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Address to a meeting of the R&D Corporations, Canberra



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BS»8EAustralian Department of Primary Industries & Energy Senator The Hon Judith Troeth Parliamentary Secretary for Primary Industries and Energy

Address to a meeting of the R&D Corporations,

Rydges Capital Hill, Canberra, 27 July 1998

Ladies and Gentlemen, thank you for inviting me to address today's meeting of the Research and Development Corporations.

I would especially like to thank John Blood and the Cotton Research and Development Corporation for organising this meeting and allowing me to share with you some of my thoughts on rural R&D.

As you know I wrote to you all earlier this year to tell you of the new portfolio arrangements where I, as Parliamentary Secretary to the Minister would take responsibility for the day-to-day management issues responsibility, while the Minister will continue to take responsibility for the overall R&D policy.

I also have responsibility for levies management, which, of course, ties in and complements R&D management.

Over the past few months, I have had the opportunity to meet with many of you individually, which I value as get to know more about the intricacies of R&D and the Corporations.

Personally, I am excited to be more closely associated with such a dynamic R&D investment consortium. Especially one that is linked to such a vital sector of the Australian economy - the rural sector.

The Action Plan for Australian Agriculture was launched last week by the Minister, which outlines this Government's vision for agriculture over the coming decade and what is being done and needs to be done to achieve that vision.

The vision in this joint industry and government plan is that within ten years:

"Australian agriculture will be based on profitable, competitive and sustainable family farm businesses that are recognised as world leaders in their production efficiency, product quality, innovation and ability to supply and respond to market needs.'

This vision and plan has come about through a long process of consultation and formulation and has been developed by industry for industry. It will continue to be a long process and challenge for us all, and you as leaders in primary industries and your Corporations as investment managers in your industries have an integral role in achieving this vision and following the action plan.

Clearly innovation is an important element in our strategy to increase the international competitiveness of our industries and the prosperity of this country.

Specifically, in terms of R&D and the Corporation model, the Action Plan confirms the high priority and commitment we have for the current system the RDC Model and its funding arrangements and the need to focus on sustainable land and water use, biotechnology, pest and disease control and eradication, and opportunities for value adding and market development.

We see the R&D Corporation Model as being the best way of delivering a wide range of public and industry benefits.

The Government's matching dollar contribution recognises these dual benefits, and also recognises that priority areas for R&D, such as ensuring the sustainability of the natural resource base, are best pursued through a partnership.

In this context, we have asked you to report on the public benefits flowing from your R&D investments, and to explain how you are helping to achieve the Government's broad priorities. I don't think you need me to remind you how important this is.

You will recall the 1997 Mortimer Review of Business Programs. While its specific recommendations relating to RDCs were not accepted, the Government does accept Mortimer's philosophical approach that Government business programs must provide economic benefits that "extend beyond the private individual beneficiaries to the broader community".

As per the normal cycle of government funding for any program, it is inevitable that the R&D Corporations will continue to be under scrutiny.

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In effect, RDC funding arrangements mean that a broad range of benefits to the community must be demonstrated and delivered convincingly, to ensure continuing Government support.

Biotechnology

The range of benefits flowing from R&D is infinitely broad and particularly well-illustrated by biotechnology in general and genetically manipulated organisms (GMOs) in particular. This technology, and all its derivatives, can deliver higher yields for producers, better food safety and nutrition for consumers and more sustainable farming practices.

I mention biotechnology, and especially agricultural biotechnology, because the Government accepts that we are on the cusp of a new revolution; a revolution that in future years will be seen to be as significant as the industrial revolution of the 18th and 19th Centuries.

Somewhat prophetic, is a statement by Alvin Toffler in a recent interview with Claudia Dreifus of the New York Times Magazine where Dreifus asks "What are some of the changes you see on the horizon now".

Toffler's categoric response was:

"Genetically altered agriculture. What that will mean is the customisation o f agricultural products, and the ability to grow food in parts o f the world no considered non-arable. The ability to tailor crops to local climatic and soil conditions may make the difference between hunger and survival......"

This revolution is beginning now. T he challenge for the Government is to foster an environment that will ensure our rural industries prosper.

We are establishing a clear regulatory framework for GMOs to instil public confidence in the way biotechnology is managed, and also to ensure Australia can realise many of the benefits the new technologies will present.

The Government is now examining impediments to the adoption of new biotechnologies, such as problems with intellectual property and pricing and access to key genetic material. Our aim is to eliminate, or at least reduce the effects of such impediments.

Clearly, RDCs have a pivotal role to play in the research and development aspects of this new technology, to ensure that our industries are best placed to own, grow and sell better products, in new ways.

