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Tuesday, 26 June 2018
Page: 77


Mr BROAD (Mallee) (17:45): In rising to speak on the Farm Household Support Amendment Bill 2018, can I respectfully ask that the member for Hunter hang around for a few minutes—hopefully, he does. I sat here and listened for half an hour and, like a good opposition spokesman for agriculture, he did his best to dismantle the federal government's position on what it's going to do. But, also like a good opposition spokesman for agriculture, he forgot to talk about what he was going to do.

The extension of farm household support is less than 12 months; I was hoping for a little more. Member for Hunter, it wasn't until 24 minutes into your contribution on the bill that you actually started to mention what you might do, and I thought: 'I'm excited. There's going to be an alternate position—finally.' I actually believe that the member for Hunter can do it. He's probably the first Labor member that I've seen who genuinely has a real passion for the portfolio, and that's really welcome. He's got a genuine interest. I hope he hangs around, because I'm going to talk a little less about the politics and a little more about drought policy.

In my maiden speech, I gave a recognition that successive parliaments over many, many years hadn't developed a good drought policy—and we probably still haven't, if we're honest with ourselves. The fact is that we live in a country that is going to experience significant rainfall at times; it is also going to experience significant dry times. It is right for the member for Hunter to talk about climate, because there is no doubt that we're having more challenging climatic conditions around our agricultural sector. If you're a believer in climate change—some of my farmers are and some of my farmers aren't—you will at least adhere to the concept that rainfall seems to be more sporadic and that, when rain does come, the downpours are heavier, which means that we need greater intervention, particularly around water catchments. There is a good argument for dams as a result of climate change.

I want to talk about a number of things that have been good and then touch on some things that would be significant improvements. I think farm household support is a basic. It's not rocket science. If we have a family that is not working and is living in a poor suburb in one of our towns, we make sure that they've got groceries on the table. If you've got a farming business that might have a large amount of assets but then, even though they're having a go, because of the seasonal conditions they are in difficulty, it's only fair that they also have groceries on the table. It is nice that drought support is being extended for a fourth year. I wonder whether it should even be indefinite. What we simply want to say is that, if you're having a dip, we're going to ensure that you're able to feed your children and that you're able to put shoes on their feet and uniforms on their backs so that they can go to school. So it does surprise me that this support even had a three-year cut-off.

Of course, what we want is farm businesses to be profitable, sound and not to have to rely on farm household support—and many of them are. The farm management deposit has been a good system. I point out that we have legislated so that a farm management deposit can be used against an existing loan. That has been taken up by Rural Bank. It's the only bank in Australia that has taken it up. That would be a very simple way of at least making those farm managements more attractive and more competitive in the interest rate component.

I think we also need to be very mindful of time of entry. That's something we haven't got our head around. I bought my first farm when I was 22 years old. In the drought of 2002, when I harvested my crop—and, for those who are interested in grain growing, when you sow wheat, you sow it at about two bushels an acre, so about 60 kilograms an acre—my harvest was 30 kilograms an acre. I got less than half back. I remember that, when I was a young farmer, my wife was working, and, even though she was only earning $33,000 at the time, because she earned over $25,000 we weren't eligible for drought assistance—none at all. I remember getting the letter saying that I wasn't eligible. I got it and I nailed it to the shearing shed wall and said, 'I'll show you who's viable!' Anyway, we made a go of it. But I think that time of entry is incredibly important because, if you're going to support farmers through a difficult time, what you want at the other end of it, when the rains start falling again, is young farmers to be able to kick off and go, because they're the ones who are going to drive our productivity gains, they're the ones who are going to take up the new technology and they're the ones who are going to drive the exports for the nation. So, whatever we do, we have to think about time of entry for drought assistance.

The other thing that I think is working is the seasonal insurance model. This requires better forecasting. It requires a good network of Doppler weather radar. Essentially, what we're seeing across my farming sector now is that people will work out: what is the input cost of growing a crop? I'll just go on a per-acre basis, to put it in layman's terms—even though we talk in hectares, a lot of the country in my area is laid out in mile-square blocks, which are 640 acres. It essentially costs you about $30 or $40, up to $50, an acre to put in a crop by the time you write out your cheques for your fertiliser, write out your cheques for your chemicals and write out cheques for your fuel, your scarifier points and all those sorts of things. We are able now to access insurance products that will cover the costs of your inputs if you have a year that's a complete wipe-out. Say for example that, to put in 2,000 acres of crop, you would have needed $200,000 worth of inputs. You're able to insure those products at less than $10 an acre—so it's reasonably competitive—so that, if you get a lack of growing-season rainfall between June and September, you'll get a payout for that.

I just want to point out why this is important. If you as a farmer start to develop a drought package in your own business, you'll say, 'I'm going to take this insurance product so that, if it doesn't rain, at least I've got enough money to put the crop in next year.' That's tick one. You'll also try to get your farm management deposit to equal what the interest component is on your loan. If you talk to any bank, most banks will roll you over another year as long as you've got the capacity to cover your interest. If you set up your business so you've got your interest component covered through your farm management deposit and you take out the insurance product so that you've got the input costs, it means that, okay, in a drought year you've made nothing, but you haven't gone backwards. You couple that with farm household support, so you've still got food on the kitchen table, and I think you start to look at a package that fundamentally works.

