DUNCANSON, Mr Robert Roy, Chief Executive Officer, Agribusiness Council of Australia Ltd

JOSEPH, Mr Ian, Executive Chair, Agribusiness Council of Australia Ltd

[11:04]

Evidence was taken from Mr Duncanson via teleconference—

CHAIR: Welcome. Thank you for your fulsome submission to the inquiry. I invite each of you, if you wish, to make a short opening statement. Then the committee will have some questions.

Mr Joseph : Thank you very much for inviting us. We look forward today to, hopefully, providing a perspective not canvassed or discussed by the other witnesses to appear before the committee. We hope to have some robust discussions and, obviously, find some solutions to the issues associated with family business.

Agribusiness is the world's largest industry. In Australia, farming and agriculture are dominated by family businesses. ABARES tells us that 95 per cent of farm businesses are in fact farm businesses. That means that, of the 135,000 farm businesses out there, around 128,000 are family businesses. Neil Clarke, who is a highly respected analyst of ABS data and ABARES statistics, tells us that, if we measured the agribusiness value chain by business income, it would be valued at around $400 billion. That is agribusiness; our whole economy totals only $1.4 trillion. So agribusiness accounts for a full one-third of the economy, and we need to make sure that the decisions we take and the impact of those decisions take into account the agribusiness value chain.

Every dollar generated on Australian farms generates a further $5 of activity in the community and the economy. Australian agribusiness has 1.3 million employees. Out of a total of 11½ million people employed in Australia, that represents 11 per cent—and that is a large proportion. What we are trying to do in the Agribusiness Council is make the link between family business and agribusiness, showing that really a lot of the family businesses are in fact related to agri. If one-third of the economy is agribusiness, that means that of the 2.1 million businesses in Australia we can account for around 700,000 businesses that earn money or get benefit from the agribusiness industry. Again that is a full one-third, which is really quite substantial.

The ABS also tells us that, over the last 30 years, the number of farmers and family farmers has declined by 106,000. These numbers in themselves really should be ringing alarm bells because that means, for every single week in the last 30 years, 10 family business, 10 farmers, have walked off the farm. Then what happens to the ancillary businesses that support those family businesses in regional and rural Australia? Where have they gone? Some farmers obviously leave due to age—the median age of farmers now is about 53—but the quite challenging thing is that the proportion over 55 has increased from one-quarter to one-half. So one-half of all farmers are now over 55 years of age, which means that, in the next 10 years, the challenges associated with the regional and rural Australia farming businesses and, therefore, all the family businesses are going to have a very, very large impact.

We don't do these sorts of things on purpose. As a nation, we cannot afford to continue to underestimate the value of the agribusiness value chain when designing and developing solutions to our economic problems, especially when it comes to family businesses. The problem with the ABS numbers is that they do not measure family business or even agribusiness as an industry, which is probably associated with your term of reference on the definition issue. Our contention is that, if farming, agriculture and agribusiness were measured as a group, we would begin to ask the right questions and develop the right decisions and solutions in terms of allocation of resources.

Evidence also suggests that seasonal and cyclical events such as fire, drought and flood are having a big impact on the farming workforce, those deciding to leave and also those thinking of entering. So we need to rewrite the agricultural narrative, which was a conclusion reached by another Senate inquiry conducted last year. The ACA submission extols the virtues of the family business unit as the most efficient and effective economic unit underpinning agribusiness and many other industries and, therefore, our national economy. It demands the right attention.

CHAIR: Thank you, Mr Joseph. Mr Duncanson, would you like to make an opening statement?

Mr Duncanson : Yes, I need to add something to that: the importance of increasing productivity to the nation. The agricultural sector has been the largest-single contributor to national productivity since Federation, and is likely to be the biggest-single contributor going forward. If the majority of agribusinesses are family businesses, then it follows that family businesses contribute most to national productivity. Thank you.

CHAIR: Thank you, Mr Duncanson. Can I just begin with some clarifying questions about the nature of the Agribusiness Council. I do not think it is any secret that there has been a bit of tension between the council and the National Farmers Federation in terms of who represents farmers. Who exactly does the council represent and how does this differ from the NFF and its constituency?

Mr Joseph : Do you want me to start, Roy, and you can finish?

Mr Duncanson : Sure.

