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ECONOMICS LEGISLATION COMMITTEE
12/04/2011
Foreign Acquisitions Amendment (Agricultural Land) Bill 2010

CHAIR —Welcome. We have your submission, but would you like to make an opening statement?

Mr Norton —Yes. Thank you, Senators, for taking our evidence online instead of us having to travel to Canberra. It is much appreciated. Very quickly: you have our submission; we have distilled it down to five main points.

Western Australia is one of the drier and more isolated states of the Commonwealth—hence, 70 per cent of our product is exported. We only have a population of 2.2 million. Obviously, transparency is going to be quite critical for Western Australia. Whilst foreign investment has been quite strong on the east coast of Australia, over the years foreign investment has not been as prolific in Western Australia as it has in the east, mainly because of our dry conditions—we do not have access to the irrigation systems that you do in the east—though the Esperance area in the early days was opened up by foreign investment from Americans and insurance companies. The majority of that land now has been transferred back to family farmers.

If there were to be large-scale investment in Western Australia, sovereign risk would become a bit of an issue due to the fact that we are very large exporters of products. Environmentally, we are a very fragile state because of the climate. If you were to bring in large-scale foreign owners from the Middle East, South-East Asia or Europe, then—depending on their modus operandi and what they wanted to use the asset for—that could be a huge risk as far as we are concerned. Biosecurity is a real issue. Environmentally, it is a real issue for foreign investments. If they are just going to use Western Australia as a land-bank to export product offshore to prop up their own food supply, it is a real risk. And there are some other issues where we believe the playing field is not quite as level as it should be.

Offshore owners have access to cheaper finance than we have in Western Australia. That was quite obvious at the meeting we had with the Reserve Bank the other day. The governments in offshore countries underwrite their ag sector to a far greater degree than what we do in Australia. Even in America, the land of the free, they get much more assistance than what we get in Western Australia. These are some of the areas where we have got some real concern if any large-scale offshore investment comes into Western Australia.

We had a classic example here with Harvey Beef, our main export abattoir, which was bought some years ago by an equity fund based out of Britain and Singapore. It has been poorly managed and it has had quite a dramatic effect on the Western Australian beef industry to the extent we had some pretty large-scale exports of beef—and sheep, for that matter—to the east coast and offshore. These are some of our concerns. We are certainly not opposed to foreign investment; it is just the way it is done. We want to make sure that the playing field is kept level so far as Western Australian family farmers are concerned.

CHAIR —Thank you, Mr Norton. You were saying that you want a level playing field with foreign investment and you are talking about the fact that in Western Australia there has been in your assessment a lower amount of foreign investment than in the rest of Australia. Apart from the abattoir incident, have you had any recent indication that there has been greater foreign investment lately in Western Australia?

Mr Norton —Because of the very dry conditions we are suffering here, our inability to access exceptional circumstances funding like farmers on the east coast have and the collapse of the timber MIS schemes, there is a high degree of interest in Western Australian farmlands by offshore investors, especially from the Chinese and equity funds. As I have said, in the past these types of investments have had a fairly chequered career in Western Australia, certainly with the MIS schemes as far as timber is concerned, which have blown out into the horticultural area with wine and olives. They have distorted land prices in a lot of the market. Now we are seeing a virtual collapse to a degree in the price of land, which is distorting a lot of the equity of a lot of family farmers in Western Australia at the present.

CHAIR —You mentioned managed investment schemes in your submission. Was there a higher than normal proportion of foreign investment in those MIS arrangements?

Mr Norton —Most of those MIS schemes to the best of our knowledge were probably funded onshore, but our concern is that this is a new dynamic that we are going into and the end result for offshore ownership could be well and truly the same as the MIS schemes that were onshore funded through tax benefits, superannuation funds and personal investors on the back of the collapse of the wool industry. The majority of that land in WA that went into trees was either land that was running sheep and wool or the dairy industry. Since the collapse of the dairy industry over the last 10 years, a lot of that country has gone back into trees.

