12 April 2013

Rural Research and Development Legislation Amendment Bill 2013 and cognate bills.

Mr FITZGIBBON (Hunter) (09:33): It is a delight to make a contribution to what is an uncontroversial but a very important debate in this place on the Rural Research and Development Legislation Amendment Bill 2013 and cognate bills. There can be nothing more important to Australia's future prosperity than a healthy, productive and competitive agricultural sector. There can be nothing more important to a nation than the concept of food security. On this front, of course, we as a country are blessed, exporting around two-thirds of everything we produce. In the immediate future, at least, food security is not a problem for this countrythat is, of course, in the absence of catastrophic weather, disease or other events and this is an area where we should keep climate change in mind. In the absence of those events we do enjoy very significant food security in this country, but we must always be vigilant in ensuring that that remains the case.

As the former Labor government's food plan and many other reports have identified, Australia has a wonderful opportunity before it in the form of what I have come to call the 'dining boom'that is, this emerging strong growth in food demand right around the world, said to possibly mean an increase in demand of some 70 per cent by 2050 as we see the world's population inching towards nine billion peopleand of course an emerging middle-class in many developing nations, particularly in Asia but also in many other parts of the world, including Africa.

The key question for Australia is: if we are to fully capitalise on this opportunity how do we produce up to three times more food than we currently produce, with the same limited, and in some cases depletingagain, I mark climate change hereland, water and people resources? The obvious answer to that question is that we will require a big lift in agriculture productivity. The next question is: how do we achieve this big lift in productivity? The answer is of course a big upward shift in investmentin infrastructure; in research and development generally; in innovation; in skills, which is very important; and of course technology. By necessity much of that investment will come from foreign sources. Port Jackson Partners ANZ reportI should note: authored by now an esteemed member of this place, the member for Humesuggested that to reach these goals or aspirations, if you like, we will require $600 billion in additional investment in our agriculture sector by 2050.

Again, by definition, much of that investment will come from foreign sources. This is why those on this side of the House were so shockedstunned, indeedby the Treasurer's announcement last Friday that he would prohibit the offer of Archer Daniels Midland to Graincorp shareholders to take control of that company, a company that does have very significant market power but which is highly regulated by the ACCC and other regulatory authorities in this country. It is a company desperately need of capital injectiona capital injection that seemingly will not come from the company in its current ownership form. But I am not so concerned even by the decision made by the TreasurerI am very concerned by the way he presented that decision, the way in which he failed to clearly articulate his reasons for that decision. He effectively ruled out in his press conference competition being the primary concern in arriving at that decision. So international investors around the world looking at Australia are now wondering what exactly the rules are for foreign investment in Australia. We are in significant competition for this investment, as large companies look around the world for opportunities that will emerge from the 'dining boom', they have many choicesin South America, in Indonesia and elsewhere. I fear that, in the future months and years, they will be asking themselves whether Australia is worth it, whether the regulatory hurdles are simply too high to bother with the significant investment involved in just making an application such as the one ADM had before the Foreign Investment Review Board. These are serious questions for the future of Australian agriculture.

I noted that earlier in the week the leader of the AWU, Paul Howes, caused significant controversy by referring to the ma and pa farms of the Australian agriculture sector. They are not words that I would have used, because I know some took offence to that. But I will say this for the comments by Paul Howes: to the extent that he was talking about the need to remodel agriculture in Australia, he was very close to the mark. We are facing a very different world. Some of the aspects of that I have just spoken about. Family farms, particularly those small innovative farms that are now working to very much a 21st century model, will remain a very important part of our farming equation. But so too will big corporations. I believe that we will have more consolidation in the farming sector in the future. I believe that we will have more corporatisation. We will address the big concern out there about where the next generation of farmers will come from by offering more graduate opportunities with big agricultural companies equivalent to those companies that we see now winning the nation's oil, gas and coal.

In my electorate of Hunter, where we have a good mix of agriculture, viniculture, horticulture, thoroughbred breeding and mining, we see on a regular basis young people roaming around in high visibility uniforms enjoying high wages, good job security, very good superannuation et cetera. These are the things that attract young people to certain careers. I believe that in the future these will be the same things that will attract young people to agriculture. Regular concerns about drought and how tough the banks can be and how government has got policy wrong again will be replaced by real opportunities in agriculture. Those opportunities will be present in the family farm model but will be more present, in my view, within big corporations seeking to exploit this wonderful opportunity presented by the dining boom.

