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Thursday, 29 May 2003
Page: 15435

Dr STONE (Parliamentary Secretary to the Minister for the Environment and Heritage) (12:24 PM) —I rise to speak on the Appropriation Bill (No. 1) 2003-2004. The economy of this country is a consequence of the entrepreneurial spirit and work ethic of Australian men and women, and prudent and strong federal government leadership. These have produced a continuation of growth and expanding opportunity despite the internationally turb-ulent times and the crippling impact of drought on regional economies. Our econ-omic strength is one of the wonders of the developed world. The budget has delivered additional investments into national security, education, aged care, road funding, and environment and heritage protection. At the same time—despite the drought, the expend-iture incurred in liberating the Iraqis and the extra costs associated with national security issues—Treasurer Peter Costello was still able to deliver tax cuts of over $10.76 billion over four years and to retire more of Labor's legacy of debt.

This week, as we focus on the continuing struggle of Indigenous communities as they recover from the impacts of the usurpation of their land, I want to say how pleased I am with the increase in funds in the budget for Indigenous programs that are delivering real change to the lives of our first Australians. The Indigenous Protected Area program, for example, funded under Natural Heritage Trust mark 2, now has a more secure funding stream and participants can better plan for the future. Seventeen IPAs have been voluntarily proclaimed so far, covering more than 13 million hectares of country owned or managed by Aborigines and Torres Strait Islanders. This country now becomes part of the national reserve system. Much of the country now returned to Aboriginal ownership or control is in a seriously degraded condition, eaten out by feral species and overgrazing, invaded by weeds, with the soil eroded or compacted and with waterholes and waterways damaged, destroyed or polluted.

The IPA is a voluntary scheme which helps Indigenous land managers first to strategically plan and then to implement works to restore their country and to protect unique ecosystems and biodiversity. They are tackling the problems of goats, donkeys, camels, rabbits, cats, foxes, inappropriate fire regimes and weeds. Elders locate critically endangered native flora and fauna and work with scientists who can then better understand how to rescue those species. Some of our IPA participants are teaching their non-Indigenous neighbours how to bring back country that has been pushed to the limits. IPA participants develop work programs to maintain and sustain the country intergenerationally at the same time as they look to new ways to live off the land—for example, as providers of ecotourism or bush tucker enterprises, outdoor recreational specialists or providers of educational tours.

The IPA program is one of the many great success stories made possible by NHT funding, the biggest sum ever committed by any government to environmental sustainability works in this country. When combined with the National Action Plan for Salinity and Water Quality and other environmental initiatives, it is clear that the John Howard led government has, in the year 2003-04, delivered the biggest ever injection of federal funds for sustaining and conserving our great country's natural resources. Natural resource protection, conservation and remediation are, we believe, the biggest challenges facing all Australians in this century. The scale of our budget commitment to the environment reflects this concern.

As the member from Murray, as well as the Parliamentary Secretary to the Minister for the Environment and Heritage, I am sharply focused on the future of the Murray-Darling Basin, as are my constituents. Access to good quality water is the lifeblood of the region's economy, whether that be farming, manufacturing, urban consumption or tourism. Living and working amidst the natural beauty of the river land and forests, waking to the sounds of bird life and coexisting with the native fauna anchors and enriches the lives of communities and gives individuals' lives special meaning and purpose. We know the environment is in serious trouble. We understand that we must urgently take stock of all water consumption and management regimes that have left us with blue-green algal blooms poisoning the waters, feral fish supplanting native species and fouling wetlands, some 1,500 kilometres of red gum dying on the banks of the Murray from Euston downstream, houseboats blatantly fouling waters with fuel spills, grey water and human waste dumping and making noise and playing havoc with riverside habitat, and jet skis and speedboats eroding banks and frightening wildlife.

Tourism and recreation in the river lands is a significant activity, economically and culturally, but it must be better regulated and managed. We have to cut through the problem of cross-border anomalies where the mix of jurisdictions from New South Wales, Victoria and South Australia means regulations are not aligned. Critical areas—for example, regulating river use behaviour and the location and number of pumping outstations for houseboats—are left in the too-hard basket.

