CHAIR (Mr Schultz) —I declare open this public hearing of the House of Representatives Standing Committee on Agriculture, Fisheries and Forestry for its inquiry into rural skills training and research. This is the 18th public hearing for this inquiry and it is part of an extensive program of public hearings and visits designed to gather information from the people directly involved with the main issues of the inquiry. Today the committee will be hearing from a number of invited witnesses representing a broad range of people and organisations interested in the area of rural skills training and research.

Welcome, Dr Wylie. Although the committee does not require you to give evidence under oath, I should advise you that these hearings are formal proceedings of the parliament and, consequently, they warrant the same respect as proceedings of the House itself. It is customary to remind witnesses that giving false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. Do you wish to make a brief statement in relation to your submission or would you care to make some introductory remarks?

Dr Wylie —I can make some introductory remarks, if you wish. By introduction, I would say that the fundamental chicken and egg problem with rural training and rural skills is the connection between low profitability and management skills. We have a problem in agriculture where, according to ABARE surveys, more than 60 per cent of farmers do not make a profit and have not made a profit for the last five years. In fact, the percentage of farmers not making a profit is increasing. It will be substantially higher in the next couple of years when the effect of high oil prices and low commodity prices feeds through to farmers’ bank accounts. So we have a problem with low profitability. I think farmers have been let down to some extent by the training industry in Australia in that they have not had access to good skills training in farm management and still do not have very good management training. This whole connection leads on then to farmers not seeing a need to access training and not being profitable enough to find time to have their employees have better training as well. There is a whole conundrum there in terms of this low profitability problem and basically a lack of motivation for training. Those are the major thoughts I want to mention in introduction.

CHAIR —Thank you, Dr Wylie. Your submission suggests a model of a skills passport. Could you expand on your suggested passport model and could you also explain to the committee the advantages and disadvantages of a skills passport?

Dr Wylie —I think the skills passport model is appropriate as far as agricultural workers are concerned whereby they might undertake basic training at an institution like, for instance, the Dalby Agricultural College in the town I come from, but they need to go on and have ongoing or more advanced training. A skills passport can provide them with those opportunities to add to their training on a slightly more formal basis than they would otherwise by doing in short courses or extra training on particular aspects on which they might need to upgrade their skills. I would include in that needing to go beyond the basic skills training which they gathered at some of these colleges, such as learning how to drive a tractor and doing some welding, to do some of the more involved or advanced training in aspects to do with management.

CHAIR —Would you see this skills passport as a national document or would you confine it to a state area?

Dr Wylie —Logically, if it could be done on a national basis it would be better because there is certainly a flow of farm workers across state borders in this country and it would help to have some sort of more standardised training and/or skills background. In other words, if a farmer is employing someone and he has a skills passport, that should be able to give the farmer better evidence of what that person can do or has done in the past.

Mr WINDSOR —Dr Wylie, you made the comment that there is relatively low profitability in agriculture. I do not want to put words in your mouth, but I think you were suggesting that it is looking pretty gloomy in terms of profitability down the track. Do you see training, though, just in relation to improving management skills? We heard yesterday about precision farming techniques, for instance, and how that has given some farmers, on the right soils, the capacity to develop a new margin, and that the training institutions were not really delivering that sort of training package as yet. Where do you see that gains can be made? Or do you see that, because of the cost of production and the way world agriculture is on a bit of a spiral downwards, management training can overcome that? How is that going to increase profitability in the global economy that we live in now?

Dr Wylie —To expand the gloomy prognosis for a moment, I did not mention that, despite the fact that more than 60 per cent of farmers are not making a profit, the top 20 per cent of farmers are still doing quite well. The better farmers that we work with have, on average, over the last five years, made a return on capital in excess of 10 per cent. This suggests that, despite the ordinary terms of trade, it is possible to make money out of farming. The conclusion from that is that one of the major differences between good farmers and bad farmers is management skills. The rider I would put on that is that it is more about attitudes than skills, that those farmers who are good managers have a better attitude towards management and in fact a better attitude towards keeping their knowledge up to date than does the average farmer. It is a whole mix of attitudes and skills and ongoing search for knowledge as much as it is a search for training.