CHAIR —Finally, you were saying that the five-hectare figure in this current bill we are looking at needs reviewing and that a financial value might be a better way to assess it. Did you have any kind of figure in mind or are you thinking that the existing trigger of $231 million would be adequate?

Mr A Hill —Thank you, Senator. I came in a little bit late to the teleconference. I need to say initially we do not have a predetermined figure in mind. Our thinking on that was that the five hectares appeared to be a little arbitrary.

The thought was, I guess, that particularly in high-value horticultural type enterprises five hectares may be three or it may be one but it needs to be set at a level which captures some of those small in size but high-value businesses. Certainly in a financial sense it is likely to be significantly less than $231 million, as it is currently. We were raising the issue just to highlight that some thought needs to be given and that in not recognising the value and size of farms, particularly in Western Australia, the five hectares may not transpose from the New Zealand model, which I think it was based on.

CHAIR —Yes, that is right, and we have indeed been discussing that with a range of witnesses. Thank you.

Senator XENOPHON —Thank you for your submission. Further to the chair’s question, what do you think is a reasonable monetary threshold? You were saying that $231 million is too high a threshold. Is that the case?

Mr Norton —Yes, it certainly is. The average sale of properties in Western Australia can vary anywhere from about $1 million to perhaps $10 million. In the current wheat belt, when those blocks were split up they were on average between 3,000 and 5,000 acres, and then you can put them together in multiples of the 3,000 and 5,000 acres. Obviously there are some properties of around 30,000 to 40,000 acres. If you can pick up blocks like that as a foreign investor you can put them together. A block like that in the outer wheat belt is selling for about $320 a hectare at the moment. You do not amass a lot of value like you do on some of the high-value east coast. I reckon it is somewhere between $1 million and $10 million. That would give you a pretty fair indication, if somebody is moving in to put together large scale amalgamations of property in the wheat belt area of Western Australia.

Senator XENOPHON —We heard earlier today from the New Zealand Treasury and from their Overseas Investment Office, where the five-hectare rule is in place. They undertake about 75 to 100 of these assessments for agricultural land a year. It takes, I think, 15 working days at least and up to six months in some cases. If there is a process in place it may take three weeks or longer to assess such an application. Do you think that would impede foreign investment? The advice I heard is that they approve 98 per cent of applications. A couple each year might be knocked back. What is your view about that? If there is a system in place where you can deal with it but it will still take a few weeks to approve or disapprove of an investment, what would that do to confidence in your sector?

Mr Norton —Three weeks in agricultural terms is not very long. We tend to talk in seasons over here and we only have one separate season a year. As I said, land sales are not happening over here at the moment and you tend to talk in months or years in a situation like we have at the moment. So if you can distil something down to two or three weeks that is not a very long period in agricultural terms.

Senator O’BRIEN —Thank you for your evidence, Mr Hill and Mr Norton. The historical position in Australia as seen over many decades has been that various nations have invested their wealth in Australian agriculture. Are we seeing a different phase in that investment now? Is it because it is the Chinese that people are more sensitive or is it just another phase in that series of agricultural investments that this country has seen from overseas?

Mr Norton —I think you are right. I have been around for a little while—I started farming in 1960, so I have certainly seen a few of these events in Western Australia. We have seen the Brits and the Americans and the Europeans coming to Western Australia. We have cohabited very well in the past, and I have no doubt we all will in the future. But, as food security becomes an issue, we get the gut feeling that things are changing. Equity fund companies are starting to buy into processing assets. There is one out of Britain at the moment, based in the Mauritius Islands, that is looking at 100,000 hectares in Western Australia. Whilst it is probably here for all the right reasons as far as its investors in Britain are concerned, some of the Chinese investors are possibly here for different reasons, and I think that that is what we would need to monitor.

Western Australia is a reasonably low value place to come in and buy assets, but we operate in a very dry, fragile environment, and whether these people can make it work the same as a family of Western Australian farmers can remains to be seen. If they cannot, that will cause huge problems for Western Australia and the Western Australian community in general. I think we are certainly going into a new phase, and I think we need a quite separate set of rules to those we have had in the past to monitor and manage it. Strategically, whether just buying the farm is the best investment for some of these investors, there is a big question mark in our mind as to whether that is the best way to approve and locate foreign investment in this state. I think we should be doing it in other ways, but that is for another forum.