Right now, the states of the Murray-Darling Basin, the ACT and the Commonwealth are consulting on what environmental flows need to be returned in the future to sustain the Murray-Darling ecosystems. Regional communities can be assured that there is an acknowledgement that sustaining human community or human capital is equal in importance to sustaining natural capital, given that the latter depends on the former to invest in and manage the ecosystems sustainably. There is a close interdependency between human communities experiencing a life they consider worth leading for themselves and their children and their desire to invest in and protect and sustain the land and water that underpins their existence.

The development of models of ecosystem health indicators now being produced at the request of the Murray-Darling Basin Commission are hugely important in convincing basin communities that we have some idea about what volumes of additional environmental flows are needed to rescue the now threatened wetlands and flora and fauna and to improve water quality. We must be able to assure those who may have to relinquish some of their water rights—that is, the basis of their livelihood—that their sacrifice will deliver the outcome of a healthier river system. Nothing else will do.

I commend the John Howard government for its open-ended commitment to drought relief in this federal budget, with an expectation that at least $700 million will be expended in the next financial year. At the same time I want to condemn the Victorian Bracks led government, which has now withdrawn all drought aid to Victorian farmers—aid which was offered during its electoral campaign fervour in late 2002. The Victorian government package was announced months after similarly impacted farmers in New South Wales had been offered state funded support. The New South Wales measures included fodder subsidies. You can imagine the desperation of farmers in northern Victoria as they watched the transport convoys loaded with fodder crossing the rickety Murray River bridges and head for the subsidised dairy farms and livestock enterprises of New South Wales.

Some six months later, by the time the Victorian government noticed that it was electorally smart to offer some assistance to Victorian rural enterprises hit by the worst drought on record, it was too late. Any fodder was in critically short supply and way beyond the means of Victorian drought stricken farmers. A month or two ago rural communities were rocked by the announcement of the Victorian Minister for Agriculture, Bob Cameron, that all state drought aid to farmers was to be cancelled on 7 May. I hope the shadow spokesman for the environment, the member for Wills, is paying attention to this.

This drought has brought out the worst in political opportunism and callous disregard in the case of the Victorian government, but it has also given rise to the steady commitment of the federal government and to some extraordinary acts of kindness and generosity displayed by the wider community. For example, between 4 January and 11 January this year the farmers of King Island rallied to the call for fodder by donating 1,000 tonnes to Victorian drought relief. Farmers offered another 4,000 tonnes, but they could not afford to transport it to the mainland. There was a heartfelt plea to the Bracks government to cover the cost of the freight. Victoria's Deputy Premier, John Brumby, refused point-blank, stating that there should be plenty of fodder in Victoria. What a disgrace! Was he so out of touch or was it simply that he did not care about the crisis?

The Bracks government has also point-blank refused assistance to Goulburn-Murray Water—a state owned instrumentality—which is forced to charge drought devastated farmers for water it cannot deliver. Two hundred and eighty-eight farmers cannot pay and Goulburn-Murray Water cannot carry the debt. Due to the lack of water for sale over the last three years, and, despite raising prices by nearly 30 per cent, Goulburn-Murray Water is unable to fund essential major storage safety works—for example, at Eildon Reservoir. They need $12 million for that reservoir, which generates billions of dollars in farm gate value and tourism annually, underpinning the Victorian economy.

This is the first collapse of the irrigation system in 100 years. The Victorian economy has done very well out of the hard work and on-farm investment of irrigators, but in this hour of need it is simply walking away. Goulburn-Murray Water needs only $12 million to make Eildon Dam safe, but Premier Bracks of the Victorian Labor government says no. Instead, the Victorian government has provided $400 million for a new ticketing system for Melbourne's subsidised city commuter transport system, $27.8 million for a new footbridge over the Yarra, and $425 million for the redevelopment of the MCG northern stand. The Bracks government rejected a $77 million contribution from the Commonwealth government to assist with the MCG project because their union bosses told them not to touch the money.