Mr Joseph : Okay. The NFF does a wonderful job, and organisations like the NFF do represent their constituencies, which is basically farmers. But agribusiness is far greater than just farming or agriculture. With the 4,000-odd industry groups out there, there are a whole range of different groups representing their own constituencies. That is a great strength in Australia: if people see a problem, they will band together and find a solution. The problem is that there is no one single voice for the industry, so who do you politicians talk to? When there is an issue with one sector of the agribusiness industry, who do you go to? You can go to one that will represent one constituency, and it will make decisions that may not even take into account other parts of the whole value chain—and that is the problem. So we were formed off the back of a convocation that was held here in Canberra 18 months ago, where industry told us: 'Look, the industry needs to speak with one voice.' So we have been working behind the scenes for the last 18 months to put this into play. We launch officially on 20 March.

Senator BOYCE: Yes, I think we have all received invitations.

Mr Joseph : Thank you; have you accepted?

Senator BOYCE: I think we have.

CHAIR: So you have farmers as part of your constituency, obviously; but who else do you cover?

Mr Joseph : We cover all parts of the demand and supply chain with regard to agribusiness.

CHAIR: So, transport?

Mr Joseph : Yes. Every sector will be represented our council.

Senator BOYCE: So, resellers?

Mr Joseph : Yes, and wholesale.

CHAIR: Retail?

Mr Joseph : Yes. And banks, financiers—everybody. Do you want to add to that, Roy?

Mr Duncanson : Yes. One of our problems is the same as this inquiry's problem—the definitional problem of what exactly agribusiness is. We define it very widely: it is the value chain from producer to consumer. For example, we would regard all restaurants in Australia as a form of agribusiness—and most of those restaurants, of course, will be family owned. The single-biggest problem facing agribusiness is the fact that it is the world's largest industry and we have to get very good at simplifying complexity.

CHAIR: Can I just move on to the definition of 'family business'. In your submission you noted that there is no agreed definition of family business. How would you attempt to define family business, since you are representing such a broad range of participants in family business structures?

Mr Joseph : I think family business has a lot to do with ownership and control. If you look at any family business anywhere in the world, the fundamental decisions are made by the patriarch or matriarch of that particular family, and it evolves from that. Where it evolves to is anybody's guess. You can have family businesses like Walmart or Samsung. They are family businesses, but they are huge conglomerates. They have evolved from the family getting together, working out that there was a need and finding a solution.

Senator BOYCE: One presumes that every large family was once a small family business.

Mr Joseph : Exactly. So family business are dynamic in nature. You can be a small business and a family business, or a large business and a family business—it does not really matter. The definition of 'small business' in the EU is fewer than 50 employees, in Australia it is fewer than 15 and in the US it is fewer than 500—that is a small business—with a turnover of less than $7 million. So each economy is different in terms of its interpretation. What we have to do is understand that, whatever decisions we make with regard to the family business structure, there are a whole range of other parts of the economy that those decisions will affect.

Mr Duncanson : I would just like to add that, whatever definition is arrived at eventually, it is most likely that the aggregate or sum of family businesses will be the biggest-single contributor to the tax system. By definition, they will be Australian family businesses and therefore working for profits in Australia and contributing most to the taxation system.

Perhaps I can come at it from another way, as well. Let us consider the case of a single man or woman who had parents who were adopted and he or she did not know the actual origins of his family, and both parents had died. Essentially, it is possible to conceive that that one person is a 'family', because they are all that are left as that family. So a family business can be very miniscule or multinational, and that is the problem facing the committee.

CHAIR: Thank you.

Senator BOYCE: Could I just ask a few follow-up questions there. Do you have any comment on the definition that has been put forward by Family Business Australia? Do you want me to read it?

Mr Joseph : Yes, please.

Senator BOYCE: 'A family business is comprised of two or more members of the same family involved in the business, with one or more related members having a controlling interest.'

Mr Duncanson : The example I gave was that you could theoretically have a family of one. So we do not have trouble with Family Business Australia's definition, but there may be a case for exceptions.

Senator BOYCE: Yes. I am just having issues—if we were to recommend anything that would advantage family businesses in a tax context, or any other context, to define everyone from a sole trader up as a family business would, I suspect, would not be seen as reasonable by Treasury or anyone else. Some academics have raised the issue of what they call 'intentionality', which means that you have to intend to pass the business on to the next generation before you would meet their suggested definition of being a family business—on the basis that couples and individuals start businesses all the time. Many of them would not see themselves as family businesses, perhaps until 20 or so years down the track, when they suddenly think, 'This kids are going to join us in this' or whatever. Could I have a comment on that from either or both of you please?