Senator O’BRIEN —Yes, and I think there are a couple of questions that arise from your answer. The first is the rate of return that farmers get on high-value properties. You mentioned higher-value properties in eastern Australia, but there are some very large properties in Western Australia, and one could argue that the rate of return on that level of investment would not justify the price. How do you respond to that?

Mr Norton —It is an interesting question. We all know the sorts of returns on investment that we get. A lot of us have been here for a long time and have not been able to do it better. How foreign investors think they can come in from a foreign environment and do it better and still get a return on that investment leaves a very big question mark in our mind.

Senator O’BRIEN —Historically they have not, have they?

Mr Norton —No, and they do not last very long. You will find that they come in, they have a crack for four of five years and then they move on or they try to realise the capital gains of the asset. But the asset value of Western Australian land has reached a peak, and now it is coming back. The only way that they can get a return on an investment is to hope to try to pick up this country cheap off the banks or the owners and not worry too much about the return on investment out of operations but instead rely on the capital gains further down the track.

Senator O’BRIEN —The other question that arises from your evidence is: should we be more worried about investment in finite resources, such as minerals on the ground, by overseas interests than we are about ongoing assets which Australia could ultimately reacquire under compulsory acquisition if it was in the national interest?

Mr Norton —That is one of the things that is disturbing Western Australian farmers. The big emphasis in Western Australia at the moment is on the mining industry. The current government has really lost interest in agriculture, and that is a concern. Not only is it a concern but it is a worry too—they are not taking an interest in making the capital investment in agriculture in the same way as they are in the mining industry, and I think we need to be mindful of that. We need to rely on the federal government, perhaps through some of these foreign investment rules and tax rules, to make sure that agriculture does not get left behind in this two speed economy that we are starting to develop especially in this state. A lot of the younger generation—

Senator O’BRIEN —So you want more overseas investment in agriculture? Is that what you mean?

Mr Norton —No. I think the state and Commonwealth governments need to make some more investment in our younger generation. The majority of the younger generation in agriculture are leaving agriculture and going into the mining industry and other industries. There are not the tax benefits and the incentives to keep the younger generation involved in agriculture for future generations of production. How offshore investors can come in here with their money and buy the farm and then try and get some Australians to run it is a bit beyond us, with the current tax and the regulations—so far as the governments are concerned—on shore.

Senator O’BRIEN —I suppose, with the cost of getting into farming, some young people’s only chance is to be sharefarming with someone who owns but is not in a position to farm.

Mr Norton —But sharefarming has never really worked. Aussies do not take kindly to getting access to agriculture via working for an offshore investor. It has never really worked in this state. Sharefarming has certainly worked in New Zealand and probably to a lesser extent in Victoria in the dairy industry, but sharefarming here has never really taken off for onshore investors. They do not set the financial remunerations for the sharefarmer in a way that makes it viable and interesting enough to pull it on.

Senator O’BRIEN —Thanks, Mr Norton and Mr Hill.

Senator WILLIAMS —You were saying, Mr Hill, that the average price of a farm in Western Australia would be between $1 million and $10 million?

Mr A Hill —That was Mr Norton, but, yes, that comment is correct.

Senator WILLIAMS —Would you have any farms in Western Australia worth $231 million or more?

Mr Norton —The short answer is no, unless you put together a very large amalgam of properties. I do not think any of those pastoral leases or the land that the state sold to the Chinese would come anywhere near that—$30 million, $40 million or $50 million, but nowhere near $230 million.

Senator WILLIAMS —Exactly. I agree with you totally. Probably around Australia you would find very few individual properties, if any, worth more than $231 million, so the point I make is that, under our current laws, unless the property is worth $231 million or more, it is not subject to scrutiny by the Foreign Investment Review Board, hence we could sell off basically every farm in Australia, which would not be scrutinised. Would you be happy with that situation?