So far, the Bracks government has received over $400 million in competition policy payments from the federal government, including for water law reform. Not a cent of these funds have found their way into the pockets of the water supply or farm sector. This is breathtakingly short-sighted. Clearly the Victorian state government does not understand or chooses to ignore the severity of this natural disaster. It has walked away.

Drought Force, an excellent federally funded government program introduced five months ago, may rescue at least some of our regional work force that is now looking at internal migration to capital seaboard cities. I commend the Commonwealth government for this extraordinarily far-sighted, humane and compassionate program. In my electorate of Murray some 55 individuals now do volunteer work on farms—they are paid a Newstart allowance under this program. Those who are monitoring the situation closely anticipate that at least 30 per cent of Murray electorate farmers may not be able to recover their losses sufficiently to re-establish herds and restart enterprises when the drought breaks. There is also a significant number of farm dependent businesses who have already lost too much equity in enterprises and who will struggle to continue.

This drought is a natural disaster. The next three months in particular will be the hardest of all. We are looking at less than 10 per cent of irrigation allocation at the opening of the season for the Goulburn system in August and possibly less than 30 per cent for the Murray system. I call on the Victorian Labor government members of the Senate and the House of Representatives to insist that their Labor colleagues in Spring Street, Melbourne revisit the decision to withdraw all drought aid to Victorian farmers. I do not know how members opposite can sit here with clear consciences if they do not demand the return of some drought aid to Victorian farmers. This is uncharted territory in terms of how we will survive. We need both state and Commonwealth support.

I commend the extraordinary efforts now being made in my community, with rural towns and small district communities undertaking family days and information sessions, trying to make do. The Shepparton Centrelink office has done an extraordinary job. With regard to primary producers' futures, however, the drought is just another blow in their struggle to farm sustainably. With regard to exported primary production, primary producers typically compete in corrupted, subsidised and managed markets, where any lowering of tariffs is often supplanted by non-tariff barriers aimed at protecting domestic producers. As well, exchange rate fluctuations can negatively or positively affect Australia's export earnings overnight, and the exporting competitors in these markets are often advantaged with home country subsidies, aid trade deals, and the like. It is an extremely tough world out there in agribusiness trade land.

Back home, there is no respite in domestic sales. In this country, a virtual duopoly dominates the food and beverage retail sector. This gives Woolworths and Coles-Myer, the two giants, the power to exert extraordinary downward pressure on the prices they pay to suppliers. And at the moment these two are particularly anxious to entrench their positions as they face a new era of the globalisation of retail food chains. Mr Roger Corbett, Chief Executive of Woolworths, spoke for his company and his rival when he said:

Instead of focusing on getting margins up in product categories, we are interested in getting our costs down.

This translates into: `We intend to keep prices down and we will do this by finding efficiencies and paying less to our suppliers.' Mr Corbett was hugely pleased to announce that $1 billion was sliced from Woolworths' costs over the last four years. He seemed particularly pleased to report that at least half of that came out of the pockets of dairy producers.

The big two can squeeze their suppliers because of their extraordinary purchasing power. Both use the cost reduction strategy of increasing the number of home brand products. Woolworths in particular is also pursuing the strategies of `Everyday low prices' and two-year tendering for suppliers with only one year of price agreement. Home brands deliver maximum returns to the retailer. They force the supplier to become a price taker, with their product vulnerable to substitution by any imported or domestic supplier who will accept a few cents less. Even suppliers of premium brands are being pressured to also supply so-called top quality home brands that will then compete directly with their own branded product. Woolworths `Everyday low price' strategy drops suppliers' prices and takes away their ability to initiate supermarket specials. Specials can move glutted stock for a processor or grower due to seasonal conditions, for example. Without this control over specials and advertising, suppliers lose their ability to optimally manage their stock. The supermarkets take total control.

In relation to the supermarkets' tendering system for suppliers, where five per cent can mean the difference in a farm product being undersupplied or oversupplied, and where there is virtually no alternative point of sale for the produce, there is invariably pressure on a supplier to submit a price near to or even below the costs of production. The supermarkets' pricing strategies and their use of their market power to push food and beverage suppliers' prices down has succeeded; in the case of Woolworths, they have succeeded in taking $500 million out of the pockets of dairy suppliers so far. Dairy prices in Victoria, for example, collapsed by 30 per cent over three months last year, just as the drought was beginning to bite. Another $500 million or so, Woolworths tell us, has been found through a combination of improved efficiencies and paying lower prices to a range of other primary producer suppliers.

