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Impact of the global financial crisis on regional Australia

CHAIR (Ms King) —Welcome. I now declare open the public hearing of the House of Representatives Standing Committee on Infrastructure, Transport, Regional Development and Local Government and its inquiry into the impact of the global financial crisis on regional Australia. This is the committee’s fourth public hearing into this important issue. We can certainly see from media coverage that the crisis is affecting many Australians, but we wanted to ensure that regional concerns were heard as government formulates responses to the crisis. Today we will be hearing from local councils, economic and regional development organisations, business representatives and the Greater Green Triangle regional development of Australia. I welcome everybody here for what I am sure will be a very informative session. We have held sessions in Launceston and Burnie and Geelong yesterday. Thank you for hosting us here in the great community of Ararat.

I now welcome representatives of Ararat, Pyrenees and Horsham shire councils. I also acknowledge that we have the local federal member here, Mr David Hawker. Thank you for hosting us in your electorate; we are delighted to be here and thanks for your assistance in putting today’s program together for us. Paul Neville has been delayed. He is in town; he will arrive shortly I am sure.

Although the committee does not require you to give evidence under oath, I am required to remind you that these are formal proceedings of the parliament and, as such, should be treated with the same respect as the proceedings of the House of Representatives. It is also customary for me to remind witnesses that giving false or misleading evidence is considered a very serious matter and can be considered as a contempt of the parliament. That being said, you are most welcome. Before we begin, we have had a submission from Horsham. I do need to resolve that one of the members accept that we resolve that document No. 20 be approved as a submission before we can actually talk about it.

Mr CHEESEMAN —I move that we accept the submission.

CHAIR —Thank you, Mr Cheeseman, I just needed to do that first. As a way of beginning the roundtable, would each of you like to make some introductory comments about what is happening in your area?

Councillor Allgood —Within our community we are struggling and I think that is because Ararat is surrounded by farming municipalities. We are going through our twelfth or thirteenth year of drought, which is making it very difficult. Of course if the farmers are struggling, that means that the businesses are struggling. We have been declared EC, and even though we have taken care of the farmers, it is the businesses that I worry about because we have had a couple who have closed. My main concern now is that, as times get even tougher, if those farmers do not spend, the businesses just do not survive and that is a real concern.

CHAIR —In terms of the economy overall, is agriculture the prime source of people’s employment?

Councillor Allgood —No, we have the prison, we have the abattoirs and we have AME. AME is manufacturing, and that is another issue. I believe Christian Carthew is coming in this afternoon. AME have an issue with being invited, I suppose I could say, to take their development to China. They are struggling with payroll tax and so that is an issue for them. The prison and the abattoirs are really great, but the thing that also worries me is that with all of the farmers taking their stock to the abattoirs, a lot of them now are looking at their breeding stock. A number of people travel into Ararat and say, ‘Look, it’s really great to see so much green grass.’ Guess what? There is no stock in the paddocks because that is where it is going to, the abattoirs. To restock when the rains do come back, and I am sure they will, is also going to be a major issue for those people.

Councillor Vance —The Pyrenees, being very much a rural shire, has the same problems as Ararat with one exception: the viticulture industry is very strong in the Pyrenees and it has had an absolute hiding with those four hot days in January, especially the vineyards on the western slopes of the Pyrenees. There has been 100 per cent loss of production this year—total loss—purely because of lack of water to be able to sustain the vines and keep them going through those hot days in the dry periods. That is an extreme problem for us. They are employers in our shire of quite a few people and they are facing difficult times. The drought is right through our shire. The south are feeling it exactly the same as the north. Personally, I am wool grower and a farmer. I have been carting water consistently for seven years, and every second day since November last year. We have had an inch and a half of rain since the middle of December, so things are extremely difficult in that field. Our secondary industries are not quite as concentrated as the cities. We do have a hay processing plant in Avoca, but it is struggling to find material to continue its industry. I believe it is reaching as far away as Queensland now to bring stuff in to process. It is striving to survive. The drought is our main worry.

Councillor Erwin —A very familiar theme. We are EC declared as well. Farming was our major industry, but that has now been overtaken by manufacturing due to the drought. This is probably against the general trend, but we would expect that that would reverse when we see the rains come—hopefully.

CHAIR —What sort of manufacturing?

Councillor Erwin —We have a fairly large abattoir as well, and engineering. I guess mining is a separate thing, but we do have Victoria’s largest gold mine.

CHAIR —How is it going?

Councillor Erwin —With the gold prices where they are, it is going very well. It has allowed them to find additional reserves. But if the gold price went southward, I would imagine that that would certainly put the pressure on them.

CHAIR —How many people are employed in the goldmine?

Councillor Erwin ——There are around 250. Water is the key issue. One of the changes we have had is in tourism with the Grampians and so forth. There has been a migration, so to speak, to this side of the state probably due to the bushfires so we have had some benefit in that game. That may level out again within 12 months.

CHAIR —How is your small business community going?

Councillor Erwin —It is doing it tough like in every area. That is due to a reliance on farming and it certainly makes things hard.

CHAIR —Thank you.

Councillor Gross —Thank you very much for giving us the opportunity to be here today. Horsham likewise has suffered extremely from the drought but I must admit that we, as a council, are feeling that we have come through the period much better than we expected. A lot of this is due to the fact that the pipeline which is being installed is happening in and around there and a lot of the spin-off from the pipeline has been reflected through the city itself.