Mr Norton —No, and that is what we are complaining about. You could just about sell off the whole of the Western Australian agricultural sector and not trigger the interest of the Foreign Investment Review Board.

Senator WILLIAMS —As time goes on and we see the increase of the world population and the absolute essence of food supply, this would be a situation where it needs to be scrutinised more and monitored to ensure that we keep a close eye on the food production in Australia, who owns that food and where it goes?

Mr A Hill —That is correct. That was the basis of the five points on the second page of our submission. Obviously, as we go forward, we are getting mixed signals in agriculture. We are being told quite positively that future population will be driving demand to a level we have not seen in the past, and yet, conversely, we are getting told that all that food will need to be produced at less than current prices or people will not be able to afford to buy it. So, yes, absolutely we would agree that there needs to be greater transparency in the application and successful bidding for future ownership of land.

Senator WILLIAMS —My final question refers to the MISs, the managed investment schemes. Did any of those schemes go broke that you know of?

Mr Norton —Certainly in Western Australia, Great Southern and the other one, Timbercorp. They—

Senator WILLIAMS —Yes. Were there others besides Great Southern and Timbercorp? Do you know of any others that fell over?

Mr Norton —I know certainly of some of those olive ones. Some of the winery ones certainly fell over. I do not have a list in front of me. I was not prepared for those sorts of questions. But it certainly has been an enormous distorting factor on land values and commodity production in Western Australia, to the extent that the sheep are grazing very well on some of those vineyards down around Margaret River and Busselton at the moment.

Senator WILLIAMS —This is my final question. You would be concerned when you see good agricultural land, whether it be grazing, farming or mixed, being sown down to trees, because you simply lose your production of food on those areas? Although I suppose you can run sheep amongst the timber, certainly the grazing rates would be a lot less.

Mr Norton —What is really concerning us is that land in not only Western Australia but the whole of Australia is a very finite resource, and we need to manage it in a far more dedicated and constructive way than we have in the past. We are certainly not opposed to foreign investment, but whatever investors do come and buy this finite resource, be they Australian family farmers or foreign investment equity funds, we need to manage it much more constructively than we have in the past.

Senator WILLIAMS —Thanks.

CHAIR —We might have lost Senator Eggleston; he was on teleconference.

Senator HEFFERNAN —Strangely enough, we were doing a select committee inquiry which the government and the Greens shut down, addressing that exact question: how in the future do we produce food that is affordable—and what defines affordable—from an environment that is sustainable and a farmer that is viable? I go to a question that Senator O’Brien raised—that is, the rate of return on the land by, shall I say, a conglomerate investor. I do not think that is even a little bit pertinent if it is a sovereign fund. We have seen Shenhua come in on the Liverpool Plains and pay $300 million for something the government actually offered out at $20 million. When I asked Joe Clayton, of Shenhua, what that was all about, he said, ‘Money doesn’t mean a damn thing to them. It’s a non-current-market-currency sovereign fund.’ So they have acquired a whole lot of farms under the umbrella of a mine.

Have the Western Australian Farmers Federation given consideration to where Australia is going to be and where the rest of the world is going to be in 50 or 80 years time in terms of global population, demand on agricultural resources, the need to double agricultural research and the new phenomenon of some countries—we will not name the countries—that are well ahead of the game in planning where they are going to be in 50 years time and the need to acquire agricultural resources not for a rate on return, going back to Senator O’Brien’s question, but for future food security? They do not give a rat’s how much they get off the land; they just want to acquire the means for food production in the future, which is why they have gone into places like Madagascar and some of the poorer, more corrupt countries on the African continent.

Mr Norton —That is a very, very in-depth question. I agree with you wholeheartedly. That is what is really concerning us. I think that as a country we are basically asleep at the wheel—

Senator HEFFERNAN —Bloody sure we are.

Mr Norton —so far as agriculture is concerned. That is a huge concern to us. I bring it up continually at the NFF, so far as the banks and finance are concerned, trying to get the playing field level for Western Australian farmers. The rules are stacked against us. They are of our own making, and yet we let investors come in and buy a finite resource. We encourage them, and that is fine, but they do not have to endure the same sorts of rules where they come from that we inflict upon our own farmers.

