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Address to open the ABARE Regional Outlook Conference.

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5 May 2004

Address to open the ABARE Regional Outlook Conference

Rockhampton, Queensland, 5 May 2004

Introduction Good morning, ladies and gentlemen. I am delighted to be here and it's a pleasure to welcome you to this Regional Outlook Conference, presented by ABARE.

Today I'll draw on the theme of the regional Outlook conferences, "Innovation and Opportunities", while discussing a number of industry-specific and sector-wide issues.

Many of Australia's rural and regional communities and industries realise that if they are to survive and prosper, they must be innovative, and they must seize all available opportunities.

This morning, I would like to discuss recent developments in Australia's beef and grains industries - both of which are continually striving to improve industry practices and move with the times to secure their future.

I will also talk about the difficult issues of land clearing and management of native vegetation, which I know are of significance to many of you here.

And finally, touch on the status of water reform in Australia and recent developments in trade - which are both important issues for rural and regional Australians. They provide us with great examples of the value of seizing opportunities when they arise.

First I'm sure that you're all aware of the announcement by the Prime Minister last week of the Australian Government's Sugar Industry Reform Program 2004, worth more than $444 million over four years.

The program is a package of measures aimed at helping the industry through a transition phase to restructure, diversify and facilitate a long-term sustainable future for the Australian sugar industry and the regional communities that depend on it.

Overall the package provides the following measures:

● Sustainability grants to millers and growers worth up to $146

million, ● Re-establishment grants worth up to $95 million for growers and

harvesters, ● $75 million for competitive regional and community projects.

● $40 million will be provided for growers to restructure and improve

their on-farm operations and efficiency, and ● $27 million will be provided for business planning, counselling and re-

training assistance.

These measures are based on the understanding that industry is genuinely committed to significant reform in several areas. Industry will undertake to develop and implement genuine, realistic and regionally based reform plans that strongly reflect local priorities, to help achieve the needed changes and ensure the industry's long-term economic, social and environmental sustainability.

The Australian Government recognises that the beef industry is another major contributor to the economy of this region. The development of the National Livestock Identification Scheme (NLIS) demonstrates the beef industry's ability to innovate. It also shows the industry's willingness to embrace opportunities to exceed market demands on its own terms.

Traditionally, Australian producers have responded to industry challenges by adopting innovative farming practices and marketing programs. To keep their businesses profitable and viable, today's producers need to continue to develop management systems that will enable them to meet future market demands.

The recent detection of a single case of BSE in the Canadian and US cattle herds has focused critical attention on the safety of the world's more advanced beef production systems.

In the past, whenever food safety or animal health was an issue elsewhere in the world, Australia could count on its enviable 'clean and green' image to reassure its overseas customers that Australian beef was a safe product. However, we must rely on more than an image.

We must be able to clearly demonstrate that we operate effective systems for producing safe, quality beef.

It is generally agreed that future markets will be able to rely on quality and safety driven, and comprehensive traceability.

Australian beef producers must meet, and I believe can exceed, increasing international market expectations about the safety and integrity of our livestock and livestock products. The system must be able to quickly and accurately trace livestock during an emergency disease outbreak.

With this in mind, industry agreed with Australian, State and Territory Governments several years ago to develop and implement an effective, nationwide, whole-of-life livestock identification system.

The NLIS is an excellent example of Australia's innovative spirit in operation, and I am confident that, through NLIS, Australia will be ready to meet future market demands.

The grains industry has also embraced an opportunity to innovate and secure its future.

The 2004 Grains Week conference in late March saw the launch by the grains industry of its strategic plan for the next 20 years, "Single Vision".

"Single Vision" aims for an integrated, demand-responsive, sustainable grains industry, to become a global leader in an increasingly competitive world market. I congratulate the Grains Council for its work with the support of the Grains Research and Development Corporation in developing this vision.

A key component of the vision is the establishment of the Grains Business Forum and the Grain Producers Forum to bring together major players from across the industry to address the fragmentation of current industry structures. A unified industry is vital in formulating policies and in presenting views to Government and international trade forums.

The industry's strategic plan foresees major changes in demand for grains and recognises that changes in technologies, information flows and business structures are necessary for the grains industry to meet future challenges.

The Australian Government - as a partner with the industry - can help it achieve its vision. We are committed to continuing joint Government/industry research and establishing national research priorities.

The highly successful R&D Corporation model is an excellent example of the commitment that Government has to working with industry. The R&D model has delivered a wide range of benefits to industry and the community since 1989.

The Australian Government and rural industries - via rural Research and Development Corporations - invest in R&D to meet the needs of their industries. This inturn delivers benefits across the economy and underpins prosperity for rural industries and the regional communities they support.

Australia's RDC model is recognised as world's best practice, and ongoing Government commitment will ensure that Australia's primary industries continue to rank among the best in the world.

The development of innovative plans for the future cannot happen without getting the fundamentals right. The management of native vegetation and land clearing provides an example of a system requiring fundamental change.

The Government recognises that a balance is necessary between development and conservation interests. The recent draft report by the Productivity Commission into the Impacts of Native Vegetation and Biodiversity Regulations has acknowledged the difficulties with the current approach.

The draft report is highly critical of current state regulatory approaches, indicating that they are less effective than they could be. The Commission recommends less regulation. But where regulations are necessary, they should be 'best practice', and subject to regular review and reform.

The Commission proposes that landholders be given more responsibility for solving localised environmental problems. At the same time, landholders should expect to bear the cost of conservation that benefits them individually or as a group, and the community should pay for the provision of environmental services from which it benefits.

