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Rural and Regional Affairs and Transport Legislation Committee
09/02/2016
Estimates
AGRICULTURE AND WATER RESOURCES PORTFOLIO
Australian Bureau of Agricultural and Resource Economics and Sciences

Australian Bureau of Agricultural and Resource Economics and Sciences

[19:46]

Senator STERLE: Senator Cameron was talking about in the early part with MLA today about productivity sort of stuff but I just want to go straight to the point from ABARES point of view, if we can. Ms Schneider—is it?

Ms Schneider : Yes.

Senator STERLE: That is a nice Irish name.

Ms Schneider : The productivity expert is coming to the table.

Senator STERLE: Mr Gooday?

Mr Gooday : That is me.

Senator STERLE: Okay. How are you? Can ABARES provide us with information as to what research you have identified as the main issues for increasing sustainable productivity in agriculture?

Mr Gooday : We have not done any research that identifies specific bits of research. We have done some work that looks at R&D in general and the impact of that on productivity, but nothing that identifies specific bits of research.

Senator STERLE: Do you plan to do some that specifically targets productivity?

Mr Gooday : No, we do not have any in mind. That is usually done by the RDCs that commission those bits of research.

Senator STERLE: What are the major threats to Australia's long-term agricultural productivity growth in ABARES' mind?

Mr Gooday : I think the general slowdown in productivity growth across developed economies is a bit of a concern.

Senator STERLE: Can you elaborate a bit more for us? I know Senator Heffernan is going to come out with 'What falls out of the sky—'

Mr Gooday : There has been a slowdown in agricultural productivity growth identified in Australia but also in the United States and Canada, and to a lesser extent in New Zealand and western Europe. There is a bit of debate about the extent of the slowdown and when it started and what the cause of it was. So some of the likely things in Australia that have been identified have obviously been the run of poor seasons recently. We have also spoken about the reduction in the growth in R&D expenditure and how that might have a long-term impact—

Senator STERLE: I want to go on to that, yes.

CHAIR: Can we just can I just have a little crack?

Senator STERLE: Yes, of course you can.

CHAIR: Those are sort of bureaucratic well-workshopped answers which mean nothing to someone in the paddock. How much money did the developed world spend last year on agricultural research?

Mr Gooday : I do not know the answer to that question.

CHAIR: $40 billion. How much did the world spend last year on Defence development?

Senator STERLE: A couple of trillion? Is that right?

Mr Gooday : How much?

Senator STERLE: He is cheating; he knows the answer.

CHAIR: $1.4 trillion.

Senator STERLE: I was off. Okay, Chair—

CHAIR: Yes, but, the greatest challenge to the human race—surely ABARES has tuned in. I mean you can fill yourself with graceful bullshit statements and cocktail parties and doctors of philosophy and everything. What is the greatest challenge facing the human race?

Senator STERLE: Feeding them.

Mr Gooday : I do not think I am qualified to answer that.

CHAIR: There are two. There is the low intake of antibiotics in the food chain; and the second one is the global food task, which does not have a solution. Does ABARES study the global food task?

Mr Gooday : We have done quite a bit of work on the increase in food demand.

CHAIR: Give us what ABARES knows about the future of the global food task and the population growth—barring a human catastrophe. Never ask a question unless you know the answer.

Ms Schneider : I am not sure that I can answer specifically but I think our research on the growth in world food demand over the period to 2050 shows roughly a doubling in food demand in that period.

CHAIR: And how much reduction in the capacity of the surface of the land above sea level to do that?

Ms Schneider : I do not know the answer to that.

CHAIR: To help you a little: where will two-thirds of the world's population live by 2070.

Senator STERLE: Junee, with a bit of luck.

CHAIR: In Asia.

Ms Schneider : Yes.

CHAIR: And they will have lost—with two-thirds of the world's population—30 per cent of their productive capacity due to urban sprawl, contamination et cetera. And there is about 13 times the volume of the sea to the mass of the land above sea level, which we have not done any work on. Have you done any work on what we can do with the sea?

Mr Gooday : No.

CHAIR: You had better get busy. Back to you, Senator Sterle.

Senator STERLE: Where was I?

CHAIR: I don't know. But I can go on and on and on.

