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Tuesday, 12 February 2013
Page: 1060

Dr STONE (Murray) (18:01): I rise to speak on these appropriation bills. I represent the regional electorate of Murray, in northern Victoria, which has been a major contributor to that state and to the national economy through manufactured food exports and food for the domestic markets. We generate billions of dollars through agricultural production, which generates more employment than any other industrial sector. The food and beverage, grocery and fresh produce sector is not only Australia's largest manufacturing sector, it represents 28 per cent of total manufacturing turnover. It is comparable in size to our mining sector and is more than four times larger than the automotive sector, which enjoys such regular largesse and subsidy from this government.

In 2010-11, when all of the value adding and activity along the food chain was taken into account, agriculture provided over 1.6 million jobs in the Australian economy. Half of those jobs were in regional Australia and 99 per cent of the approximately 130,000 farm businesses are Australian owned. When all of the value-adding processes that food and fibre go through are aggregated, agriculture's contribution to the GDP averages around 12 per cent or $155 billion per annum. So why aren't we in awe of this industry sector? Why aren't we paying it attention? Why is it so often the butt of bad government policy? Why don't we understand the market failure that is so evident in both our domestic and international markets? And why do we have some 700 to 800 people gathering in the Western District of Victoria just the other day with a new group called Farmer Power, which tomorrow will be participating in a gathering in my electorate where we expect 700 or 800 people again saying 'enough is enough'? We have an agricultural sector in rural and regional Australia which is in despair, which is not getting a fair go and a decent livelihood. They cannot sustain the environment as they know they must, and have always done, because they simply are not getting enough to cover the costs of doing business in Australia.

The farm sector has outperformed other sectors in growth over the last 30 years, with an annual rate of about 2.8 per cent. But in very recent times this has slowed to one per cent, reflecting, amongst other things, the government's neglect of vital research and development spending, which is necessary for innovation and to grow productivity, and the removal of water out of the Murray-Darling Basin from food and fibre producers. Over 1,500 gigalitres of water is now out of production and in the Commonwealth's own environmental water holder's bucket, with no advantage or additional sustainability for the environment.

When the coalition left office, a free trade agreement with China was almost ready for signing. That FTA languishes unsigned, and today's media carried stories about how our Prime Minister, Julia Gillard, was going back to try and repair the broken bridges in China—a result, unfortunately, of her naivete and clumsiness when last there. New Zealand has an FTA with China and so their dairy products, meats and wines enjoy significant cost advantage over Australian exports. They also enjoy tariff advantages with Japan and the Republic of Korea while our DFAT effort is underfunded and underskilled and totally ineffective. The carbon tax has been particularly brutal in raising the cost of energy for food producers and food manufacturers who are energy intensive. They are also price takers; they cannot pass the extra 15 per cent on their electricity bills to buyers in export markets, where we are already less competitive because of the high Australian dollar. And none of our EU or US food market competitors are serious about reducing their massive subsidies to their own primary producers and manufacturers.

Australian farmers export about 60 per cent of what they grow and produce, but in our domestic food and beverage markets we also have significant market failure. You cannot pretend we have free trade or fair trade in our domestic markets. Labor members of parliament proclaim that we live in a free-trade international-domestic environment so no support is needed for our struggling producers. Nearly 80 per cent of market share being held by just two supermarket chains in Australia means that they can compete on price alone with each other, boasting about charging just one dollar for a litre of milk. There was in fact a price per litre of milk of 62c in the Western District recently in a supermarket which thought it was a wonderful thing for their buyers, the people with the shopping trolleys. Sadly, those same people with shopping trolleys might not have an option of Australian produced milk in the near future. 'Down, down, down', we hear our supermarkets cry. They are referring to their prices but they could be referring to their suppliers' viability and capacity to survive. They could be referring to what our next generation of farmers actually think about continuing in their fathers' and mothers' footsteps.

We have labour costs pushed up by this Labor government because it has no concept of the flexibility needed to compete when you do not have a nine to five Monday to Friday workplace, where seasonal peaks and troughs in labour requirement mean you must have a flexible and fair approach, not just a punitive set of penalty rates for weekends or before or after regular hours of work. We are 30 per cent higher when it comes to comparing labour costs with our nearest neighbour, New Zealand, so it is no wonder that Heinz's Girgarre tomato sauce factory marched out of that town last year and headed straight for New Zealand, where they do not even grow the tomatoes required to manufacture tomato sauce. We now have food manufacturers in Australia who can import ingredients like fruit juice concentrates or tomato paste or preserved or frozen fruits, vegetables or seafoods at a fraction of the price of buying that same food for processing from an Australian farmer or fisher. In 2011 and 2012 total imports of foods and beverages exceeded industry exports by $2.8 billion. Not surprisingly there was also a decline in employment in the Australian food and beverage grocery and fresh produce sector by 7,000 in the year 2010-11.