This approach would be more equitable. More importantly, it would provide positive incentives for appropriate retention and management of native vegetation. Environmental objectives would be met in flexible, innovative and cost-effective ways. Also, payments to landholders for 'public good' conservation would lead to increased scrutiny of costs and benefits.

The Government will examine the Commission's final report closely.

The recent controversy surrounding land clearing in Queensland is a case in point of the problems with current state regulatory approaches. We all agree that land clearing in Queensland could be better managed.

The Australian Government offered financial support. But we expected that any new regime would be based soundly on science, and that landholders would be consulted and treated fairly in the whole process.

Unfortunately, the Queensland Government refused to cooperate with landholders who were seeking to develop workable land clearing regimes.

The NSW Government - on the other hand - was able to negotiate with conservationists and landholders to achieve an agreement acceptable to all parties.

The Government is hopeful that some of the recommendations contained in the Productivity Commission's final report will be useful in developing solutions to ensure that these examples become a thing of the past.

Just as fundamental changes are necessary to the current approach to vegetation management, change and innovation will be required to improve Australia's management of water resources.

To that end, the Council of Australian Governments (COAG) has agreed to develop a National Water Initiative to drive the next phase of Australian water reform.

The National Water Initiative will focus on a number of key objectives. These include a framework for nationally compatible water access entitlements, a more efficient water market and new arrangements for the management of water at all levels, from aquifers to catchments.

The Initiative will feature the principles of user-pays and full cost-recovery. It will aim to encourage investment and maximise the economic value created from water use, while ensuring sufficient water to maintain healthy rivers.

While most of these changes apply to rural water users, an urban water reform component will also be included. It will reinforce the need for urban users to use water efficiently, promoting water recycling and the adoption of more efficient technologies.

We are moving towards a market in which resource allocations are determined by prices rather than by top-down government policy. Industry would come to expect water to be managed using market measures similar to those applied to other goods.

In the future, the Initiative should ensure that irrigated industries aim to produce more with less water. The industries will monitor and report on their own water management performance and be involved in water trading as well as land and product trading.

Irrigated industries will have sufficient certainty over future resource access to support the investment in improving output and efficiency. They will be able to continue to support rural communities and other rural industries.

Finally, they will enjoy an improved natural environment in which environmental water requirements are clearly defined and planned for, and managed to achieve accountable results.

The National Water Initiative is an opportunity for a win-win outcome for production and the environment, and builds on the fundamental water reforms of the past 10 years.

We are working with the State and Territory Governments to develop an intergovernmental agreement for the Initiative by the middle of this year.

While the Australian Government has been working hard to ensure a competitive and sustainable environment for our industries domestically, we are also working to improve the competitiveness of our industries in overseas markets.

Over the past twelve months, some of the Government's successes in opening up new markets for our exporters have included negotiating Free Trade Agreements with Thailand and the United States.

There are already strong links between the Australian and Thai economies, with our agri-food exports to Thailand worth around $680 million in 2002.

The FTA with Thailand will bring major benefits to Australian food and agricultural producers and exporters, and will eventually lead to genuine free trade in all products.

From the beginning in January 2005, there will be an immediate elimination of Thai tariffs on a range of products important to your region, including grains, dairy products, processed seafood and tropical fruit.

Australian industries will also see the phasing down of high meat, dairy and horticultural tariffs and upfront country specific preferences for products such as fresh potatoes, skim milk powder and liquid milk and cream.

The Government is convinced that the US FTA will also bring about real improvements in the access for Australian agricultural products. From January 2005, two thirds of agricultural and food tariffs will go to zero immediately and real increases in access for goods currently limited by quota will be achieved over time.

For our meat industry, this agreement provides greater access for our number one export to the US - beef.

The agreement delivers a potential $22 million benefit by eliminating the in-quota tariff on our already significant beef exports to the US and adds a sizeable and growing increase in quota volume. Over-quota duties will also eventually be phased out.

In dairy, we will more than double the existing access for those dairy products currently constrained by quotas. This means our access will grow by an average rate of five per cent a year.

The deal will also see the duty dropped on all our wool, lamb and sheepmeat exports. And further, the FTA will do away with the current duties on all our major fresh exports of horticulture products and gradually eliminate the duty on wine.

These are significant gains in access opportunities that all exporters should be looking at seriously.

While the Government will continue to pursue bilateral agreements where this makes good sense, we have not been sidetracked from more

comprehensive agricultural trade reform through the WTO Doha Round of agriculture negotiations.

We recognise that multilateral trade rounds can be long and difficult affairs, but they still offer the greatest potential rewards.

Together with our partners in the Cairns Group of agricultural fair trading nations, we are keeping the pressure on the major agricultural subsidisers - the EU, US and Japan - to live up to the ambitious Doha mandate of substantial improvements in market access, reductions in trade-distorting domestic support and the phasing out of all export subsidies.

I have outlined this morning the innovative and forward-looking approaches being adopted by Australia's grains and beef industries. These industries provide a great example of the benefits of taking opportunities when they arise, to ensure that Australian producers can continue to hold their own in world markets.

I hope that in the near future, all producers will be able to take advantage of the opportunities presented by an improved regulatory and trade environment.

I encourage you to take every opportunity during today's conference to learn from your fellow participants and to contribute your knowledge and experience to the discussions.

I am delighted to officially open this conference, and to wish you well in your deliberations today.

Senator Troeth's Media Release