Generally speaking, farmers are not looking for training. We talk to farmers. I have been involved in some surveys of farmers. You ask farmers about training and they say, ‘Yes, training is good, but not for me, for someone else.’ This is the basic problem in farming—farmers do not see a need for training; they see a need for solutions. This is where the whole mix of training, extension and technology becomes blurred. We have a massive industry out there in the GRDCs of this world that are providing millions of dollars of what I call ‘titbits of technology’ and in a way I think they are doing a fairly good job of keeping farmers up to date with aspects like precision farming, fertilisers and other things.

However, where we are not helping farmers is in things like labour management, marketing, succession planning and financial management. These are the areas which the GRDCs of this world, the tertiary institutions and the colleges are either ignoring or in which they are quite incompetent. Most of our institutions do not have the sort of background or skills to provide farmers with relevant training in this area. In fact there is only one agricultural college in Australia that has any credibility with farm management and that is a private college, Marcus Oldham. We have Queensland students who, if they are serious about doing farm management training, end up going to Victoria. We are letting down farmers right from the word go. We are not training new farmers in management very well and the older farmers we are not training in management very much at all. That is the situation as I see it.

Mr WINDSOR —Yesterday we took evidence from the Queensland government and others and one of the subjects was the revamped arrangements in Queensland in the agricultural colleges. None of us are from Queensland so we are not that familiar with what the problem was, that they had to be amalgamated, and that there is hope that the new structure will be better than the old one. We are hearing in other states that the agricultural colleges are delivering. We are not hearing that here.

Dr Wylie —I do not know the full story of the agricultural colleges. The impression I have gained is that farmers have lost some confidence in the agricultural colleges; therefore, enrolments are down and the colleges are in trouble, and some are in financial trouble. Dalby College appointed a receiver-manager to try to get out of its financial problems.

Mr SECKER —Who did that?

Dr Wylie —I believe the Queensland government appointed a person who is, effectively, a receiver-manager. It comes back to the fact that they need to restore confidence in their product, and perhaps improve their product so that they can restore the confidence of the customer: the farmers who are going to send their sons or daughters to the colleges.

Mr WINDSOR —Would you classify Longreach in that fold as well?

Dr Wylie —That is why I say that I do not know the exact details of the whole college situation. I am only relatively familiar with the southern Queensland situation, which is basically Dalby. I cannot really comment on Longreach, Emerald or Burdekin as to whether the same crisis of confidence is there in terms of the product the colleges are producing.

Looking on as an observer, I think the colleges probably do a reasonably good job at a basic skills level, but I think there is a need for more than basic skills. There is a need for the ongoing updating of skills. There is a need for more management training, which those colleges are not really doing much about. There needs to be a career pathway, too, for farm managers—that is, young people who see themselves as either a self-employed farm manager, taking over from dad, or a farm manager employed by a corporate farm or a larger agribusiness farm. At the moment there is no real pathway or career, and a lot of people going into those jobs are heading off to do a university course, which is not necessarily the right course for them in that career pathway.

Mr WINDSOR —Are you familiar with the Cotton Basics training package?

Dr Wylie —Not intimately, but I am basically familiar with it.

Mr WINDSOR —We have positive vibes about the way in which it is client focused. It is a package structure that delivers the services the industry wants, and the industry itself has been part of putting together the course. We have heard a similar thing about the mining industry in Queensland in that the Mining Industry Skills Centre, which has taken over the development of packages for that specific industry, has been funded by the Queensland government. Would you like to comment on the structure of those sorts of courses, and particularly on the client focus that seems to be coming through?

Dr Wylie —Client focus is certainly the essence of what is needed, but I think there is still a problem there: ask farmers what they want, and they more or less want everything in the trained person. They want the trained person to be a welder and a mechanic, a trained technician in almost everything, so I think they want the impossible in a labour person. They do not necessarily see a need for better understanding in areas such as management and labour management. Some employees move up the line into a foreman type role on the farm and they are not equipped for that role, because there is never any training at any sort of level in terms of staff management. I am not saying that there is no training but that there is not to any great extent. A lot of these things are not seen as relevant by farmers.

We are still talking about having fairly basic training; too much of the training, I think, is at a basic skills level. A lot of farmers say to me, ‘We’re happy to train people in the basics of how to drive the tractor and how to run the boom spray,’ because they would rather train the workers in the way that they do things rather than retrain them after someone else has had a go.

Mr MARTIN FERGUSON —Dr Wylie, your submission is quite critical of farm leaders. For example, on page 2, at point 5, you state:

Further on you state:

Who are these farm leaders whom you are critical of in your submission?