CHAIR —Is that in terms of the construction work of the pipeline?

Councillor Gross —The construction and the support for it because our Wimmera Development Association is saying there are some 600 jobs directly or indirectly provided through the pipeline and that has created quite bit of trade through businesses. When a dollar is spent in one business it then circulates before it leaves the town and we believe that that has helped. But we are concerned that within six to nine months it will be completed and we realise that there is going to be a sharp drop in money being spent in and around the place.

I hope that through our planning and development other projects will come up and be started so that we can edge this off for the whole region. Horsham is very much focused on supplying to the regional areas in and around 100 kilometres or more and we realise that those outlying areas are doing it extremely tough. We are very conscious of that and I hope the government is likewise.

We had a fire in the Horsham area on 7 February and it has created a lot of stress and heartache. We lost 11 homes, a lot of homes and properties were damaged, we lost a warehouse of the big trucking company and the golf club. We have a lot of work being done in trying to give support to those people who were traumatised by the fire and there are a lot of folk being serviced by our council’s welfare department at this stage.

All in all, I believe this city in itself is travelling well and, as I said before, the rural sector is really doing it tough. I feel that if we have another one of these devastating years a lot of changes will occur right throughout the Wimmera region. I hope it will not happen. I hope that the rain that is promised is delivered and that it will be followed by others. I think I will leave it at that.

CHAIR —Thank you. Mr Bawden did you want to add anything to Councillor Gross’s comments?

Mr Bawden —I guess it is fair to say that Horsham as a regional centre has experienced relatively steady growth, and with that comes a certain amount of pressure to provide the infrastructure needed to service a broader population base, which puts a reasonable amount of pressure on the resources of the city. With the growth in some of the specialised service sectors, like grains research, and service industries in general, we are also seeing some skills shortages that, I believe, are affecting not only Horsham rural city but particularly some of the smaller areas as well, where it is very difficult to recruit certain types of staff, be they in the accounting field or in the engineering field. As regional communities it is a challenge that we continue to face. In a way, with things like stimulus packages and major enterprises like the pipeline, it really does exhaust our resources of trades et cetera that are very difficult to get for other purposes.

CHAIR —I will ask you some questions around some of the construction issues, but I want to stay for a minute on setting the scene so that members get a picture of what is happening in the area. Obviously this inquiry is looking specifically at the global financial crisis. I want to make sure that, in all of the information that is coming out about that and all of the media stories, the story of regional Australia is heard by the parliament. That is one of the purposes of this inquiry, but we are very mindful that, while the global financial crisis is affecting regional communities, those areas are also suffering drought, which has obviously had a prolonged effect on this district. We are conscious of that in visiting here. Are you hearing about any issues regarding the availability of credit that may be affecting small business, the agricultural sector or manufacturing? Is anyone hearing anything in those sectors?

Councillor Allgood —I have heard about some of the farming institutions like Elders and Dalgety. I know that our staff have been out to visit some of those farms because they have got the call to say that they need to be paid—so that is starting to happen. That also has to be an issue—

CHAIR —Would that have occurred regardless of the financial crisis or is it occurring as a result of the credit squeeze?

Councillor Allgood —I think it is probably the drought as well—all of the above. Anybody who buys a business buys it with the idea of making it a success. It must be very hard on a farmer who ploughs up his paddock hoping to get a good crop and nothing happens. He has wasted the fuel, his time, the seed and everything else. Next year he does it all over again and by the 12th or 13th year it becomes desperate. We have been hearing from some of the people around us that that is creating domestic violence within our community. Of course, it is fairly well hidden, but it is putting a lot of stress on a lot of families, and unfortunately—I am not sure about the other councils—we have had suicides as well. That is very frightening for us.

CHAIR —Thank you. We will try to get some information on the issue of whether the availability of credit is posing additional problems for the agricultural sector. I am not sure where we can get some evidence in relation to that, but we may write to Elders or one of the financiers. Are there any other comments?

Councillor Vance —It was remiss of me not to mention earlier that the blue gum industry is in extreme trouble. We had one very large company go into receivership.

CHAIR —Timbercorp?

Councillor Vance —It is not Timbercorp.

CHAIR —Timbercorp is reporting difficulties but has not gone into receivership?

Councillor Vance —Yes. The future of the industry is difficult. There is a large swipe of very valuable farming land south of the Western Highway covered with blue gums, and all of a sudden there is no outlet. Farmers have leased their property to these companies and are unsure as to whether they will get their lease money.

CHAIR —The blue gum is all for woodchip, isn’t it?

Councillor Vance —That is right.

CHAIR —And the market for woodchip has just completely collapsed and predominantly it is coming out of Japan.

Councillor Vance —There is a major concern there because it flows right through to Portland, doesn’t it.


Councillor Vance —The manufacturing industry which is building containers for these transports to take the chip to Portland or wherever is also affected. It is a flow-on, right through.

CHAIR —We heard from the timber communities in Tasmania, and they had some quite interesting suggestions as to how the workforce and those communities might be assisted through some government intervention. The blue gum industry in particular is quite specific to here, isn’t it? Does it employ a lot of people locally? Or is it predominantly the income that farmers are expecting to get through the leaseholds?

Councillor Vance —It is the income they are expecting. The employment side of it, it decimates some of our—we had the VFF coming to council expressing to us their concern that very valuable production land is going out of production for the blue gums, and now it has come home to bite us.