So Australia's households will go on enjoying some of the cheapest and best food in the developed world, Woolworths and Coles-Myer shareholders will continue to see nice returns on their investments and the suppliers of those food and beverage products will be driven to survive on substantially less. Some commentators, including NGOs, wonder why some farmers are not fencing out their remnant vegetation, installing nutrient management systems, revegetating slopes, buying new and more efficient irrigation infrastructure, replacing lost nutrients, paying their workers more, reducing stocking rates, replacing introduced species with native pastures, restoring wetlands, tackling weed invasion, and exterminating feral animals. I suggest they go and talk to customers in the supermarkets. Australians need to understand that their cheap food is in fact costing the earth.

A range of farmers responded to a survey undertaken by Allen Consulting in 2001, the year before the major price collapse in the dairy industry. In a document called Repairing the country they quote the responses from land-holders who were asked to identify what factors prevented them from addressing environmental problems. Over 75 per cent cited a lack of funds. Another 67 per cent cited low commercial benefits. My farmer constituents put it this way: you cannot be green when you are in the red, and you cannot pull up your socks when you have none. In a classic `blaming the victim' statement, the Wentworth Group in their Blueprint for a living continent proclaimed:

We need to change our institutions to remove the hidden environmental subsidies to agriculture where farmers impose costs on other people or future generations.

They do somewhat redeem themselves in the next paragraph by saying:

These subsidies generally benefit consumers, not farmers, through lower prices, and often hurt farmers who are trying to be sustainable by making them compete with others who are not paying the full costs of their actions.

Farmers are simply not offered prices which cover the full cost, including the environmental externalities, in the production of food and fibre—and I have just been discussing why not. But it can and must be different. In a book soon to be published, entitled Agrifood Globalisation in Perspective—Internal Restructuring in the Processing Tomato Industry, Associate Professor David Burch of Griffith University and Bill Pritchard, lecturer in economic geography at the University of Sydney, compare Australia's and Canada's systems of regulating manufacturer-supplier relationships so that the value to be derived from the sector is shared and the industry remains competitive and sustainable and even grows.

In Victoria some 10 years ago we dismantled what was a suboptimal but at least a working system of tomato industry supplier-buyer price negotiation and mediation. But it was replaced with the Commonwealth regulation which outlawed tomato growers' rights to even talk in the pub together about contract prices. While collective bargaining was lawful for workers in the labour market, more vulnerable micro-businesses like farmers were breaking the law if they sought to collaborate.

I commend the wisdom of the Dawson review of the Trade Practices Act, which identifies the inequities in the system. I also commend the initiative of the John Howard government in the establishment of the Grocery Ombudsman which, interestingly, has not been asked to deal with a single retailer-supplier dispute—due, I believe, to the huge potential for retaliation—but is now proving to be a godsend for those in supplier and wholesaler disputes.

We need to consider how other countries have dealt with the inevitable vulnerability of primary producers to be price squeezed and the consequences for them as managers of our natural resources when they are pushed to the brink of viability. It also has to be remembered that farmers are no longer necessarily in control of the decisions made about land use on their properties. They are, for example, often required to allow onto their properties contract harvesters employed by multinationals processors which are inappropriate for the best environmental protection of their soils. We have examples on Tasmanian vegetable farms of this.

We must find ways to transfer back the embedded subsidies in cheap food so it can be reinvested in environmental remediation and improvement of land and water management. It is essential that this be done if we are to protect the country which sustains the people and sustains our futures. Our supermarkets must and can behave ethically. They need to look to Sainsbury's and Tesco as two examples of supermarkets that have understood what is at stake if they simply push their suppliers to the brink. The development of crop and animal protocols which translate into higher price incentives for suppliers has been done elsewhere. Australians must look to those examples. (Time expired)