Dr Wylie —I say that because one of the general problems is motivation and attitude towards training. Farmers say that training is fine, as long as it is someone else. Part of this problem is that there is no peer pressure in agriculture for training.

Mr MARTIN FERGUSON —Where should it be coming from? Who are the leaders you are critical of?

Dr Wylie —In some cases the leaders who stand up to be counted are the leaders who go into roles in groups like NFF, QFF, AgForce and the like. I do not want to single out a particular organisation.

Mr MARTIN FERGUSON —I understand that.

Dr Wylie —In general terms, without trying to be too rude to those organisations, their farmer members see their major role in life as trying to get more money out of Canberra. To do that they try to make excuses for farmers by saying: ‘Isn’t it bad down here on the land? Isn’t it terrible with all these subsidies around the world and the decline in terms of trade? We need more help for farmers.’ But the better farmers would probably say: ‘Get on with it. We’ve got the environment. We can make money. Let’s forget about trying to get more money out of the government for this sort of problem. Let’s just get on with it.’ So I see it as a problem of lack of peer pressure for training. To a certain extent the leadership is pushed on by, dare I say it, the bottom rung of members who say, ‘We want some more help from Canberra.’

Mr MARTIN FERGUSON —Do you see an attitudinal problem more among the older farm managers rather than among younger ones?

Dr Wylie —Yes, there is possibly a difference. The younger farmers see themselves in terms of careers more as managers. The biggest problem with older farmers is that they do not see a need for change. They are doing the same thing they have done for the last 20 years.

Mr MARTIN FERGUSON —How do we go about achieving an attitudinal change? That is the only way we are going to get them to take up training, isn’t it? The crux of the problem is attitude.

Dr Wylie —Yes. The main way to do that is to change some of the messages about training and say things like, ‘Agriculture can be profitable if you put your mind to it. There are solutions out there.’ We need to put the training in terms of solutions rather than training outcomes. This is one of the problems of the way we have gone down this track with FarmBis. We have said we want accredited training according to VET-accredited courses and that sort of thing. That is fine to some extent, but farmers do not want accreditation. They want solutions to problems.

Mr MARTIN FERGUSON —Thank you.

Mr SECKER —You mentioned a crisis in confidence in ag colleges. What do you think has caused that and how can we fix it?

Dr Wylie —All I am saying is that the evidence is there that the enrolments have gone down. As I understand it, they are about half what they were a few years ago. To me that says that the customer does not have the same confidence. There are farmers I work with whose sons seem to be going off to university or are doing other things rather than going to an agricultural college. I think agricultural colleges need to have a greater leadership role in agriculture. They need to be seen to be up there with the latest technology. They need to be advertising the fact that they are producing a good product. Perhaps, as we were talking about before with Mr Windsor, there needs to be more farmer involvement in the whole process. In other words, the customer needs to say more about what they want to get out of the process.

Mr SECKER —On a different matter, we have heard quite a bit of evidence about FarmBis. You have had a bit of experience with that; what would you see as the advantages and the disadvantages of FarmBis? Are there ways we can improve on it?

Dr Wylie —I think FarmBis in general is a good principle from the point of trying to encourage farmers and to take away one of the barriers to training, which is the cost. It is certainly not the biggest barrier to training but it can help, so FarmBis is generally a good program. It has tended to focus on accredited training, which is fine, but I understand that farmers are giving it a miss in droves. As I understand it, in Queensland it would probably take 20 years to spend the current three-year budget, so there is something wrong there.

Part of the problem is motivation, and attitude and/or outcomes. Training needs to be sold to farmers more in terms of solutions to problems rather than accredited training. That is an issue because we are almost encouraged not to do that as far as advertising programs are concerned. There is no support for farmers in terms of mentoring or coaching. We are not allowed to do that because it is not regarded as training.

Perhaps the biggest problem with training is that there is no component in FarmBis to help attract farmers and to help provide the motivation to organise farmers and encourage them into training. If FarmBis were to provide a component for getting farmers involved in training and a bit more at the other end, I think it would be a better program.

CHAIR —We have heard evidence from a number of organisations and individuals on their concerns about the way the bureaucratic process and requirements slow down the process, and that it is costly because of the time loss. What is your experience in developing, for example, an advanced diploma in rural business management? Have you gone through the critical process of bureaucratic nonsense, with reams and reams of paperwork? Do you have any views on that?