CHAIR —Obviously there have been managed investment scheme incentives in order for that to occur.

Councillor Vance —Exactly.

CHAIR —In terms of the one that has just gone into liquidation, obviously receivers have not provided any information to the leaseholders yet as to what return they can expect?

Councillor Vance —I am unaware of that. I would be foolish to say anything about that because I am really unaware of what has happened.

CHAIR —Thank you for drawing that to our attention.

Councillor Erwin —I do not have any hard evidence as far as the tightening of available money for farmers goes, but I guess the lower interest rates have taken a little bit of pressure off to a certain extent. One of the looming things, and I have heard this from quite a few doctors and so forth, is the proposed changes to the way hospitals are funded and the availability of services. From the indications they have given me, it will have an impact on doctors and so forth in rural areas. I am not exactly across it, but the way the hospitals are—

CHAIR —Is it the hospitals or the GPs?

Councillor Erwin —It is the hospitals and it flows on to the GPs I think.

CHAIR —I think you might be referring to the GPs. I think you are referring to the federal report, which is about the potential changes to the classification of the RAMA system.

Councillor Erwin —It is causing quite a bit of angst amongst the local doctors and they are very worried about the ability to attract new doctors to the region.

CHAIR —Thank you very much for raising that as an issue. I understand the government is currently looking at the classifications, but no decisions have been made around that. Certainly many of us have been lobbied by our own GPs on that particular issue and we have fed that through to the minister.

Councillor Gross —We are hearing around the grain belt of the Wimmera that finance is becoming very difficult for properties to continue. In fact, last year a lot of properties were told that that was the last throw of the dice; this year people are under extreme stress as they are trying to secure the finance for this sowing season and trying to manage through this period. I must admit that the household support and the interest subsidy have made it possible for some of these people to stay in the industry up until now, but it is becoming extremely difficult. A fortnight ago, a bank employee who was dealing with farm financing and visiting farms and receiving farmers into his office said that six couples within the week broke down while they were discussing the business—they were realising that a lot of their future had evaporated into too big a debt—and were causing concern. We are seeing that a lot of the lending authorities want more and more security to provide such funding. Whereas they were previously working on stock mortgages, crop liens and perhaps one or two titles as far as security, they are now saying they need more because they too are concerned about the future of the whole of the industry.

The other thing that we are noting is that while there are properties that are being sold, they are very much at previous market values. In fact, they are holding up extremely well. But we have heard suggestions that banks are offering deals between their clients, whereby where one client is still travelling very well and another one is in trouble, they are offering that troubled property to the second client at market value, but at 10 years interest-free terms to be able to maintain the level of pricing at that high level. The big concern is that if there are fire sales in properties then the whole equity scenario collapses. We know that there are properties that have been purchased by Melbourne interests as a safe place to park money, which has not occurred before. These things are all out there causing new terms and scenarios that we have not seen before. But most people are realising that if we do not have a good year this year, then with the world economic climate we are going to see massive changes in agriculture.

CHAIR —Mr Sullivan, you have been asking a number of questions around the credit issue. Do you have any specific questions on that issue?

Mr SULLIVAN —I want to ask the people at the table if any of them have any suggestions as to how these credit issues might be resolved.

Councillor Erwin —As Bernie said, we do not want to see a fire sale. The drop in equity would have an even worse effect.

Mr SULLIVAN —With what Bernie was saying, I just think of what happened with properties in the beef industry in Queensland where they transferred from one non-viable operator to somebody who the bank hoped would be viable, and when they proved non-viable, they transferred it to somebody else. The prices of properties were going up, to the stage where production could never meet the cost of running them. While property values are holding, as you say, that certainly does not need to be escalating. The properties that are being bought by Melbourne interests, are they remaining in production?

Councillor Gross —Yes, most of them are leased back to the original farmers or to a neighbour. It is all in production.

Mr SULLIVAN —There was some talk earlier, I think from Gwenda, about Dalgety’s and Elders and the like calling in outstanding debts. Traditionally those kinds of companies fostered their farmers through tough times. If they are withdrawing that kind of service, and you can understand that they are probably having trouble getting the money to do that as well, and the banks are withdrawing, what is left for the rural industry?

Councillor Allgood —Unless we get rain, there is not very much. But the other thing I am fairly concerned about is the businesses. We need these businesses. We are probably lucky in a way in that there is a group of us sitting at the table who are in a forum where the mayors and the CEOs from across this area get together and discuss how we can support each other. At the moment we are planning to put together a document that can relate to state and federal governments about where we see our future as being. I think that is going to be very interesting. I think we will have that finished by May. Is that right?

Councillor Vance —Yes, that is correct.

Councillor Allgood —That is going to be very important. As I said before, the farming area is really struggling and they prop up your local businesses. But for those local businesses—I sold mine just recently—there has never been any assistance for small businesses like there has been for farmers. They are also in the drought areas, and we tend to forget that they are also trying to survive.

Mr SULLIVAN —Do not ask me to explain how, but some businesses can get EC money, but it is a limited number.

CHAIR —They have to have specific criteria.

Councillor Allgood —One of the things I was told yesterday was that some of the people in the clothing industry have had orders placed and those companies have fallen over, so some of the fashion shops in the street have lost their orders because the manufacturers have ceased.