Let us not close our minds to these matters. Mr Howes may have, in my view, chosen his words better. But he does make a very sold point, that point being that in the 21st century we cannot just stick with the old models of the past if we want to fully capitalise on the dining boom. We will need the assistance of big investment to lift that productivity and that output to the extent necessary. It is very clear to me and to most thinking people that that very large investmentinvestment to lift our output by up to three timescan only come from big corporations. Given our population and our limited capital in this country, it will largely come from multinational corporations that will more often than not be based offshore. We should not fear that. We should be encouraging it. Nothing in the Treasurer's announcement last week served the purpose of encouraging foreign investment in agriculture in this country.

It has not come up until now because the demand was not there. It now is. Nor has the return been there. But, as demand continues to outstrip global supply, food prices in Asia and in other places will continue to rise and therefore the profitability of the investments by these big corporations will become more attractive and continue to rise.

Investment in agriculture and in agricultural research and development in Australia is undertaken primarily through the rural development corporations, state and territory governments, the CSIRO, the tertiary education sector, cooperative research centres and the private sector. Total expenditure by all of these sectors in this country is around $1.5 billion annually. The RDCs, who commission research and development from public and private providers, are funded through a co-investment model based on industry levies and matching Australian government funding, a model that the Productivity Commission assessed as one of the best in the world and one watched by the rest of the world.

The Australian government collects industry levies under legislation for the purpose of research and development and matches the expenditure on R&D on a one-to-one basis up to a cap of 0.5 per cent of industry gross value of production. The objective of this legislation is to make this system more efficient. A version of this legislation was, of course, passed through this House in the 43rd Parliament. It was an initiative of the former Labor government but failed to pass the Senate prior to the proroguing of the parliament for the 2013 election. Therefore, the legislation has been reintroduced by the new minister, and on that basis the opposition supports the legislation.

The Rural Research and Development Legislation Amendment Bill 2013 updates and refines the Australian research and development CorporationRDCmodel in line with the policy commitments by the former Labor government. In preparing the policy statement, Labor met and consulted with stakeholders around Australia and took into account many submissions. Extensive consultation continued in the process leading to the legislative amendments which are before us this morning.

There are 15 RDCs, six of which are statutory bodies and nine of which are industry owned, in the various agricultural sectors. The Rural Research and Development Legislation Amendment Bill 2013 will allow statutory RDCs to carry out marketing activities on behalf of their industries if a marketing levy is in place. RDCs undertaking marketing will be able to use their industry expertise to provide cost-effective, targeted marketing activities in accordance with industry needs and priorities. I note that no new changes to levy rates are in the legislation, despite the Productivity Commission's recommendation that the cap on government contributions should go from 0.5 of one per cent of the industry's value to one quarter of one per cent of the industry's value. I suspect that this will be an issue of ongoing debate.

The legislative amendments being considered here will encourage private sector investment in R&D by extending to all RDCs the arrangements for the government's matching funding to voluntary contributions for eligible research and development. Statutory funding agreements for statutory RDCs are proposed to drive performance improvements and to increase transparency in the delivery of R&D services. Funding agreements have been a flexible mechanism for providing government guidance and oversight to industry-owned RDCs, and these amendments will extend the mechanism to statutory RDCs.

The amendments in the legislation will change the process for selection of statutory RDC board directors to improve transparency and efficiency. The amendments promote due consideration of diversity in the selection process. The amendments aim to ensure high quality boards for RDCs and to reduce the time and delay associated with securing the make-up of the boards. The amendments propose to allow the collection and matching of individual fisheries industry levies subject to the cap. This will allow specific fisheries to propose levies to invest in R&D for the industry and to undertake marketing in a similar way to other rural commodities industries. The burdensome requirement for ministerial approval of statutory RDCs' annual operating plans will be removed, and other technical matters will also be addressed in the amendments.