Dr Wylie —Certainly it has taken a lot of time, which means money for me in terms of aligning training to the VET standards and which is what I have done in looking at subjects related to an advanced diploma in rural business management. So it has taken time, but I guess I have got to the stage where it is certainly possible to roll things out on that basis. But, as I was saying, the farmers are not necessarily concerned about whether it is part of an advanced diploma in rural business management. They are interested in whether they have a succession planning problem and what the solutions are to it. If there is some other problem, they are interested in whether we provide the solution to it.

As far as red tape is concerned, there certainly is red tape and it could be freed up a lot. There are a lot of things for which I do not think everything has to be approved prior to beginning—you get a group workshop and someone does not turn up, and then someone else wants to turn up at the last moment but has not got approval to come. Those sorts of things are somewhat restrictive to making FarmBis training better.

CHAIR —Would it surprise you to know that, throughout this inquiry, we have heard evidence from agricultural colleges about making application for a specific course which has involved up to 1,000 pages of paperwork to get through the process? The criticism is that it is not only time consuming but also a very costly process.

Dr Wylie —It is. I have an advanced diploma in rural business management course in 1½ filing cabinets. It is probably 3,000 or 4,000 pages. That is mostly done in my spare time, but it probably would have cost thousands and thousands of dollars. One of the problems is that by the time you have finished it, it is out of date. The colleges have a worse situation in that by the time they have finished their program it is probably five years out of date. There is a bit of a problem with the development of courses and accredited programs.

CHAIR —It is a pretty frightening process when we are concerned about training people and getting into research and we have a process that takes so long to wade through for the people delivering the course to the extent, as you put it, that it becomes irrelevant after you have gone through the process.

Dr Wylie —It does and it also avoids the potential that is there in trying to bring in experts. Take succession planning, for instance. Last year I ran a program on succession planning. Rather than deliver the course that I have in my filing cabinet, I involved an expert, who is a lawyer from Brisbane or an accountant. We presented a day-long workshop and then followed up the course with appropriate material to discuss it. In the running of those sorts of programs, some of these courses should or could use more current expertise from outside, for want of a better word.

CHAIR —Or indeed from within the industry itself?

Dr Wylie —Exactly. That is what I am referring to. Another example is a marketing course. I ran into FarmBis problems with the guy who is presenting the more detailed marketing program. He is not an accredited trainer. Can we use him or not? It is all of this sort of thing. He is the expert on marketing and he does not want to be an accredited trainer. But we involved him in the marketing course that I ran over five half-days with farmers.

Mr ADAMS —You were talking about farming and where it is at. I am wondering whether the market will sort that out. Will inefficient farmers go out of business?

Dr Wylie —I guess it is happening. A lot of farmers in Australia are struggling on by off-farm income. Typically, the wife is a teacher or something.

Mr ADAMS —So what about the corporate farmers? Are they the future?

Dr Wylie —No, I do not think the corporate farmers are the future at all. The corporate farmers are less efficient than family farms. The most successful, profitable farms are the family farms, and that is still probably 80 per cent or 90 per cent. If we ignore the big pastoral industry in the Northern Territory or whatever, the big bulk of farming is still done on family farms.

Mr ADAMS —They make up the 20 per cent that turn over most of the income?

Dr Wylie —Yes. Generally, farming is not profitable enough for corporate farming in those situations. Land prices keep on rising to a point where farming remains unprofitable. There are only particular industries, such as cotton and extensive beef, where the corporates have really got a leg in.

Mr ADAMS —I find that the market does not work there. Somehow, land prices stay up. Even though you come before this committee and say that 80 per cent of profitability farming is dysfunctional, the market is still there and land is still worth X dollars. Is this a market failure? If the corner store is not making enough, it usually goes on the market; if a guy’s fishing boat is not making enough, it will go broke. But land prices stay up. There must be something in the process. Do the banks keep the prices up because they are worried they are going to lose money?

Dr Wylie —I do not think so. I think there are two issues there. One is that farmers in general as businessmen are prepared to accept a lower return on capital than other businessmen.

Mr SECKER —They always have.

Dr Wylie —Yes. Beef farmers in particular at the moment are paying big prices for land and are lucky to be able to show a two per cent return on capital even though beef prices are relatively high. The second aspect is that a lot of farmers are actually investors in real estate rather than farmers. Over time, they make more money out of real estate than they do out of farming.