Councillor Vance —Let’s go back 10 years—I have been farming for 40 years—and the message was ‘get big or get out’. The people getting out now are those that got big. They have fallen over. There is a message there as far as I am concerned that agriculture needs to go back to the grassroots. Fourth and fifth generation farmers are very good farmers. We are struggling at the moment because of Mother Nature. A chap rang up a radio station the other day and the women asked what he did and he said to call him a hobby farmer. She said, ‘What do you do?’ He said, ‘You would probably call me a planter. I plant 5,000 acres of crop but I never get to harvest it.’ There is a message there. The smaller grassroots people know agriculture inside out. We know how to do it best and getting bigger is not the answer. As I said before, blue gums came into the beautiful country around Skipton and the back of Beaufort and took top land out of production for the chip industry, which was going to be the saviour, but it has let us down. We really need to support our grassroots farmers for Australia’s sake. The dry periods have been around before and we have to survive them. If there was somebody out there who could tell us when it is was going to finish we would be pleased.

Mr SULLIVAN —The situation we need is that we need for you to be there when it does finish—

Councillor Vance —That is right.

Mr SULLIVAN —and how best can this committee make some recommendations to government to ensure that is the case. In the context of what we have been hearing from you today, the global financial crisis just exacerbates a worse crisis that you have, which is drought.

Councillor Vance —Exactly.

Mr SULLIVAN —If the combined impact of the two of them start to denude your towns of businesses then that is not going to be good for anybody—farmers or town folk.

Councillor Gross —In regard to small business there is some help but most of them do not have the time or the understanding of how to obtain that. Through the Wimmera Development Association we had a drought support officer appointed with government assistance to mentor small business and they were working right throughout the Wimmera region. We ran out of funding but I understand that funding is available again and that person will be going around helping small business. We find that the businesses that are primarily servicing agriculture have a good chance of obtaining help. They have a chance to obtain household support, which takes a lot of worry out of their home.

In the Horsham area I have been chair of the Drought Support Committee. I started off accepting the job for six months and I think it has been six years since it started and we are still going. We have been running seminars to help accountants in our community to also understand what help is available and how to go about it. That is proving to be one of the most successful programs that we have put in place because the first point of call that a farmer or a small businessman goes to for help is their accountant, or their medical practitioner or their clergyman and these people need to have an understanding of what the situation is and where help can be obtained.

Those seminars, I believe, are some of the most important things that we have been doing. We have had seminars throughout our rural areas, where we have taken the service providers out to the people and spoken to them in their own public halls to give them an understanding about what is available. We are finding that people who a couple of years ago said that they would not darken the door of Centrelink, now saying quite freely that that is the help that is supporting them and their families. It is just a matter of going through it. People are proud. People pride themselves in being able to manage but this has been going on for so long that we have now had to break that shell down and provide them with a facility that they are ready to accept and use.

Ms KING —I commend you, certainly on your initiatives in relation to accountants. I have had similar experiences in my own electorate of people not necessarily getting the right information about what is available to them. I think that is a very commendable thing to do. I think it is also really important—obviously you have been telling them this—that people not self assess their eligibility for EC funding. It is important that they put in an application. A number who have assessed that they would not be eligible have actually been eligible, in the end. So that is good.

Mr CHEESEMAN —I have a number of questions around the drought, because clearly that sets the scene in this part of the world in terms of the impact of the global financial crisis. I am curious, given that you are now in the 13th year of drought, about what has been happening to the population of the region. Is the region emptying out? I note that in one of the submissions—I think it was from Horsham—you indicated that there was a one per cent growth in population in your municipality.

Councillor Gross —That is right.

Mr CHEESEMAN —Is that at the cost of some of other surrounding municipalities? Is that people simply retiring off the land and coming into town for amenity and services and the like?

Councillor Gross —It is hard to tell. The seniors in the community are the ones that are coming to town. A lot of the people in the 20-45 age group are going straight past to the bigger centres such as Ballarat, Geelong, Melbourne and Bendigo, because they are seeking job opportunities for the family and education opportunities for the children. So they give the family a fresh start rather than staying in a city close to where they have been. Yes, we are seeing a one per cent increase but it is all in the seniors of the community, where they want to settle close to where they have been.

Councillor Erwin —As far as the Northern Grampians go, we have probably maintained the population or have a slight decrease. I will let the others speak for their areas but it is probably similar. There has not been a dramatic drop but as Bernard Gross said, our demographic is probably getting older at a quicker rate than was anticipated. I have noticed it in the younger farmers this year. It is the first time I have heard them say that they have nearly had enough, carrying debt and just not seeing any light at the end of the tunnel. What Bernard said before was right on the mark but the other things is in maintaining the social fabric of those little communities that are still there and—

Mr CHEESEMAN —I have a series of questions on that so we might come to that a bit later on.

Councillor Vance —Pyrenees area is a little bit different from Horsham and others in as much as our boundary is very close to Ballarat and we see an opportunity in the southern end of the shire, with some infrastructure put in place, for it to be a satellite growth area—especially around Snake Valley—to feed off Ballarat. Ballarat is predicting a massive growth to the west. They have to be realistic about what good agricultural land is taken up, the water supply and many other things. We have an opportunity in the south. In the north I believe our figures are staying relatively level.

