overcome the obstacles faced by farmers trying to make a living off impoverished soil and very dry land.

Since then, we see farmers making use of technology and innovation to remain viable players in a keenly competitive international market, while ensuring the sustainability of their social, economic and biophysical environments. Into the future, rural R&D will continue to help the agricultural sector meet the challenges associated with the rising cost of agricultural inputs, declining commodity prices, climate change and meeting the increasingly discerning needs of consumers.

Bundaberg—in my electorate of Hinkler—is home to the world’s largest macadamia processing plant and is the second largest macadamia-growing area in Australia after the Northern Rivers of New South Wales. With an estimated yield of just short of 20,000 tonne of macadamias grown in the Bundaberg region, this industry is worth well over $100 million.

According to the Australian Macadamia Society, macadamias have one of the highest investments in research and development relative to its size of any Australian horticultural industry—more than $4 million every single year. Macadamia research and development projects have focused on improving soil and orchard floor management, disease management in macadamia, progressing integrated pest management in macadamias, regional macadamia variety trials, and optimising kernel processing for shelf life.

Other programs being undertaken by the Australian Macadamia Society are: a breeding program, which has identified new selections that are expected to outperform existing commercial varieties and one of the potential benefits from these selections include 30 per cent higher yield; a precision agriculture project that aims to improve farm operational efficiency and reduce impacts on natural resources; and research is underway to develop a functional-structural model that helps identify and prioritise the physiological processes affecting macadamia growth, yield and quality.

Another example of the benefits of research and development was a 13-year $20 million joint investment led by the Sugar Research and Development Corporation, now Sugar Research Australia, to halt sugarcane yield decline, which returned independently evaluated benefits to industry of $237 million. According to the Council of Rural Research and Development Corporations, the investment returned a benefit cost ratio of 7:1 and an internal rate of return of 19 per cent. The then SRDC led the investment and was supported by BSES Limited, CSIRO, Queensland Department of Primary Industries and Fisheries, and Queensland Department of Natural Resources and Water. The program hinged on successfully integrating legume rotations into sugarcane production systems that involve minimum tillage and controlled traffic.

Former chairman of SRDC Mr Ian Knop said growers who implemented the farming practices reported savings of up to $500 per hectare. This represents money straight onto the bottom line of a farm business. The Sugar Yield Decline Joint Venture—a three-phase research, development and extension investment—was established in 1993 after yield decline and yield plateaus had been a concern for the sugar industry for a number of years.

Economic, environmental and social benefits from the venture included: cane yield increase after the legume crop in the cane plant crop and subsequent ratoon crops, due to improved soil health; savings of nitrogen fertiliser and its application in the cane plant crop and, in part, the first ratoon crop; reduced cultivation costs for the plant cane crop; labour savings and improved timeliness and flexibility of operations; capital savings due to lowered requirements for high-powered tractors and tillage equipment; and an overall likely reduction in any impact the cane industry could have been having on the water quality and biodiversity of proximate coastal waters and possibly on the Great Barrier Reef.

The 2011 Productivity Commission report into rural research and development corporations also highlighted how research and development could benefit consumers and the wider community. There were benefits such as: better standards of living, through cheaper and higher quality food; improved environmental amenity; and greater capacity within rural communities to adjust to changing circumstances, which may in turn reduce calls on the welfare system.

The report stated that any given R&D investment can lead to a mix of benefits for different parties:

For example, pests that cause damage to crops might also blight backyard gardens, and hence efforts by producers to prevent or limit pest outbreaks may be beneficial to others in the community. In the other direction, the provision of high quality food can generate health benefits for consumers — and insofar as this encourages them to buy more fresh produce, benefits may flow back to producers. Indeed, in many ways, benefits to producers and benefits to the community are heavily intertwined.

In summing up, it is important to note that the bill does not create levy payer registers. The distribution of levy payer information to an RDC will only happen where an RDC, in consultation with industry, requests that it occur and that request is approved by the Minister for Agriculture and Water Resources. Whether an industry sees benefit in implementing a register is a matter for each RDC and industry to consider.

The coalition government considers that the ability to hear directly from the levy payers who fund the system will result in a positive outcome for RDCs and Australian agriculture. I commend this bill to the House.

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