Those are the things that I think we need to perhaps create greater incentives. Also, we need to be mindful that farmers will look, in their own farming system, at ways of developing a drought assistance package. That might be that they'll be putting in additional storage, so they'll put two years of grain aside so they've always got seed to plant. They might put a feedlot on to value-add. I think we need to be very cognisant of and open to accelerated depreciation packages when a farmer is saying, 'I'm doing this part of my business so that I can drive some productivity.'

Ultimately, I would like to see the government having a good discussion with some of the big insurers. I'll just run through this because this is something that I looked at as a farm business at one stage. At one stage I looked at leasing 6,000 acres in Saskatchewan, in Canada, and farming over there. People ask, 'Why would you do that?' The logical answer was: because you get the northern hemispherical risk with the southern hemispherical risk in your grain growing. Not many farmers can look at how they can do that productively in their own business. However, what we're seeing now with companies such as QBE and big insurance companies is that, if you look at like-for-like countries—and the clear ones would be Canada and Australia—you could develop an insurance product that is local but also has a reinsurance component by a company such as QBE, and you could actually get a global insurance company. Their input in that would bring the premium prices down quite substantially. There is some really quite practical stuff that we can be doing in insurance products, in assistance to farmers and in assistance through drought.

Can I touch on one of the other things that were substantially beneficial for me as a farmer throughout the drought of 2002 and the drought of 2006, 2007 and 2008—the hat-trick drought, as I call it. I remember my father, who had farmed all his life, said: 'You only ever get in our area one drought in a row; you never get two. Always the second year is a good year.' That theory was blown in 2006, 2007 and 2008. It's very humbling to have worked as hard as you can physically work and at the end of three years realise that if you'd done nothing for three years you would have actually had a better life and made more money.

The one thing that has helped us has been the opening up of markets. I think this is something we need to be very careful about, and it is something this place actually can benefit from. I'll give an example of that. In 2002, even though we had fairly skinny sheep, we were still able to sell those sheep for up to $100 a head. In 1992 we were shooting sheep. You couldn't give them away. People say, 'What is the difference?' The difference is this: in 1992 Australia was exporting sheepmeat to 12 countries, and in 2002 we were exporting sheepmeat to 96 countries. So opening up market opportunities is perhaps one of the most important things this place can do to build resilience in our farming sector. Ultimately, the greater utilisation of that carcass—with hearts and livers and bits and pieces out of the carcasses being airlifted across to the Middle East—put an underlying floor in the prices that farmers could get. If you looked to the mixed farming area that I was in, the one thing that sustained them through the drought years was that at least one part of their commodity was getting very good prices. We talk about farm household assistance; we talk about insurance products; we talk about accelerated depreciation for infrastructure on farm; and we talk about things that can be done in the way of loans and those sorts of things, but that factor of opening up markets must always be well stated.

The other thing that we've substantially done—and it has been the role of government to assist this—has been building major water pipeline infrastructure projects. In my patch is the largest pipeline system in the world. People may not be aware of that. The Wimmera Mallee Pipeline was from a combination of the Victorian Labor government and the federal government. You can actually go to nearly every paddock across a third of the state of Victoria, and every paddock's got a tap on it and you can turn the water on. We've got two more projects we want to get funded: the East Grampians pipeline and the Mitiamo pipeline. We're funding the Loddon pipeline at the moment, with $20 million from the federal government and a contribution of $40 million from the Victorian Labor government. Those things have been very interesting because, call it climate change or call it what you will, we are seeing that areas that used to run a lot of livestock and that rely on catchment dams—where, essentially, it would rain and the water would wash into the dams—have had dam evaporation rates higher than they have had and less ability to hold water than they have had. So the ability to run poly pipe for hundreds and hundreds of kilometres has revolutionised the farming systems. It's opened up opportunities for BASF, formally Bayer, with a research facility in Horsham, which is the only canola genetics research facility in the Southern Hemisphere. It's opened up intensive animal husbandry such as Luv-a-Duck, which is processing 90,000 ducks a day. It's opened up opportunities for feedlotting lambs. It has been a substantial thing.

If you want to look at policies that can address drought communities, they are a combination of water infrastructure, trade policies and getting the settings right around loans, farm management deposits and insurance products. I just want to touch on one other issue that's also very relevant to this policy, and it's something that worked reasonably well in 2002 and in 2006, 2007 and 2008, and that has been assistance with rates. One of the things we've always found when it is dry is that the capacity for a farmer to pay their rates has been substantially diminished. Farmers pay a large burden of the rates in our country shires. Some of those rates can be $10,000, $20,000 or $30,000. There have been rate subsidies of 50 per cent which have also been a significant help. Those rates subsidies not only helped the farmers but also helped the rural community, because they meant that the shire had money coming in. If there's one thing we have learnt when it comes to dealing with drought, it is that you also have to remember that there's a rural community that has to have money stimulating it.

There's much to be done in the drought space. There's more leadership to be had. There are many good ideas out there that we can learn from other parts of the world. But this is something that we must tackle, because if there's one thing we know about Australia it is that it is raining sometimes and it is dry sometimes and it will always be that way.