Councillor Allgood —We actually had a growth of 0.18 per cent in 2007-08. Council self-funded their own rural officer position but still were quite effective with that. Ararat did not receive drought officer funding. We had to fund that ourselves, so that made it a little bit harder for us. For some reason we were not included in the EC drought area. That was a little bit intriguing to us. I attended a meeting last night out at Moyston, where we are going to experience a big growth within the prison system. At the moment there are quite a few people moving out into smaller areas like that and building. There has been a fair bit of growth within the Moyston area, with people going to work at the prison. They do not necessarily want to be in the city, so they are moving out to those smaller communities. That is probably where our growth has come from.

One of the things that they put up on the board last night was that the farming community is getting very elderly. When you have grown up in a family where you have seen mum and dad struggle forever, who wants to take over the debt? That is the scary thing. So farmers are getting older and hanging on and hanging on. Our population is suffering mainly from the youth exodus. They go away and get a job and do not come back. One of the things that everyone needs to focus on is getting the youth back into our areas and stopping being just an ageing population.

Mr CHEESEMAN —You made the observation that the 20- to 45-year-old demographic has been leaving the western districts to go to Ballarat and Geelong and so forth. What impact is that having on the capacity of our towns to deliver services and have people working in the supermarket and all those sorts of things that clearly are required to support the existing community?

Councillor Allgood —We have the likes of KFC and McDonald’s and supermarkets that are open over the weekend. When they first came into the area there were a lot of young people who could take up positions with them. I think that in a lot of ways the reason we have suffered a decline in a lot of our sporting organisations is that those young ones who want to go away to college want to do that work over the weekend to get some money behind them. So they are choosing to work instead of playing sport. But there has been a struggle recently with trying to keep those numbers up, to keep young people employed in those positions, because they go away and they just do not come back.

Mr CHEESEMAN —With that 20- to 45-year-old group also leaving, it is having an impact not only on footy clubs and the like but also, presumably, your education institutions. You do not have the young people around, which puts pressure on the viability of schools and all of those things, I assume.

Councillor Erwin —Yes. You assume right.

Councillor Allgood —We probably have not suffered from that so much. Some of our smaller schools in places like Warrak have closed. They might have amalgamated two schools, or they provide one bus to pick them up from one area and take them into another area. But we are finding that in some pockets of our municipality there does seem to be a growth in the number of children. For instance, down around Lake Bolac there seem to be some young people moving into the area. But that puts strains on not only the schools but the child care and kindergartens as well. Kindergartens need to have a certain number of children so that they can survive and be viable.

Councillor Vance —Pyrenees have not noticed that quite as much. One great asset that has come into the region in the last couple of years has been the very fast train. You can get on the train in Beaufort and be in Melbourne in an hour and 20 minutes. If we can get the timetables lined up so that they can be in Melbourne by nine o’clock, it will be so much better. Then you will not have to leave at 5.30 in the morning to be there at nine o’clock.

Mr CHEESEMAN —You have just set the scene. The global financial crisis coming over the top of that and adding to that has clearly put a lot of stress on the community. Has that put stress on the viability of some of the towns throughout the western district? Is there a lack of credit for businesses within those towns with 30, 40 or 50 employees? Is the capacity of farming communities to buy goods and services drying up?

Councillor Erwin —I think they have been under stress for quite some time and gradually it has got worse and worse. You are really seeing it come to a crunch this year. If it does not turn out to be a reasonable season, it will be crunch time in the next 12 months.

CHAIR —I note in the Horsham submission you talked about the difficulty of skill sets, and I assume that is particularly around the trades sets. I suspect the stimulus package in relation to some of the building and construction for primary schools will put some stress on that. If you have not got a lot of tradespeople already then that is certainly going to do that. I am interested to get your views on that and what is happening in relation to education. But I think the deputy chair has a question about TAFEs.

Mr NEVILLE —Yes, I was interested when you were talking about retention. Which communities have university campuses and which have TAFEs?

Councillor Allgood —We actually have both.

Councillor Gross —Horsham has both.

Mr NEVILLE —What about the other towns?

Councillor Erwin —Stawell has a University of Ballarat campus, but it is very limited.

Mr NEVILLE —Notwithstanding that, university campuses are a way of retaining young people in the community and not just during their study years. There is good evidence around that says that a lot of kids who do medicine, dentistry and things like that in the area will stay in the area. My colleague Kay Hull over the border in the Riverina has a pharmacy college in Wagga. I think last year or maybe the year before—she gave me the figures—there was an output of 43 from the final year and 38 or 39 got jobs in country areas. This is the same thing with the medical school in Townsville.

Councillor Erwin —I do not think any of us have those courses available.

Mr NEVILLE —No, but the point I am making is that she aggressively went after it. I am jealous of her I must say. She also helped one of the members get a dentistry school for Bathurst or Orange. Once you get a facility like that, you get lecturers, students going out for internships and that kind of thing and it creates a dynamic of its own. I recognise drought. Drought is one of the greatest—and forgive the mixed metaphor—dampeners of community confidence and morale. I recognise that. There are people around who are very good. Peter Kenyon and people like that are probably worth getting in to look at opportunities during that time.

My area went through a very bad period. He made a whole series of fibres from the tops and tales of sugarcane. You would not have thought there was a quid in that. He built this huge factory and got equipment from overseas. Now he makes stuff that is sold by Bunnings, Coles and Woolworths and mulch for around trees. He has another one that chops it up for stock food, and he sells that all over Australia. More recently he has designed out of sugarcane an equivalent to the Pink Batt that can go into ceilings.