Mr Joseph : I will go first. I think you are dead right. There is no doubt that there is no set definition for a family business. If they evolve, and with respect to the intentionality: because they don't know what the future holds, they don't know what the intention will be. We do know that in the agricultural world that a lot of farmers have the intention to pass their business on to the next generation. A lot of generations now are choosing not to take that up and are choosing to do other things.

Senator BOYCE: Which is why they are talking about intention rather than the actual act.

Mr Joseph : Exactly. And circumstances change as well. What was once a viable, vibrant opportunity with 50 hectares or whatever, is in today's world very difficult to make money out of. So there is a lot of consolidation going on in the industry. That number I mentioned, that there are 106,000 fewer farmers now on the land than there were 30 years ago—where have they gone? They have died off, they have sold out, they have moved on, they have consolidated; and there is a lot of consolidation going on. If they intend to pass it on, and the kids say, 'No, I don't want it, dad'—or mum or whatever—then they will have to sell. At the end of the day that is their right but they probably did not start off by not intending to pass it on. I don't want to be the generation that loses the farm that my father, and his father, and his father and mother or whatever, built up and developed over the generations. I don't want to lose that, so I want to find security and longevity.

Senator BOYCE: Thank you.

CHAIR: There is a nostalgia for the good old days and the small family farm, but you have just made quite an articulate argument, with changing practices, for the non-sustainability of those old structures. So even though we feel the loss of something as those numbers reduce, we are actually increasing productivity through this consolidation.

Mr Joseph : Yes, and farmers are really very good at producing. They will be the last manufacturing industry that will ever be in Australia. We export 60 per cent of everything we produce.

Senator BOYCE: I hope you are wrong on that. I hope there are other manufacturing businesses left.

Mr Joseph : No, there will always be others, but I am saying that there will always be a manufacturing industry which is called farming and agriculture. We produce 98 per cent of everything we eat and, as I said, we export 60 per cent of all we produce. We are, as an industry, very productive and getting more productive as time goes by because of economies of scale.

CHAIR: Yes, indeed. Yesterday I heard some fantastic argument about the dry farming of Australia and the expertise that we have to share with the rest of the world. Certainly there are fantastic things going on here. You mentioned ABS data in your opening comments. Do you rely on the ABARES and NFF to give you data as well? How rich is your data, given that there are no family business definitions operating in the ABS data?

Mr Joseph : As I said, the ABS data does not actually quantify or qualify. They look at farming and they look at agriculture but they do not look at agribusiness. So, you are right, there needs to be other sources to make an informed decision. The ABARES data, again, is done for particular reasons. We need to expand the definition, and I think it needs to be expanded worldwide, to have agribusiness as a fundamental class, because once you have agribusiness as a class it is easier for banks to risk rate an industry rather than for businesses and smaller businesses. There are definite benefits in having the industry looked at holistically. This is the problem: if it is looked at and fragmented further we will never make that decisions that are best for the industry holistically.

CHAIR: So the argument that you are really making for us today is that farming families are so much at the heart of agribusiness that it deserves some special consideration. What data can you point to to provide us with some certainty about the proportion of farms that are family owned, and how reliable is the data?

Mr Joseph : That family business data is from the ABARES data, which is that 95 per cent of farming businesses are, in fact, family businesses. If you extrapolate that data out it is very easy to see that the numbers are much bigger than most people think of when they first think about farming, or agriculture or family businesses, because they are not mutually exclusive. They, in fact, override the whole lot. So the decisions that are made have to be looked at in terms of the big picture rather than the small picture.

Senator BOYCE: Does that the definition of farming include horticulture and grazing and all those others?

Mr Joseph : Yes. The definition of agribusiness includes all of those.

Senator BOYCE: It is primary production.

Mr Joseph : Yes.