Mr ADAMS —Is that because they inherit a farm and there is not the normal business practice of operating and needing to get the return to pay off the mortgage?

Dr Wylie —That is true to some extent. But farmers can become very wealthy because of land price rises over their career.

Mr WINDSOR —I wish to go back and look at better farming land, the impact that no-till technology has had in terms of increasing productivity and some of the environmental positives that are there. A seminar held in Tamworth recently looked at the reasons why a lot of people have not adopted that technology even though there has been an increase in productivity for those who have. Given your training and experience, how would you have driven that agenda over the last 10 years so that more farmers would have adopted the technology?

Dr Wylie —As a little bit of background, I was one of the people who helped start the group called Conservation Farmers, which I believe you are hearing from or have a submission from. We started that group almost 20 years ago to try to get more farmer support. In other words, it was to get farmers to support other farmers in implementing what was a fairly difficult bit of new farming practice. The idea of that was to bring together information that we had from research with practical farmer experience and economics. Having put all three together, we then tried to run field days, programs and networks whereby farmers would support other farmers. If they wanted to get a new planter, they would go and talk to two or three other farmers to find out how their planters were working before they bought a planter. It was about that sort of thing. That is what we did with Conservation Farmers and I think that has helped over the years. But you never really get to the final 25 per cent of farmers with some of these things. They are not prepared to change traditions of farming that go back many years.

Mr WINDSOR —So the training has actually been delivered by peer groups, networks and neighbours, rather than by agricultural colleges and universities in terms of that productivity leap?

Dr Wylie —I think a lot of it was. That is not to say that there was not a lot of support. There was a lot of support from private agronomists in the first place. For instance, we had a lot of support from agronomists working for Monsanto, who held farmers’ hands to get minimum tillage up and running. Then those farmers who had it up and running and had solved some of the problems helped pass it on to many other farmers. I think it is fair to say that is how a lot of it got going. It was many years later, for instance, that the agriculture college at Dalby decided that minimum tillage was right for it. It was probably one of the laggards in the adoption of it.

CHAIR —The committee has received evidence that there are locational, attitudinal, cultural and monetary barriers to the agricultural industry’s attempt to attract labour. One suggestion has been that the industry should look to attracting labour from urban areas. What are your views on that proposal?

Dr Wylie —I am not sure that is really going to be terribly successful. I think that the further west you go, the trials and tribulations of living out in the bush are more likely to be handled by people who have been bred and brought up in the bush rather than by the people going there. I would say one of the major problems with labour is in fact the management of labour. We have on a lot of farms a fairly paternal, old and simple attitude towards labour by management. That has to change.

Farmers have to become very much more modern in outlook in the way they handle employees if they are going to survive. Retaining employees is the main thing, in the face of the much higher wages being paid by industry. We have gone down the track in our part of the world now. The mining industry have caught up with southern Queensland. They are building power stations and coalmines and offering people $1,000 a week while farmers are only paying their workers $700 a week. So farmers need to get a lot smarter in terms of keeping their labour. That is more important than trying to attract labour from the cities. The most important thing is to retain labour and not have it trot off to the coalmines.

CHAIR —What about migration as a viable option to address the skills shortage in agriculture? For example, we have heard that there are no training courses available in beekeeping and, as a result, the beekeeping industry is importing people from overseas to fill the gap. Do you think we should be looking at that as a model or should we be revisiting what we are offering to people in the way of training courses—which you have alluded to in your submission anyway?

Dr Wylie —I think that is right. I do not see too many situations where training is not on offer; the problem is that it is not taken up. There is the basic problem, as I have mentioned, that training in rural business management in this country is woefully deficient. But that is not a problem of importing it; it is a matter of improving it. In general enterprises like beef, wool, cotton and grain we are not short of skills. I do not think we need to import any skills in those areas. We just need to get better at skilling our workforce—our managers and farm workers.

CHAIR —Thank you very much, Dr Wylie. We appreciate the time you have given to the inquiry this morning. It is very important for compiling information which will eventually end up in a report. We have a recommendation from government that we hear a broad cross-section of information and concerns from people such as you. Thank you very much for your time this morning. No doubt the contribution you have made will play a role in assisting us to put together what we are reasonably confident will be a comprehensive report with some very sound recommendations. Whether the sound recommendations are picked up by ministers of the Crown is, of course, another issue, but thank you for your time.

[9.39 am]