What I am saying is that sometimes in those worst periods a community finds other outlets. I wonder if you have been looking at that sort of thing, looking at getting a new strand to the TAFE college or whatever it might be?

Councillor Erwin —In Stawell we have certainly encouraged the college to at least maintain and expand its services. It seems to be difficult. As far as the federal government goes, if you can support that social fabric and innovation that would be of great benefit I think.

Councillor Allgood —Could I just add to that. Clyde has just handed me a note that says: ‘Training cadetships’—I do not have my glasses on, Catherine, so you will have to excuse me—‘for students at Ballarat and Geelong have been proven to be of benefit. Kids are returning in vocation to work in their field.’ That is health cover in Carina. ‘Offers of more funding would help.’

The other thing I would like to add to that is that we sit in a tech school. Not everybody wants to go away and do those other schooling type things, but the tech school was a great place for those children who wanted to do a trade. We were actually drycleaners before I retired. But, if you take on an apprentice, there is an absolute issue there as well because you have to send them to Melbourne. So you have to get their accommodation and you have to be without them for two or three months a year while they get all their training, and some of them have to go down every week. It is really difficult. We are just that far away, that little bit remote, from where we should be, I think.

CHAIR —I think it was Councillor Vance who said before that you were getting together as a council and putting together a plan that you will have available by May. Forgive me that I do not know—David Hawker will obviously be aware of this—but are you putting any proposals in to apply for a trades training centre as part of the federal government’s programs, or any of those sorts of larger facilities that are available?

Mr Hawker —Do you want me to answer that?

CHAIR —You can if you want to.

Mr Hawker —I agree with everything that has been put forward. I think I agree with all the points that have been made. On the importance of maintaining government services, you are well aware of the question about the zoning for doctors, and that is critical for this region. Stawell is going to be affected, as well as most of western Victoria. I think the bigger centres—the Warrnambools—might not be affected so much, but for the smaller ones it is going to be critical.

On the trades training, we have a tech college that has got as far as being two campuses: Warrnambool and Hamilton. It is doing some fantastic work, but we are desperately trying to keep it intact. Of course, under the new policy it is going back to the state, and if it does not get that additional funding—because the cost of running a tech class is significantly more than running an ordinary class in school—the school will not have the funding. So, if I were to make a plea, it is to ensure that the funding continue at a level that will allow those tech colleges to continue. They go up to certificate III.

The employer support has been superb, and that is what it is all about. To take Mayor Gwenda Allgood’s point, we need to get people ready to be apprentices at a local level, and we must follow through to continue that concept in the future. We do have the medical school, of course. You are looking at centres here that really are not big enough for that type of tertiary thing. The Deakin University School of Medicine, which has Ballarat, Geelong and Warrnambool campuses, is all about getting postgraduate doctors trained in the country, based on the Flinders University model, which has been extremely successful in encouraging future doctors from the country, who will then want to practise in the country.

The other issue that I think ought to be hopefully somewhere in your report is the critical importance, when upgrades of broadband are being rolled out, of having something there in some of the smaller centres. Broadband, to me, is one of the ways we can collapse distances for many types of businesses. There are quite a few people who have moved to the country, often to the very small towns—

CHAIR —They have very high expectations of broadband.

Mr Hawker —and they want that broadband. Boy, do they want that broadband!

CHAIR —I am just wondering about the provision of TAFE. Obviously the University of Ballarat has a presence throughout this district. Have the councils all met with vice-chancellor about the provisions?

Mr Bawden —Yes.

CHAIR —You have talked to him about that?

Mr Bawden —Could I come in on very promising developments at Horsham. The director of the Horsham campus advised us last night at a meeting that the planning for the Wimmera trade and education centre is well advanced. There is an architect coming out. It is going to be based largely on the Horsham College campus, which is a secondary campus. Together with that will be upgrades to the university campus to go back to some of its former services, I think as a TAFE, and upgrades also out at the Longerenong Agricultural College. That is a very promising development. As a council and a development association we have been liaising principally through the state education department to achieve that outcome. The aim is to address some of the skill shortages we have as well as to retain youth. We are working closely with the VET classes, and there has been a very successful transport network for some of the smaller rural areas so that transport for students can come at low cost. I guess that is a good model. It is a demonstration of the need for ongoing support. I heard on the radio yesterday that Mildura are looking to secure something similar. It is a matter of the parties working together. It is being done in a fairly low-key manner, but it appears that it is happening quite well.

CHAIR —Thank you.

Mr SULLIVAN —Thank you very much for the opportunity. These questions I guess will refer more to the urban areas—that is, Councillor Allgood, your council and probably the Horsham council. I would like to get a picture of what is going on in your towns. What is the level of rates arrears? When businesses are sold—and, Councillor Allgood, you mentioned recently selling yours—are they sold to other people who are already local or to people coming in? What is the level of building applications going through your councils? Are you able to give us the housing sales statistics?

Councillor Allgood —Our housing is holding fairly firmly at the moment. There are a number on the market. We are struggling at the moment—and I know it is not a federal issue—to get areas that we can open up to have more buildings built. Because of the extension of the prison, we are expecting quite a few more families—about 100 families—to come in and take up those positions. On the businesses that are being sold, this is quite interesting. Some properties in the smaller communities, and I talk about Willaura, have almost been bought over the internet. Even some of the houses are being bought over the internet. People are going through and seeing where the area is and what is actually happening there. The housing is probably holding fairly solidly as far as we are going.