The young blokes, Bill, are really jacking up. We are losing football teams on the outer wheat belt like there is no tomorrow. There are three football teams at Ongerup, Pingrup, Nyabing and Shackleton—good, solid, old communities. The first thing the old blokes will tell you is that as soon as you lose your football team your community is in the first stages of rigor mortis. Yet politicians keep on telling us—our minister for agriculture over here keeps on telling us: ‘Just bring in foreign investment. That’s the way. Make the farms bigger.’ It is a load of rubbish. I really do not know how long the politicians of this country expect us to swallow that line.

Senator HEFFERNAN —The difficulty with politicians is that they are always worried about the next election and not where we are going to be in 50 years time. By the way, the Western Australians need to define the difference between sovereign acquisition and foreign acquisition. The Vesteys came out here 120 years ago and invested, but that was not Her Royal Highness the Queen of whatever, such as a non-market currency, in the instance of China, where they are holding the US, which is technically insolvent, to ransom. They will hold us to ransom too eventually if we allow them to continue with the non-market currency.

You have a good example over there in Western Australia. When I discovered that coal liquefaction plant that was proposed with Indian sovereign backing, much to my dismay and disgust, I thought it was going to be a competitive thing for the Australian fertiliser market, which we desperately need—given that now, for instance, Landmark is selling out Pivot in a pre-arrangement with Agrium or someone in a further consolidation of the fertiliser market. They were not in a position to provide the urea that was going to come out of that coal liquefaction plant to Australia. It had to go back under an arrangement, which is the exclusion of us getting access to our sovereign wealth. Because of the acquisition by a sovereign wealth fund, it all had to go back to India. Do you think the government is awake up over there to the fact that there is a hell of a difference between foreign company investment and foreign sovereign investment?

Mr Norton —I am glad you brought that up, because we have written to the Premier only this week on that very issue. Premier Barnett very proudly went up to Collie the other day and has put $83 million into head works, roads, bridges and water. We have written to Premier Barnett asking him: what is in this so-called urea plant for Western Australian farmers? I am getting phone calls daily as to why the Premier has not negotiated some access to that asset, the fertiliser, instead of just exporting it offshore. It was the same with Karratha, with Oswal, where that urea plant only processed urea to the semi state and it was all shipped back to India, where it was heavily subsidised.

We are getting let down very, very badly by state and Commonwealth governments and politicians as far as agriculture is concerned. They are just two examples, Bill, where agriculture has just fallen off the radar screen. Politicians fall over themselves to bring in these investors, and the poor old Western Australian cockies get nothing out of it. They are using our funds to put in infrastructure. Alan Carpenter put $140 million into the head works of that plant for Karratha. Barnett has put 83 million of our dollars into the plant at Collie. To that extent, we are so frustrated over here at the moment that we have put together a 10-point plan for the vision of agriculture in Western Australia that we hope will feed into the 2050 Committee that the NFF has set up. We are thoroughly disenchanted with the way agriculture is being treated by the political process.

CHAIR —I think that might be enough. We will have to move on, sorry, Senator Heffernan.

Senator HEFFERNAN —I will come back to you, boys.

Senator CAMERON —Mr Norton, there are two big issues you have raised. One is the issue of what you called the patchwork or two-speed economy. The other is the sovereign wealth funds. In terms of the patchwork economy, many economists are basically saying that this is the market at work and that the mining related industry should actually attract the labour, the contractors and the construction equipment and you have to take that away from other areas of the economy. Do you agree with that analysis?

Mr Norton —The question is not quite clear, but I think I know what you are driving at. We have had dry economic rationalists and accountants out of the bowels of Canberra dictating policy to agriculture for probably 20-odd years now. According to a lot of the data we have got, agriculture and the average age of farmers are going through the roof at a higher-than-average rate than the rest of the community. Sure, it is very easy to bring in contractors and have somebody behind a desk with a university degree tell you how you are going to do it out the back of Bencubbin or Mukinbudin. But nobody wants to go and live out there at the moment. There is no health or education out there. The women do not want to go out there and bring up their families like some of our previous generations did. You cannot fly in and fly out to a farm in the outer wheat belt. The model we have got here is just not working, and really we are relying on people like you to generate models that are going to return the wealth to agriculture, like we have done historically.