This Gillard government has produced a National Food Plan. I so wanted this plan to be a thoughtful, useful, innovative plan. Unfortunately, it is a joke. It failed to focus on the problems of Australia's competition policy failure. It did not talk about the market power of the supermarkets and what had to be done in relation to the confused food labelling laws in Australia where you can get away with implying that much of the product is from locally produced ingredients. The supermarkets continue to get away with squeezing prices and increasing the demand for home brands production at the expense of Australian manufacturers' own branded products. All of this is the reality in Australia's agricultural and food sector. But the Australian National Food Plan failed to even mention that this is the context in which Australian food producers try to survive.

I was recently bemused when one of the big two supermarkets told me that their contract with suppliers always includes the capacity for the supplier to revisit the agreed price if the cost of the production had risen.

They assured me that they rarely, if ever, receive an approach to renegotiate a price on a contract—'So everyone must be happy!' they said. Even they knew that that was laughable. If any supplier complained about price to one of the big two, they would know that outside the door there was a queue of alternative and desperate suppliers waiting to cut just a little more off their bottom line. They have nowhere else to go. The export markets that they have to compete in are corrupted and there are the costs of doing business with the high Australian dollar, our non-competitive carbon tax—the refrigerant gas tax—and our labour costs. All of those factors mean that, if you happen to sell some of your product in the domestic market, you just might limp by for another season.

There are no complaints to the Produce and Grocery Industry Ombudsman either, because retaliation can be so swift and so deadly. For example, there are seven or eight Australian-based dairy manufacturers all jostling to supply basically two buyers—Coles and Woolworths. To suggest that there is any market power in the hands of suppliers in the Australian food and beverage value chain is to demonstrate you know nothing about the realities of life in that sector in Australia.

In my electorate there is a town called Tongala. It is a dairying town in what was once—and will be again one day, I hope—a rich dairying area. It boasts a Nestle factory, which produces the best condensed milk in the world, sought after particularly for confectionary and fudge making. There is a big export abattoir that converts surplus dairy cows into ground beef for export to the USA. Tomorrow this town of just a few thousand people is expecting close to a thousand local primary producers and other business and community members—all of them dependent on a decent go—to gather in the Tongala Shire Hall to protest and to plan. The dairy industry cannot survive and thrive with the prices now being paid for their output. These primary producers can survive droughts, floods and fires, but they cannot survive the policy and market failures that characterise our country.

These people cannot survive in an environment where the government of the day sees them as simply superfluous to need—out of sight, out of mind. For example, why do we not spend some of our foreign aid dollars on buying purposely manufactured product in Australia, which could be highly nutritious—for example, milk powder based product—which we can send to the most drought-affected or disaster-affected communities elsewhere in the world. Other countries do that—the United States and New Zealand, for example. That means that you have further employment in Australia, your surplus Australian food and juices unable to be sold can be utilised outside of Australia, rather than our aid programs depending on simply cash donations—and we know a lot of that cash goes astray. We can then be assured of the quality and nutritional levels of the food supplied to save the Syrian refugees or the desperate people in Mali. Of course this government would have to see that this is a subsidy, not protection, and is plain common-sense. At this point in time, however, I am not getting very much sympathy for an option that was taken up long ago by European, United States and New Zealand governments.

Let me, in my final minutes, talk about one of the greatest and most extraordinary disasters now occurring in Northern Victoria. There is an irrigation system managed by the Goulburn-Murray Water, which is a state-owned authority with over 600 employees. That authority is now spending $1 billion of federal money to reduce its irrigation footprint by 50 per cent. It wants to reduce the channel system from 6,300 kilometres to just 3,000 kilometres—and, no, it is not going to replace all of those channels with pipes or alternative systems of water delivery. It wants to have at least half of the irrigators convert to just stock and domestic or dryland farming only. The productivity of the region is already being affected by this reduction in water security.

Before 2007 we had 1,900 gigalitres of water to put into food and fibre production in this area; since 2007 we are down to about 1,000 gigalitres. This area in northern Victoria, which has wide brown plains with only about 15 inches of rainfall, but with glorious soils and a glorious climate, is just ideal for irrigated agriculture. That is why we were the food bowl of Australia. That is why we had the biggest dairy exports out of Geelong year after year—magnificent country with water security. That is, as we speak, being destroyed by government policy. I find this just too difficult to explain to people who say, 'That can't be true; that can't be right.' Well, come and see how a 100-year-old irrigation district is being destroyed in order to save a state owned government instrumentality that is heavily in debt and cannot manage the whole of the system by itself. Obviously, an irrigator cooperative is the answer, as in New South Wales, Western Australia and every other irrigator state in the country. But, unfortunately, at this point in time no-one is seeing reason. Farmers are being killed by a thousand cuts.

Food and fibre production in this country will continue to suffer as long as such stupidity prevails. We have to listen to the voices on the ground who know best, because our growers can meet the demand for additional food into Asia and more in the future if only they are given a chance.