At the moment this is one of our biggest problems. We have the bigger companies coming in and putting up these wonderful packages and that is stripping a lot of work from our local builders. That is getting to be a little bit of a concern. I do not know how you can address that, though. It is the people’s choice as to what they build. But it is a bit of a struggle for the local builders to keep going. We are hoping the new prison will create a lot of work for the local contractors. Of course, there is nobody big enough. That is one of the other issues in our area. We are not really equipped to do a lot of the bigger jobs that come up with the bigger companies. They are basically subcontracting our local builders because they do not have the strength or the capacity to put their own bids in.

Mr SULLIVAN —What about rates arrears? Have you noticed a spike in those at all?

Councillor Allgood —No, we have not really noticed that. You normally have a few each year but, no, we have not noticed that. One councillor was talking yesterday about the no-interest loan scheme. He said they had some applications from people who needed fridges and other bare necessities. He said they were seeing a bit of an increase in people like that coming forward.

Mr SULLIVAN —What about Horsham?

Mr Bawden —In Horsham rates arrears are not an issue. We have a very active rates collector who keeps them at very low levels. I think the exceptional circumstances assistance for rural properties has helped significantly. That has to have had a positive impact. On business sales, I think there is a mixture between local companies or investors and people coming into the city for new development. I am not aware that there is any trend one way or another.

CHAIR —As you answer that question, could you also let us know what is happening with your building approvals?

Mr Bawden —In the last two years they have dropped off for new residences. We reached a peak level 2½ years ago—

Councillor Gross —It was three a week.

Mr Bawden —It was about 160 new residences for the year. We are back to around 100 at the moment, and it is tracking the same way this financial year. The number of building applications has held but the number of new residences has dipped in the last two years.

CHAIR —Thank you.

Mr SULLIVAN —Are you catching some of the same internet sales phenomenon?

Mr Bawden —Not so much in Horsham, I do not think. I know in Warracknabeal, to our north, they have had a lot of that—that is, people just buying over the net—but I am not aware of it in Horsham.

Councillor Gross —Land developers are still pushing the case. At present we would have somewhere between 500 and 1,000 blocks being prepared for development. There are still sales on that. There have not been many businesses close. I have heard only in the last couple of days that CASE Machinery, which is an American based company, are offering terms of hire purchase or term sales at the rate of two per cent per annum for the length of the term. That is attracting a few clients to take machinery out.

Councillor Erwin —To the Northern Grampians: our median price has maintained very well and is one of the highest in the state. So, if you invest in Northern Grampians, your money will be in reasonably good hands! Our building approvals are quite high. There is quite a bit of government building within that, too, which maybe fuzzes the figures a little bit. Housing approvals are probably down a bit. Generally, sales of houses have been fairly good. We are in the same boat as Ararat in that we do not have a lot of new housing blocks.

Mr NEVILLE —We were talking before about having a large project built by outside resources. By the way, a jail is the most remarkable injector of funds into a community. They are the best motels in Australia—that is, they are always full, there are a lot of people eating and there are a lot of guards. It is a whole community of its own. Maryborough, in my area in Queensland, does extraordinary well with theirs. I have seen a development board do this, and I might raise it later. When someone gets a major contract, either from the government or a private firm, they invite the developer or the builder to the community, put on a modest cocktail party for them and bring in all the subcontractors—the builders, the plumbers, the electricians and so on. They welcome them to the district and say, ‘I’d like to introduce you to our subcontracting community.’ Right at the beginning of the process they try to create linkages to get as much of the subcontracting work in the city or the shire.

Councillor Erwin —We have gone through that process.

Mr NEVILLE —Good on you.

Councillor Allgood —We are very good at that. We have a MASH team that Clyde is involved in and it has exactly that effect. It is not only about people getting to know each other and what can actually be done but it is a really good bonding thing, because if you stand around having something to eat and a bit of a drink you tend to open up more to your neighbour, and so when things are tough you can find out if there is work with that other person. One thing I forgot to mention before when we were talking about major industries within the city is Gason. Les says his figures have never been better. I think that must be the Queensland range.

CHAIR —What do they do?

Councillor Allgood —They do farm machinery. They are one of the biggest manufacturers in the Southern Hemisphere and they sell all around the world. They are pretty important to our economy. I do not know of any other manufacturer that has gone from church pews right down, and now they are coming into heaters and still doing farm machinery. That is an incredible story that has happened in Ararat over many years.

Councillor Erwin —Gold Acres are experiencing the same thing.

CHAIR —That is an interesting phenomenon.

Councillor Vance —My son works at Gold Acres. Their books are full; until the end of the year 2010 you can get nothing at all.

CHAIR —That is all farm machinery?

Councillor Erwin —Spray equipment.

CHAIR —And they are all heading up to Queensland.

Councillor Vance —There is no drought in Queensland.

Mr SULLIVAN —This week!

Councillor Vance —I almost cried on Sunday morning when one chap rang up and said they had had 10 inches in Mackay over the last two days. That has been our rainfall over 18 months.

CHAIR —It is best not to listen to those stories at the moment. Darren had some questions on social infrastructure but can I just check first on one point from the Horsham submission. You said that you had not had the sign-off yet on your community infrastructure fund projects. Has that happens now?

Mr Bawden —Last week.