Mr Duncanson : If I could go back to the academics' definition, very briefly I would say it is very hard to come up with a definition based on intention, which is the core of their proposal. I have been a public servant in three different state governments and a Treasury official in two of them. It would be very hard for the money people to go with the definition that might include an intention. You have to really build systems that are about actuality, not some future state. Having said that, on the ABS issue, agribusiness is a system and farming is an integral part of that. But ABS statistics are essentially based on a reductionist model. It is about breaking things down and then aggregating them up. The definitions of agribusiness rely on a systems approach, and sometimes the statistics, which are firmly rooted in the past on production agriculture in particular, have not really evolved fast enough. It is a bit like technology. They have not evolved fast enough to come up and service the needs of a far more complex industry, which was the case in the pioneer days of the nation, when ABS itself was also born.

So it is a matter of perceptions. The core issue here for both family business and for agribusiness is to reach a community accepted definition. That is the root cause of the problem.

CHAIR: You mentioned in your opening comments that the age of people who are farming, even on these consolidated pieces of land, has increased to the point of 50 per cent of them being over 55, as opposed to 25 per cent at an early date—I missed the date when you said it.

Mr Joseph : It was 30 years ago.

CHAIR: So there has been a significant change in the workforce out there farming and engaged in agribusiness.

Mr Joseph : Yes.

CHAIR: Is there a differentiation I need to make there?

Mr Joseph : No, that is exactly right.

CHAIR: Those stats were about farming?

Mr Joseph : Yes.

Mr Duncanson : The problem is actually worse than that. There is a looming retirement bubble in the scientists who service the industry. So the very people who contribute most to technological improvements, and therefore productivity, are also 'dying off'.

CHAIR: Are they part of family businesses or are they part of other businesses?

Mr Duncanson : It is always a mixed bag these days. Let me give you a bigger picture again on global trends. Only recently did the total research and development expenditure of the world kick past 50 per cent. What I mean by that is that nowadays 51 per cent of all global research in agriculture is done by the private sector. Many of those in the private sector are family based businesses based on a single consultant.

CHAIR: We have had a number of concerns about the expiration of trusts, and also concern about our baby boomers moving on and family businesses changing over—obviously not just in your sector. Can you comment about the longevity of the families that own Australian farms, and is there any research into succession planning and how your association is assisting with that?

Mr Joseph : Obviously we are fairly fledgling. We will obviously have that as one of our core objectives once we get going. But I am a banker of many, many years and banks are always very aware of the succession plan issues with regards to all the businesses that are in their portfolios. I think the aging population is a big factor. When they do retire—across all farming businesses: agribusinesses, family businesses and small businesses—what are they being replaced with? We are finding in the agri field that they are not being replaced with enough. We are not putting enough young people through the educational institutions, because there are now fewer educational institutions than there were, especially teaching agriculture. So that demand is not there and nor is the desire to get into agriculture. So there will be a very big hole in a very short period of time when the aging population we see in rural and regional Australia starts to bite, with regard to it not being replaced.

CHAIR: When you say 'within a very short period of time', what do you mean?

Mr Joseph : If the average age now is 55, in 10 years time they will be 65. And that is accelerating. It has accelerated from 25 per cent to 50 per cent being over 55. In 10 years time that will be even higher as more and more get out and more and more consolidations occur. It is a real problem.

Senator URQUHART: Does the council provide any sort of succession planning and information to members in relation to succession planning and that sort of thing?

Mr Joseph : One of our core tenets is education, because at the end of the day we need an educated workforce. Australia survives on being a smarter nation. That is the fundamental tenet. That will provide the succession of the next generation. With regard to succession planning, that is left up to financial institutions, financial counsellors and all the other existing organisations and infrastructure that is there to talk to the people They have far greater knowledge about how to put in place a robust succession plan that will enable dignity in retirement—as you were saying before, Chair—as well as making sure that they can pass on their farm to the next generation or sell it to somebody else.

Senator URQUHART: What percentage of your members would you be aware of who would undertake a proper succession planning process?

Mr Joseph : Speaking generally, as people get older they tend not to acknowledge the fact that there is a—

Senator URQUHART: A need?

Mr Joseph : Yes. So, I think generally speaking people—and I am talking about the whole gambit of people—will tend to put it off and do it later rather than sooner. That then causes its own set of problems. With succession planning, you have to start planning 20 years before. People don't until there is a need and then when the need arises it is invariably too late. So we need to start to identify people in their 40s and have them start to work out what they would like to do with regard to their farm—where they would like it to go and how they would like it to run and operate.