Senator CAMERON —How do you deal with the argument—and I am not pushing this argument; I am just saying it is an argument that is out there—that governments should not intervene, that they should allow the market to operate and not impede the move from, say, the agriculture, manufacturing and tourism sectors to the mining sector?

Mr Norton —I clearly understand, and it is an argument that is difficult to counter. Probably the best way to counter it is to go back and look at where we have come from, what we have achieved and where we are going. As far as agriculture is concerned, I do not believe that we are headed in the right direction. It started with the National Competition Policy. That was set up to deal with government authorities and it has flowed over into a whole lot of other areas that it was never intended to cover. If you go back to the late 1980s and the 1990s, agriculture has been on this trajectory that the dry economists have pushed us onto. The dairy industry is a classic example. The dairy industry is going backwards at 100 miles an hour in this country, yet the drivers in the pilot seat say we are still on track. We are going to crash-land.

Senator CAMERON —The other argument that has been put forward is that trade agreement rules and regulations should apply, and that means that any of the countries that we have a trade agreement with would have the same rights to invest in Australia. What is your view on that?

Mr Norton —It is pretty much distorted so far as Australia is concerned. Other countries support their food production sectors to a different extent than what the Australian governments do. ‘Manipulate’ is probably not quite the right word, but they have ways and means, even in America, of looking after their agricultural sector and they use it against us. As I have said, out in WA we are a 70 per cent export economy. You have to be very careful that you do not upset trade negotiations as far as the domestic rules of other countries are concerned, so we unfortunately have to abide because we are basically exporters and we just drive our farmers harder. The dry economists tell us that we have to get more efficient, we have to work harder and we have to run harder. The model is not working. We have to think outside the square as to how we are going to place agriculture in Australia in the future. To just let a whole lot of investors come in and buy the finite assets is not the way to go.

Senator CAMERON —Given the strength of the Australian dollar, is there a problem? Obviously there is a problem for export industries in Australia, but in terms of sovereign wealth funds is there any evidence that the strong dollar is diminishing investment in the agricultural sector?

Mr Norton —I am not an economist. I am just a poor old dairy farmer cum beef farmer. I have done quite well out of agriculture but with not a lot of education behind me. The current high rate of the dollar is not really affecting our commodity prices because it is very much supply and demand, but I do not know how long that is going to last. The old saying is that when the dollar goes up it is tough for exporters and good for importers. That rule is not working at the present, and there are a number of reasons why it is not working which we will not go into now. So the old theory is not affecting us at the moment. Because there is a shortage of bulls, a shortage of red meat protein and a shortage of dairy products, the high dollar is not affecting farmers’ prices—which is interesting, because exporters and purchasers offshore usually use that against us. So it is not affecting us at the present, but seeing how long that lasts is going to be interesting.

Senator CAMERON —What if the dollar declined? When the dollar was much weaker, was there any evidence of more foreign investment in Australian agriculture?

Mr Norton —That is the interesting scenario that we have at the moment. We have global financial meltdown and opportunities around the world for investment. For whatever reason, they see Australia as a bit of a soft investment for agriculture at the moment. How long that will last I do not know. It tends to ebb and flow a little bit. It is certainly on the slow side of the agenda at the moment.

Mr A Hill —To follow on from Mike’s comment, inadvertently the question highlights something that is at the very core of the inquiry. Anecdotally, we could say to you, yes, we hear this or that about investment, but the reality is that a lot of it is unknown simply because there is not a register or a publicly accessible database. We can only really speak about Western Australia. We have had, obviously, the financial crisis but as recently as 2006-07 we had a fairly significant part of the grain belt under exceptional circumstances, which, I am sure you will agree, is a pretty tough thing to be trying to sell to anyone. It is very hard to say yes we have or no we have not noticed that impact. But we certainly champion the need to have that data available so we can, as industry and as government, track that analysis and find out what the impacting factors are.