As the general level of understanding of these new technologies is low, however, there is also an imperative to get out and sell their benefits to the wider community. I see the RDCs as having an important role to play in this educational process.

You have close links with your industries and producers, and through them to the rural communities. All these people need to be made aware of what's happening with regards to biotechnology because their support is crucial.

Better Practice

Earlier, I said the RDC program was working well.

While 'working well' is an apt description, I'm sure you appreciate that we live and work in a very dynamic world - a world where we should always look for ways of doing things better.

One of the things that impresses me with the RDC Model is the diversity of approaches used by the Corporations in getting things done. This was very evident in the recent round of planning documents that crossed my desk.

Some Corporations focus on the production end of the spectrum, others span the whole production, processing and marketing spectrum.

Some Corporations have small discrete populations of producers to service; others have their clients numbering in the tens of thousands, and spread from one end of Australia to the other.

I believe this diversity is one of the strengths of the RDC Model. Because each of you quite often have unique problems and opportunities to confront, you have to be innovative in solving them.

Through that innovation you may be defining a better way of doing business, or best practice, that can be adopted by other Corporations.

In this regard, I am pleased that you are exploring best practice in your activities. I refer, of course, to the benchmarking project which I note is on your agenda today, and I encourage you in those endeavours.

I understand one aspect of the benchmarking project is to take a look at technology transfer and commercialisation to help improve the way R&D investment, or new knowledge, is translated into real outcomes. In other words, achieving a practical application within an industry.

This is important to me, as I strongly believe in a service ethos. Only by delivering the goods can you be assured of continuing Government and industry support.

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The CAC Act

We are living in a changing world. And although that is a bit of a cliche, it is certainly evident in the way we regulate our corporations.

Last year, the Commonwealth Authorities and Companies Act 1997 (CAC Act), was passed by Parliament. This legislation aligns the corporate governance and accountability arrangements for statutory authorities with those applying in the commercial world. The Government is committed to maintaining this alignment.

In essence, we are aiming for world best practice in corporate governance and accountability to Australia.

Corporate Law is being progressively amended and, as a consequence, so is the CAC A ct. Most recently, a substantial suite of amendments involving both pieces of legislation and, in particular, providing more elaboration on Director's duties, was introduced into Parliament.

In this changing corporate environment the challenge for RDCs is not only to stay abreast of the changes, but also to adapt and improve their internal procedures so that the Corporations not only comply with the law, but give full effect to its intention of applying world best practice in corporate governance and accountability in this country.

In the commercial world, world best practice and accountability is mostly judged by the results on the bottom line. For non-profit and government organisations, it is not as simple and is an issue that Government's are continually struggling with. You could say that it is the voters who decide ultimately, but along the way we do have to put in place some measures that ensure the customers or voters are getting the outcomes they want.

Much of the responsibility and accountability for the RDCs rests with the Boards. I understand there are a number of new ways of measuring the performance of Boards. This is something that will be looked at during the upcoming review of Board selection processes, where one of the core issues will be to determine what makes an effective Board.

I encourage you all to participate in and contribute to this review, and especially to consider this threshold question because an effective Board is at the very heart of the RDC Model.

The ANAO Audit

In talking about best practice and issues relating to corporate governance and accountability, I see some opportunities arising from the Australian National Audit Office (ANAO) review into the portfolio's statutory authorities, which is currently underway.

While I concede that audits can often inspire fear and trepidation, and I appreciate that you must feel that you are being endlessly reviewed, I tend to take a more positive view and I hope you will too.

The ANAO will be looking at, among other things, the accountability arrangements and how they relate to the new framework provided by the CAC Act. I expect they will be making a number of recommendations to improve the overall accountability of all the portfolio statutory authorities, including RDCs.

I expect that they will provide some guidance on ways to improve planning and reporting arrangements. In effect, they will be helping to define best practice in accountability under the CAC Act, and I encourage you to respond positively to their recommendations.

While the ANAO's recommendations will no doubt vary in how they impact, I feel it is important that you recognise and apply best practice when it is identified.

I feel strongly about this because I see accountability as a critical element in meeting the information needs of your two most important stakeholders: industry and the Government.

Show us that you are doing what you were set up to do. Show us that you are employing best practice. Show us that you have an effective Board. And show us that you have an ethos of innovation permeating all your activities, and I am confident that you will continue to attract the support of industry and Government.

Thank you for your time and for giving me the opportunity to talk with you today.

& I

http://www.dpie.gov.au/dpie/pr/speeches/troeth/rdcorp.html 09/10/1998