CHAIR: Mr Joseph, what would you characterise as the bigger problem: succession planning or access to education and engagement of the next generation, regardless of whether or not they are in a family farm structure?

Mr Joseph : You are talking about both ends of the spectrum, aren't you? So you are talking about the young people coming through to fill the gap and the older experienced people leaving the industry. I think they cannot be mutually exclusive here. You cannot talk about one without talking about the other. If people are leaving the industry, what is the strategy to get more people in? One of the things we talked about was rewriting the agriculture narrative. The industry has to talk itself up and people need to understand that it is a great lifestyle, it is a great career and it is a great way of spending the rest of your life with your family in rural and regional Australia. I think both of those have to go hand in hand. If you try to do one without the other we again start to fragment the solution.

The solution needs to be: if we know there is an aging population how can we work with the banks and financial institutions to develop those financial products and services that will enable the other end to get into the industry, as well. I have been developing financial products for many years, and there are certainly a lot of opportunities available for banks and financial institutions to take a bigger role and make a bigger difference at the younger end, and support the older end, and it will be a win-win for everybody.

CHAIR: I am sure the sociologists would have a field day with articulating why it is that the younger generation is selecting against the lifestyle that they might have seen their parents experience on the farm. As much as we all love our great nation, our outback and our farmers, there is I think a very complex story in there that needs to be told. It is not really covered by this hearing.

Mr Joseph : But we do tend to talk the industry down—not 'we', I think the industry itself is to blame here, as well. When we see something good happening we and the media tend not to report the really great stuff.

Senator BOYCE: It is just the droughts, the floods and the lack of funds that get talked about.

Mr Joseph : And we intend to change that. We intend to make sure that when we talk about the industry we talk it up, and that is the complete industry, not just agribusiness. It is all the businesses and industries in regional and rural Australia and in the cities.

CHAIR: In terms of the family business submission you put in, you made a claim that there is evidence to confirm that family businesses often outperform non-family-businesses. Where did that evidence come from?

Mr Duncanson : It is a construct based on the following. If most of the national productivity has its origins in agriculture—so most of the contribution of productivity for Australia—and if the majority of those in agriculture are family businesses, then it follows that they have been more productive and therefore more financially viable than most sectors to date. The biggest single problem facing the industry at the moment is access to capital. No doubt that has been dealt with in other forums.

CHAIR: So it is a claim based on logic but not on evidence.

Mr Joseph : I can provide some evidence. The evidence is also that if you look at all the banks' portfolios of farming clients in regional and rural Australia, and just clients in regional and rural Australia, the percentage of bankruptcies and failures is a lot lower in regional and rural Australia than it is in capital cities. In regional and rural Australia family businesses are also based on the community, and the community tends to rally around when people are in strife. We have seen that with the floods and the fires. It happens on a regular basis in regional and rural Australia, because that is in their DNA. They support people when they are in strife. If you asked any single one of the four major banks what their percentage of losses is in regional and rural Australia in farming and agricultural portfolios, they are a lot lower than those in the corporate and business portfolios.

CHAIR: Yet you make the claim in your submission that financing issues are a big problem for agribusiness because of its high level of indebtedness.

Mr Joseph : There is a high level of indebtedness. I do not want to go into banking 101, but banks fundamentally risk rate all industries. They risk rate them based on their perceived loss. That perceived loss is not necessarily an actual loss, but they rate them and charge interest rates based on whatever the risk rating is for those particular clients. So there is the perception and there is the reality. The reality is that agriculture is not as high a risk as the banks have perceived it to be. I think the GFC has had a part to play in this in terms of banks being, not reluctant to lend, but looking more closely at their lending policies with regard to which industries they lend to and how they lend. If you had family businesses as a separate class—we were talking about this before—the banks would develop their own risk strategy around the family business category and therefore they would risk rate it accordingly.

CHAIR: So in your view the family business tag is a critical one in determining the viability of businesses?

Mr Joseph : I think so, yes.

CHAIR: If you have any detailed evidence you could point us to we would appreciate it.

Mr Joseph : I can go to banks and ask them for their detailed data, but I am pretty sure they are not going to tell me. If you have some contacts in the big four, ask them what their losses are with regard to city and country losses across agri portfolios and across corporate and business portfolios and you will find that there is a difference—quite a big difference.

CHAIR: We have to wonder if they have any data in terms of which ones are family businesses and which ones are not. But we can certainly ask the question.