Senator EGGLESTON —There are marketing mechanisms in place around Australia and overseas for various agricultural commodities that we produce. Going to the core of what you see as the objectives of people investing in agriculture in Australia, what problems might you foresee for marketing mechanisms which are in place now with foreign investors getting into, say, large-scale wheat production or something like that? What would be the implications of that for our industry?

Mr Norton —It is an interesting question that you have posed here. There are some very good examples in the grains industry as between Western Australia and the east coast of Australia. We have Cooperative Bulk Handling in Western Australia. That is wholly owned by the grain producers. They are investing in rolling stock, and I think there are areas in finance and banking that they can get involved in so far as cropping is concerned. That compares with the east coast where most of their old cooperative bulk handling infrastructure has been bought by corporates. New South Wales farmers are extraordinarily concerned about their predicament over there in dealing with the corporate sector of the multinational grain industry, and very envious of what we have here in Western Australia. Bear in mind that we also have the WA Meat Marketing Cooperative, which was an old statutory body which we turned into a co-op. It is owned and run by farmers and it markets directly into America and takes out a lot of middlemen. That is operating extremely successfully. I think this is the model that perhaps government should encourage agriculture to look at again. Unfortunately, on the east coast you have lost a lot of that.

Senator EGGLESTON —I suppose what we are talking about very largely is maybe Asian investment in Australian farming. How do you think that would affect our sales into South-East Asia and North Asia if there were very large-scale Asian ownership of not just wheat but dairy perhaps and the fruit areas?

Mr Norton —What politicians, academics and theorists tend to forget is that Western Australian and Australian farmers are some of the best in the world. To think that you can just bring an investor in and replicate that, defies logic. I do not think Australian farmers get enough credit for their ability from their political leaders and some of the academics that manage the finances of this country.

Senator HEFFERNAN —That is because farmers do not have to pay themselves overtime.

Mr Norton —That and a lot of other things, Bill.

Senator HEFFERNAN —Does the West Australian Farmers Federation give consideration to science predictions of future weather? South-west Western Australia has lost about 50 per cent of its run-off since 1975 and it is predicted to go even further and some of the more pastoral zones of the north become mosaically farmable. Have you built into your planning for the future—bear in mind that most politicians do not plan beyond the next election or preselection—where we are going to be? The greatest opportunity, as I understand it from CSIRO, is fish farming in south-west Western Australia at sea. Have you looked at what is going to happen to the agricultural lands in Western Australia by 2050, according to the science?

Mr A Hill —We are very firm believers in long-term planning. As Mike has outlined, we commenced a process last year to look at where the industry in Western Australia is going to be in 2020 and 2030. We genuinely believe that it is that level of thinking and that level of investment that we have not seen, and therefore we are on a three- or a six- or seven-year cycle of government. Then we get a significant change in policy. Meanwhile, the stock that Mike is buying this year he still has on his property. Absolutely, we are firmly committed to the concept of a drying climate. As a long-term Western Australian there is no question that it is getting drier here. What that is going to do to our agricultural industry is unknown, but as part of that process we did receive a small amount of federal funding to work closely with CSIRO and have a look at some of the potential climatic impacts on not only cropping but also broader agricultural industries. There is a lot of research going on—I talked earlier about the north eastern parts of the wheat belt. We have seen significant changes to cropping systems and cropping rotations in that area without getting into the finer points. Yes, it is being addressed. It is a bit of an unknown but we have certainly had  an in-season weather event last year that saw us drop from about 11.5 million tonnes to about 6.5 million tonnes of grain output plus there were some quality issues embedded in there. If that is the new future then we do not want to be at the new future before we have thought about how we are going to deal with it. So we are certainly involved in that. Part of that planning is the vision for agriculture, which we are quite happy to send to the committee. Perhaps we should have thought of that before the question. But it is very much within our thinking and very much looking to work with reputable science and scientific organisations to try to map out for Western Australian farmers what their climate future could be.

CHAIR —Thank you for participating this afternoon.

[2.23 pm]