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Tuesday, 21 August 2018
Page: 7985


Mr BROAD (Mallee) (17:40): I'm going to touch on the issue of climate change, because I always hear that people on our side don't believe in it and that believing in it on the other side's going to fix the problem. I want to do it from a very practical farming perspective that people might find of some interest. It isn't what you believe, it's what you do that matters in the farming sector.

Our family has had a farm or been in the farming district for years around Bridgewater. I still own a commercial farm. Yesterday I sold 132 lambs and they made $155.80. So I know something about agriculture. I'm a Nuffield scholar. I've looked at agricultural policy in about 70 countries. I think I can speak with some authority. It disappoints me to see that the member who just spoke is going to run out the door, because they'd find this very educational.

For the 124 years from 1894 to 2018 we've got the growing season rainfall figures for Bridgewater. This is very interesting. Did you know there were 18 very dry years in the first 62 of those years and 14 in the following 62 years? We tend to imagine, when we talk about climate change, what our parents can tell us and what our grandparents can tell us. My grandparents met in the war years. They began farming in 1946. They farmed through to 1976. If you could talk to my grandmother—she's now passed away—she would say, 'We live in a very good farming area. We always get the header out and we always harvest something.' There was only one year out of those 124 years that was a very dry year. They farmed through reasonably wet years.

From 1976 the seasons dried out again. The challenge for us, if we really want to address policy settings around agriculture, is to develop a farming system that doesn't just reflect what our grandparents experienced—because, historically, they were wetter years—we have to develop a farming system that is the long-term average over 124 years. That long-term average is dryer than what our grandparents and parents experienced. You can have the discussion around climate change or not, and I have a view that we should be responsible global citizens. We should plant trees and we should look after the environment. That is our moral obligation as citizens of the world. But we also need to realise that we have, in many ways, developed farming systems that have been based on historically high rainfalls and not over the last 124 years that have been dryer.

Let's work through the things we need to do if we're going to develop farming systems that will give us some long-term stability. Those things will be based around, firstly, ensuring that we have the right genetic varieties and farming techniques. We have crops in the Northern Mallee that still have the potential to yield, because of no-till farming techniques, because of the research and development that has been invested in from this chamber. It was John Kerin, when he was a Labor agricultural minister, who set up the R&D organisations where the government co-contributes with industry to try and drive productivity. That model, good policy, has been adopted and adapted and kept from when it was implemented in the Hawke era. So there are things that are bipartisan on this side and there are things that can really go a long way.

I want to touch on what the government is doing. I don't think this should be politicised—that somehow everything we're doing is terrible and everything they'd do would be better—because there's some good in it, and this policy, I think, will stand the test of time. Farm household support is really about grocery money, money for schoolkids, money for kindergarten and money for school uniforms. Essentially, what we're saying is that when a farmer is going through drought they shouldn't have to worry about how they're going to feed their family. Just like we have a safety net in our Centrelink system for people who are unemployed, in a drought situation you will have a farmer who may have a large number of assets but hasn't earned any money and we should stand by them. Just like we stand by someone who's unemployed because they haven't got any income coming in, we should stand by them. That is what the farm household support is about. It's $25,000 per couple.

The most important amendment here is a recognition that in the past the threshold of farm assets was $2.5 million and we are now increasing it to $5 million. That's because just because you have assets in a drought situation you have been precluded. Those assets might be land assets or in water allocation and the water allocation might be zero. Or you might have 1,000 megalitres of water. At the moment, at $4,300 a megalitre, that is $4.3 million worth of assets. So this amendment is about essentially lifting that threshold to $5 million, and I think that's sensible.

The other thing we've done is we've given two lump sum payments of $6,000 each. There is a lot of value in that because there's grocery money on the table but there are school fees that need to be paid. We don't think that country kids who are the children of farmers should be disadvantaged. We think they also deserve to have a decent school uniform, a new set of shoes and maybe some Christmas presents. That's really about trying to take off some of that household pressure.

We often have a view when we talk about farms. They often grab the farmer out there who's handing out a bit of fodder or trying to put a little bit of grain out to some drought-affected sheep—that is, the bloke. One of the things I've seen, having been on the board of the National Farmers' Federation and having been the VFF president, is that so much of the psychological burden of drought is on the partner of that farmer. Having some support around that household at least takes some of the burden off that partner. There are amazing rural women out there who are standing behind their blokes across New South Wales and Queensland at the moment. I want to say that this parliament pays tribute to you and your assistance. I know, having farmed through the 2002 drought, the 2006 drought, the 2007 drought and the 2008 drought, the burden that my wife carried when I was out there trying to make ends meet.