Mr Joseph : But we can extrapolate the family business side out of the portfolios in terms of a postcode analysis, and, if the ABARES data is correct that 95 per cent of those in rural and regional Australia are family businesses, then you can make a pretty informed assumption, I think.

Senator BOYCE: Staying in the financial area, you have suggested an emergency development fund debt refinancing round table.

Mr Joseph : Yes.

Senator BOYCE: Why? What would it do?

Mr Joseph : We know that the industry itself is quite stressed because of the cyclical and seasonal nature of the industry per se. We also know that the ones who can make a difference are the ones we have mentioned in the round table: the banks and their own peak body. If we could get them all to the table to understand what their intentions are with regard to their support of the industry—and, again, we are talking the big picture industry—

Senator BOYCE: Are you seeing this as being for agribusiness or for family business?

Mr Joseph : We are seeing it for the industry, and the industry makes up a large proportion of family businesses. We would do it on behalf of the agribusiness industry, but again the impact and the effect would be felt right the way through family businesses, small businesses and corporates. If we understood—and I think that needs to be identified—and informed, and then people can make decisions based on that.

Senator BOYCE: I have a follow-up question to the fact that there does not appear to be any emphasis on family business—in fact, there is a representation of family business and small business as being basically interchangeable. You were here, Mr Joseph, but I am not sure, Mr Duncanson, if you heard the evidence from the Tax Office and from Treasury, but I am wondering if you could comment on your perceptions of the interest in the topic from these bodies and what you think might be consequences of that.

Mr Joseph : I did hear some of the evidence from the previous Treasury and tax officials. I cannot pass comment on what they said, and I am not an expert by any stretch of the imagination, but there are tax benefits associated with farmers and farming with regard to farm management deposit accounts. That is a way of, again, smoothing out the income so that if you have a good year you are not slugged unnecessarily and you are able to then spread those out over three years.

One of the things that needs to be discussed also is that if you are a sole trader—if you are a registered business, if you are a trust—the particular structure will be the determinant of how you are treated taxwise. The tax office would be better able to inform you of the intricacies of all the difference vagaries of the structure relating to the tax effect and the tax implications. I think you have to take each and every case and have a look at where they came from, how they were formed and how they currently operate in terms of the legal structure, and then they will be able to answer a specific question based on that particular structure of family business. There are just far too many for me to pass comment on today.

CHAIR: Perhaps I could just ask a question on trusts, and then we will move on to a different topic. Have your members raised concerns with you in relation to family trusts?

Mr Joseph : Not specifically. I think every business at some point in time, as it evolves, works out—again, depending on their own individual circumstances—whether they need a trust, and they will be advised by their accountant and financial advisor as to whether a trust is the most appropriate way for them to run their business. That, in my experience, is the way it normally evolves. You do not all of a sudden think, 'I need a trust.' You form the trust because of a need, and then the trust is the means by which you can distribute your profits and do other things with regard to the trust. And the longevity of the trust is an issue as well. So, again, it is far too complex for me; I am not the expert here.

CHAIR: I understand that the Agribusiness Council has lobbied the government to amend legislation regarding family trusts, so perhaps I could ask you on notice if you could provide the committee with those submissions.

Mr Joseph : Yes.

CHAIR: The other question I want to ask is with regard to superannuation. I think you were here, Mr Joseph, and I am not sure if you were in line at the time, Mr Duncanson, when I asked a question about superannuation within family structures. There is such a belief in the family business, and a belief that the good days are ahead. I know this can happen in agribusinesses as in any other family business, but sometimes the notion of putting superannuation away rather than keeping the profits going into the business is something that people might instantly dismiss. But there are long-term implications, not only for the individuals who might not be getting superannuation but for the community in general if such a family should break down. And if such a family does not achieve the profits that they desired, that can leave people who have given a great life and a great deal to their community very vulnerable and perhaps leave them with only the public purse to support them. What research have you done into the security of superannuation in family businesses among the people you represent?

Mr Duncanson : What is running through my mind is the fact that we are still forming, and our membership is growing, so we do not yet have the complete picture that we need. I also did not hear the evidence from the tax office and the previous submission to that on superannuation, so I am not really able to comment. However, there are two sides to the word 'superannuation', applying to the individual or the business, in this discussion. And then there is the pooling of those funds and what those funds subsequently invest in, and that is an area of interest for agribusiness. In other words, there are large investment funds available that are probably not invested as much in family business as they ought to be.