The Primary Industries (Excise) Levies Amendment Bill 2013 removes the maximum levy rates for research and development and marketing levies on primary industry products. Similarly, the Primary Industries (Customs) Charges Amendment Bill 2013 removes the maximum charge rates for R&D and marketing and changes duties of customs. The numerical maximum levy and charge rates will be removed, and the rates will be limited to no more than the levy recommended by an industry body following a consultation with the levy and charge payers.

The legislation will not change any levy or charge rates in operation at the moment, but they will streamline the process for changing rates in the future. Levies and charges may be increased following a request by industry but will not be allowed to be set above the rate recommended by the industry. This will allow industries to manage their collective investment in research and marketing while also providing a safeguard for levy payers against arbitrary increases in rates.

So, the way I see it and have always seen it, this legislation is an important and first step in lifting Australia's productivity and in changing the way we address our RDCs and promote research and development in this country.

But more will obviously need to be done. It was interesting: I took a pretty close look at the minister's second reading speech and I noted the absence of any reference to the coalition's commitment during their campaign to inject an additional $100 million into the RDC model. One hundred million dollars is a lot of money, in proportional terms. In fact, it would be around 40 per cent of the current government's spend on RDCs. That is a big lift in investment in anybody's language.

Of course that lift is something the opposition would welcome, but it would be more welcome if we saw some clear indication of how that $100 million will be spent or indeed how that $100 million figure was arrived at. How will the money be spent? Will the money indeed be forthcoming? And why wouldn't the minister take the opportunity during his second reading speech, on a matter which is so relevant to the campaign commitment, to make reference to that commitment? So I invite the minister to, sometime in the near future, reaffirm the now government's commitment to that $100 million promise.

I have then shadow minister John Cobb's media release with me. I will not seek leave to table it because I might be denied, but it is still on the web and very easy to find. So I make reference to that. I remind the minister of that commitment. And I invite him, as I said, sometime in the very near future, to reaffirm that commitment and to clarify where the $100 million figure came from and say how the government intends to spend that money.

If the government has a very good plan to spend an additional $100 million on R&D in agriculture, the opposition will of course welcome it. But, as the Port Jackson Partners study indicates, R&D in Australia is far more complex than just throwing more government money at it. Indeed, the recommendation from the Productivity Commission to reduce the government cap to one quarter of one per cent of the value of the industry was about encouraging greater private sector investment in research and development. I think everything I said earlier in this contribution would indicate that at the end of the day our success in R&D and its contribution to productivity improvement is not going to come from the level of government investment, as important as that is; it is going to come from a very significant lift in private sector investment in research and development. It is also about making sure that the funding commitments of the industry and government alike are closely tied to very clearly defined strategic plans to lift R&D and, therefore, productivityand of course has a focus on things like extension of R&D, which is struggling in this country. We need a much greater focus on it. So these are just a couple of examples of the complexity of the R&D effort in Australia, in all areas of R&D in all industries, but particularly in the agricultural sector. It is not as easy as just throwing a bit of extra government money at it. It is far more complex than that.

This bill is very important. It is, again, an initiative of the former, Labor, government, which grew out of a very good rural research and development policy statement by the former government, which I again will not seek leave to table because I suspect the Leader of the House is going to deny me. But that is also very easy to find on the web.

So, as the originators of it, we of course support the bill. We want to work with the government in a bipartisan way as we drive towards the dining boom and the opportunities it presents for us. We want our food planproduced by the former, Labor, government, and a very important first stepto be part of that effort. We welcome Minister Joyce's commitment to a white paper, which he is committed to producing sometime in the course of 2014. Again, I am keen for the opposition to make a contribution to that white paper process in any way it can.

I am keen to have a bipartisan approach, as far as we can, to that white paper, because, in my view, Australia's future prosperity will largely be underpinned by the extent to which we take these opportunities presented by the dining boom.

This is a very important matter for Australia. It also goes to food security, and nothing can be more important than that. So I am willing the government to do well with this white paper. On the behalf of the opposition I am making a very serious commitment to working with the government in any way we can. There will be differences, as we saw with the GrainCorp decision last week, but that does not mean that, in the majority of cases, there cannot be common ground. In fact, the national interest calls for it; the national interest demands it; and we will take that bipartisan approach at every possible opportunity.

Debate adjourned.