The other thing I want to talk about which is an important part of the package is the low-interest loans. I want us to just fully understand the advantage of these, because we somehow look at the low-interest loans and think not a lot of money has been placed down in the low-interest loans. But their purpose and really what Barnaby Joyce, the member for New England, was trying to do with those low-interest loans is to put some competitive pressure back on the banks. You've got to understand that it wasn't that long ago where a household loan was at five or six per cent but a farm loan would be at eight and nine per cent. Yet the level of equity that a bank was requiring on a farm loan was extraordinary, so there was really no risk for them. By us entering the market as a Commonwealth lender and saying, 'We will loan you money in the instance of a drought,' it forced the banking sector to close that margin drastically. Now you will see situations where a home loan has basically the same interest rate offered as a farm loan. That in itself has saved millions and millions of dollars of repayment in the farm sector.

When we think about the two things that we've offered—farm household support for grocery money and for schoolkids and support of the households and being there as a banking facility to put downward pressure and competitive pressure on the banks—they have actually assisted our farming sector. The other thing that we've done which is very important is essentially open up the market. In 1992, when we went through some dry times then, I remember we had old wethers that were worth nothing and we had to shoot them. My father couldn't do it. It was actually me and a friend of mine who, after school, at 17 years old, had to do it. He just couldn't get over the waste of it. But the great contrast between then and when we farmed in 2002, 2006, 2007 and 2008 was that, because we have opened up the opportunities for markets—instead of exporting to 12 countries, we now export sheepmeat to 96 countries—livestock commodities stayed high. That makes such a difference. If you're selling stock or having to unload stock and you're still getting $150 a head for it as opposed to getting nothing, that's additional income.

The other thing that our drought measures have made provision for is that farmers can actually park that income from the sale of drought-affected stock and it doesn't become part of the taxable income for that year. It's part of a financial mechanism so they can bring that back into production later. Those things are very good.

Another thing that I think has been instrumental in assisting us through dry times has been the significant investment in water infrastructure and in fodder retention infrastructure—tax incentives for hay sheds and for grain storage silos. There is also what farmers can now do with piped water. If there is one thing that climate change is showing us very clearly it's that we're having higher rainfall intensities and then longer dry periods, and so the ability of the catchment dam to hold water doesn't appear to be there anymore. Progressively, the Victorian government, in conjunction with successive federal government—governments of different persuasions—have rolled out piped irrigation infrastructure. I can see it taking place in my patch now. I'm still pretty keen to see some funding for the Mitiamo pipeline system, which is going to require $29 million—some from the Victorian government, some from the farmers and some from us. We haven't found that money yet. But the Wimmera Mallee Pipeline system, which was funded by the Victorian Labor government and the federal government in the Howard era, is a billion-dollar project. It's the biggest pipeline system in the world.

You would be surprised at just what you can do, Mr Deputy Speaker Buchholz. I put my own pipeline system on my farm. I ran three miles of two-inch polypipe with a double impeller Honda pump. You wouldn't believe it: a five-horsepower Honda pump, using a litre an hour, will deliver 100 litres a minute out the other side.

Ms Butler: What about in quarts?

Mr BROAD: Yes—it's incredible what you can do with pipeline systems now. What we're seeing across our agricultural regions is the rejigging of stock and domestic pipelines when, in the past, catchment dams may have done that.

People ask, 'Do you believe in climate change or not?' What we do know is that the climate is changing, what we do know is that we're building the tools, collectively, as Australians to adapt to that and what we do know is that our farmers are pragmatic. They're not getting stuck in the intellectual debate around climate change. What they're saying is: 'We see that it's drier on our farm. We see that we have different periods of dry—and it may be because of historic reasons and that we're getting back to our long-term average rainfall, or it may be because of emissions in the air.' They don't really care. They care about how they farm, how they make a living and how we ensure the market's available to them—how do we open up the financial products to them?

Can I also offer something that we haven't moved on and which I think we need to move on more—something that is taking place around the world. Saskatchewan in Canada has a drought insurance model, and I met with the USDA in Washington two years ago to discuss their arable drought insurance. 'Arable' is the word they use for broadacre cropping. We have yet to develop a really effective drought insurance model. I think that where we do need to land—and I'll just put this on the record—is encouraging people to have an FMD of the same value as their interest component. So if they have a million-dollar debt and interest rates are at six per cent, they should have $60,000 parked in an FMD. If it's dry they can then realise that FMD and make an interest-only payment, which will keep the bank out of their way for that 12 months.

We should also encourage an input-only insurance product. So if they're running up a fee for fuel, wheat, seed or fertiliser, they should be able to take an insurance product against what they write out in fees. Then, when we get that dry year and they don't harvest anything—and I have harvested one bushel an acre myself. If anyone wants to check what a bushel is, it's a third of a bag. You can work that out, less the seed that I actually put in the ground. In those dry years, they should be able to get their input components back, service their loans with an FMD and then not be out of pocket. They can roll the dice again and set themselves up for another year, because the most important thing anyone must have at the end of a drought is ensuring that they're well placed for productivity so they can then go forward and produce, because it will rain. It does rain.

To our farmers out there: we hear you and we're standing by you. To our farming families and those women out there in Australia, we pay tribute to you. It'll rain again and we'll be helping you until it does.