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Tuesday, 16 June 2009
Page: 6235

Mr BURKE (Minister for Agriculture, Fisheries and Forestry) (8:14 PM) —If I can first of all refer to the issues raised there by the shadow minister. In the RIRDC report to which he refers are similar issues to some that I have raised with respect to some of the ABARE modelling. Modelling by definition is always going to have to involve particular assumptions. That is the nature of any modelling. It does not make the modelling worthless but it does limit the extent to which you can use the modelling as an accurate predictor of what will happen in the future. For both the RIRDC modelling and some of the ABARE modelling, I thought it was important to make it public as it has come to me, and I have made it public, including the documents that I tabled that I think you were making reference to in what you terribly referred to as a ‘dixer’ in question time that day.

One of the assumptions is one that I think everybody, no matter how closely or remotely they are involved with agriculture, knows is a massively false assumption, but it is used in all the models. It is that there will be no behavioural change by farmers. The ABARE modelling that I have referred to about the impacts of climate change presumes that there will be no behavioural change from farmers. We know that is not true. In fairness, how do you model and take into account what the behavioural change will be? It is extraordinarily difficult to do so. I am not critical of the researchers for using those assumptions, but it is extraordinarily unlikely and would be completely inconsistent with what farmers in Australia have done throughout the generations. There will be adaptation. The RIRDC modelling includes that same assumption that there will be no behavioural change.

There is also a concept in some of that modelling as to whether you are looking at changes in input costs or changes at the processing level, and the most extreme projections—the ones that we have both referred to at different points, because I thought it was important to put it out there, and no doubt once I put it out there you found it helpful for a series of other arguments—presume that 100 per cent of the increase in input costs is borne by farmers and 100 per cent of the downstream costs are also borne by farmers. That presumes not only that there is no behavioural change on farms but also that there is no behavioural change at any point of the value chain. It then also presumes that every one of those charges gets passed back to farmers. That part of it is often true—to a large extent, prices do get passed back to farmers. But, as to the presumption there will be no behavioural change at any point along the value chain, I have to say I just do not believe that. It is completely inconsistent with everything that I have ever seen.

I can refer now to EC payments, because I had a chance once I sat down to have a more detailed look at the table the member for Riverina referred to. The specific EC payments are the ones I was referring to that now go through the COAG process and through Treasury, but I take the question in good faith, and particularly the line towards the end of the member for Riverina’s question. Can I provide a guarantee and certainty for the farmers in her area who are on EC that they will continue to receive that beyond 1 July this year? The answer is yes. The guarantee that was sought for people who are currently on EC remains there as a guarantee, unchanged.

There was another issue that I started to refer to in response to the member for Flynn, where we were talking about how you get to $1 billion. There were a number of expiring programs that made up the billion dollar figure that the shadow minister was complaining about the day after the budget. One of those was the Tasmanian Community Forest Agreement. I have to say I have had no-one, including from the forestry sector, argue that that was anything other than a terminating program. Another related to the Murray-Darling Basin irrigation management grants, which we actually extended beyond their original termination dates. We kept extending those and I have had no-one argue that this is anything other than reasonable. Finally, a large part of that billion dollar figure was the termination of the Dairy Adjustment Levy. The Dairy Adjustment Levy was not just an expiring program; it was an expiring program for which we put special legislation through to deal with the wind-up earlier this year, and it went unanimously through the parliament. If the National Party want to argue that there are $1 billion of cuts to agriculture, all but $20 million of that are cuts that they supported.