CHAIR: Is that because family business does not have a profile , or there are insufficient vehicles to enable them to do so? Or is it just completely off the radar?

Mr Duncanson : My personal view—and I stress that it is a personal view, because this is an extremely technical area—is that it is mostly to do with liquidity. Large super funds have complex investment strategies, but a lot of it is centred on liquidity. Agribusinesses and family businesses do have the perception about them that they are not as liquid as other investments.

CHAIR: Is that because they are not as liquid as other investments?

Mr Duncanson : That I cannot really determine.

Mr Joseph : I think the super funds would, again, make their investments based on the industry risk rating, just like banks do. So I do not think they would consider a family business, unless it is a large one.

Senator BOYCE: Do you mean a private family business? Or any structure?

Mr Joseph : I do not think the large super funds would consider any structure other than a large corporate, a large agri-corporate or one of the top 100 on the ASX stock exchange or stock exchanges around the world as a viable investment for their contributors.

Senator BOYCE: I want to move on to a more general question. In terms of succession planning, the National Farmers Federation strategic plan says that succession planning is an 'unresolved and deeply divisive issue' for many farming families, and more for agricultural management. Could you comment on that? Do you see it as an unresolved and deeply divisive issue?

Mr Joseph : I think it can become that, but I do not think it needs to be looked at like that. I think succession planning is a natural extension of a business model that needs to evolve into the next generation and into the future. I cannot believe that it needs to get to a point whereby it becomes agrofied—if you know what I mean.

Senator BOYCE: Sort of!

Mr Joseph : You need to discuss succession planning. People need to get to the table around succession planning, but that, again, is a journey, and people need to be educated as to benefits and the consequences of a great succession plan. We see the disasters that occur when families do not have succession plans in place and one of them dies suddenly, or something occurs on the farm and they do not have the insurance or the succession plan in place. That then causes problems. But from my experience and from what I have seen, people who have the foresight and thinking get to where they need to go, because they plan to get there.

Mr Duncanson : I would like to make the point—I think we made it in our submission—that with respect to succession planning the real issue is that there are amongst our members people who make a profession just out of this activity. The issue is generically one of uptake, regardless of industry. So I would like to go back to the core issue, which is the definition of 'family business'. Once there is an agreed definition you can start to measure the problem and devise solutions for it. To summarise the point I am trying to make, succession planning has been around for a long time and there are professional people. It is just not being taken up. If you wish to target that as a service to family business or whatever industry you wish, you first need to be able to identify the targets you want to deliver the service to.

Senator BOYCE: The chair is telling me we need to be moving on to our next witnesses, but I was initially concerned at the lack of submissions from the rural sector to this inquiry. I am not quite so concerned now. Can either of you briefly comment, or perhaps provide in writing, your views about whether there are any substantive differences between agribusiness family businesses and other family businesses.

Mr Joseph : We can take that on notice and send the answer back to you, if you like. We would be happy to do that for you.

Senator BOYCE: Thank you. Tell us whether it is about culture, tax or any aspect.

Mr Duncanson : You asked for an overview comment on all issues. I would simply say this: within agribusiness we regard it as a classic J-curve situation. We have not yet hit the bottom of our J-curve, and the Agribusiness Council is trying to plan to get out of the bottom of that J-curve as quickly as possible.

Senator BOYCE: Thank you.

CHAIR: I noticed that Senator Boyce used the word 'aspect' in her closing comment. That is quite fortuitous because it was at the Aspect Central Coast School, at the beautiful Christmas party and concert by one of our finer institutions—it looks after young children on the autism spectrum—that I met Mr Joseph, where they do amazing work.

Senator BOYCE: Is Mr Joseph a constituent?

CHAIR: No. I think he provides his services in kind, as a citizen, to support that work.

Mr Joseph : I do.

CHAIR: He is doing a great job. It reminded me, in terms of family businesses, how many incidental connections there are. This is a big issue but at its heart it is about people being able to tell their stories and representatives such as us being able to find out what is going on and make the sorts of recommendations that enhance the productivity and the life outcomes of all these people.

So thank you very much for your submission and your attendance today—in person, Mr Joseph; and from a distance, Mr Duncanson. Thank you.