Senator STERLE: Keep going. Mr Gooday, you said, 'a run of poor seasons'—

CHAIR: The global energy task force—

Senator STERLE: Shoosh, Chair. Mr Gooday, then you said the 'decrease in spending in R&D'. So as far as Australia is concerned what else, Mr Gooday?

Mr Gooday : Pardon?

Senator STERLE: What? He put you off, didn't he? He has a knack of doing that. I am just kicking on from where we left off. You were halfway through telling me what the dramas are with agricultural productivity and Australia's long-term best interests.

Mr Gooday : One of the other challenges is meeting society's increasing demand not only for food but for environmental and other goods cost effectively. So farmers are being asked to do more in that regard than they have in the past, and that is affecting productivity.

Senator STERLE: Coming back to Senator Heffernan in a roundabout way, what are ABARES suggesting? Or are you not suggesting; are you preparing reports for the minister that say, 'Hang on, Minister, we have some serious issues and this is what we have found'?

Mr Gooday : So in talking about the productivity issues, there is some thinking to do about how we spend our R&D money, not only the quantum but making sure that the systems are as effective as possible and that the incentives within that R&D chain align with what we want to get out of it. That means making sure that there are as few impediments to people doing research into the sorts of activities that are likely to lead to productivity growth as possible; the whole GM debate fits into that. There is work to be done to make sure our regulation is as effective as possible, so that we are getting the environmental and other outcomes we want while maximising productivity capacity. There is a whole bunch of, I suppose, you would call them 'cross-economy issues' that we need to get a hold of—inconsistencies across states, for example, in terms of regulations for transport, OHS issues, and a whole range of things.

Senator STERLE: I will make it a bit easier for you. Is there a stack of reports sitting on a minister's table? Are they waiting for you guys to sign off and actually say: 'This is what we have done. This is what we need to do'? Or is it still talking at the moment?

Mr Gooday : We published a range of reports—

Senator STERLE: Has anything been done about them? Have you had any reaction from the minister or from the government?

Mr Gooday : I think the white paper addresses a number of them. But a lot of these issues are very long term problems. COAG, for example, has been wrestling with some of these inconsistencies between states for a long time.

CHAIR: While they are thinking about the next question, in the bigger picture one of the issues facing the global food task is the 40 per cent of the food that gets chucked out or wasted every day. Do you blokes do any research on how to save that. The biggest natural increase in net production of food is to stop waste. Do you do work on that?

Mr Gooday : No, we have not done any work on that.

Senator STERLE: Can you provide current statistics on Australia's total factor productivity for the agriculture, fisheries and forestry sectors?

Mr Gooday : Yes. They are published annually in the March edition of Australian Commodities. There will be an updated set of statistics out in about three weeks.

Senator STERLE: You do not have an early version there just for me?

Mr Gooday : This is last year's version. We are happy to go through any of that with you.

Senator STERLE: We would have seen that last year. So next year's is coming in a month, in March?

Mr Gooday : On 1 and 2 March.

Senator STERLE: Are figures in the latest releases about apparent changes in employment omitted because they show bad news or because the government and ABARES have come to the realisation that using labour force survey data as an indicator of fluctuations of employment in the industry in not an accurate gauge of what is going on on the ground?

Mr Gooday : No. Our total factor productivity breakdown includes changes in labour. The partial productivity measures we produce show that the use of labour has been decreasing in agriculture for a long period of time. That is all in the statistics that are produced in this book.

Senator STERLE: Why is that diminishing? I may know the answer, but you can tell me.

Mr Gooday : Because of changes in technology. People are substituting capital for land and labour.

Senator STERLE: Is that because productivity is up?

Mr Gooday : That is one of the outcomes of uptake of new technology. There is an increase in productivity. One of the things that is happening there is that labour is being released from agriculture to other sectors of the economy.

Senator STERLE: So as far as ABARES is concerned there is no shortage of labour in agriculture?

Mr Gooday : We have not addressed that issue specifically, but we know that in particular parts of the agriculture there is anecdotal evidence at least that people are having some difficulty sourcing labour.

Senator STERLE: There is nothing to hide. I am just curious. It is like the trucking industry. They are ageing and they are ageing bloody quickly too. So is farming. Have a look around this table—look at this pair!

Mr Gooday : There has also been a change in the skill mix required. As the technologies have changed, the labour mix is changing towards more high tech requirements.