CHAIR —Good. So you have all got yours and you are all busy now because you do not have a very long time to do it. Darren, did you have some questions around that?

Mr CHEESEMAN —I am curious as to what recommendations you might make to government in terms of the type of social infrastructure that government might consider investing in to assist in supporting your communities, not only because of the global financial crisis but also, naturally, because of the ongoing drought.

Councillor Erwin —As an example, through the drought funding, much of which is probably from the state, and with our drought officer we have run a number of functions in small districts. One was in a little place called Carapooee—there is nothing there except the CFA shed. They ran a ‘back to’ function, which the council supported with $1,500, and there were more than 200 people there. I think the social capital that that builds is pretty hard to put a value on. So you do not have to spend a great deal of money to keep the social fabric of small communities together.

CHAIR —Does anyone wish to make some concluding comments? We are running a little over time but we are happy to hear any final points you would like to leave with the committee.

Councillor Allgood —I would like to see the housing grants continue. I think that is very important for our community and that it creates employment. One of the things we have been conducting is a listening post, where we have been going out and meeting with our people in all the smaller communities and saying to them, ‘Where do you see our future and what would you like us to do?’ One of the things they are telling us at the moment that came out very strongly is that they want to have more social functions. They also want to see youth retained in our area. I think that is something we can both relate to.

There is another thing that Ararat is very keen on. We are very aware of our environment and we have gone to the extent of preparing an area of land alongside our aerodrome for an energy park, which I was talking to John about before. Around this particular area, one thing we do have a lot of is wind. We would love to be able to see the energy park developed. As a council, we believe that would attract a lot of people. There are a lot of technical matters involved with turbines and blades and all the infrastructure that is needed, so it would be really great if we could get that up and running as well. I think that is the way to go for the future.

Mr CHEESEMAN —That also provides an income for the farmer, doesn’t it?

Councillor Allgood —It does.

Mr CHEESEMAN —Especially with a turbine—

Councillor Allgood —You are looking at someone here who everyone is very envious of, because he has some. I do not, and I do not know of anyone else like him, but he always—

Councillor Vance —I am sorry, but I do not have any hills that are big enough.

Councillor Allgood —The good part about the wind energy issue is that it makes a contribution to the community—a cash contribution—as well as paying the farmers. That is an excellent way to go.

Mr SULLIVAN —Following on from that, and this has only now occurred to me, we have heard a number of people over the last three days saying to us, ‘Continue the bonus for first home buyers.’ Could that be zoned so that there is a better bonus to attract people to build in regional areas? Obviously, the bleeding of young people to the cities is a problem. If it continues, it will only get worse. Something of that nature could be used to bring people back.

Councillor Erwin —It sounds like a good idea to give weighting to regional and rural areas.

Councillor Allgood —It is important, because what we are finding is that there are a lot of young people interested. We have heard before about houses being restored. I spoke to one father who has a son who has bought a house. He spent $80,000 buying it—he is a tradesperson—and he spent another $30,000 doing it up. That creates trade through the timber industry as well within our local community. His daughter is an apprentice and she is desperately seeking something for when that finishes; she would love to find something. Once those young people have made that commitment to buy a house, they are more likely to stay within this area while they are doing their apprenticeships. They have ownership. Rather than living with mum and dad, they are doing something for themselves. That would encourage more of them to stay here as well.

Mr SULLIVAN —The other aspect to that is something that you mentioned earlier. You talked about corporate builders coming in and taking over the work that traditionally has been done. If you had a competitive advantage on first homes, then the corporate builders would come to your towns, so there is some good and there is some bad. The alternative—

CHAIR —We might wrap up there, because I am conscious that the next witness is waiting. Are there any concluding comments that you would like to make?

Councillor Vance —On alternative energy, a decision by your government on the future of alternative energy will make a big difference to the Pyrenees Shire, I can tell you. We have—

CHAIR —You are waiting for our MRETs legislation?

Councillor Vance —billion dollar proposals sitting in front of us just waiting on the outcome of that decision.

CHAIR —We will certainly remind government of that on your behalf.

Councillor Erwin —There are quite a few proposed infrastructure projects around, such as the duplication of the Western Highway. If that could be brought forward as much as possible—

CHAIR —The planning works have started for that—you would be aware of that.

Councillor Erwin —As far as the Northern Grampians go, we have a proposal in for the upgrade of the airport. We have already had some state funding, but some additional funding would be good. That is a real regional thing, too, with aerial bombing and so forth. As far as tourism goes, there is an iconic walk proposed within the Grampians. Projects like provide some real benefits in infrastructure, and any assistance would be greatly appreciated.

CHAIR —I am sorry to sound like a bit of an ad for government programs, but the jobs fund guidelines and criteria have just come out. It is important to get across those, and the Tqual Grants program as well, which are for tourism projects. I do not have information on them, but I am happy to provide that to David as your federal member if he does not have it.

Councillor Gross —I would like to support would Kevin has just said. The Western Highway upgrade would be one that could be brought forward and done in a shorter time. We noted that the pipeline through the Wimmera Mallee was listed for 15 years. It has been completed in four years. As I said earlier, this has given a lot of help and support to the community as a whole. I believe that the Western Highway from Ballarat to the South Australian border is listed as a 10-year program. I would like to challenge the government to try to develop that into, say, a three- or four-year program to stimulate growth and to give continuing work to the contractors on the pipeline to another project in the community and thereby underpin the whole economy of this region. In the twenties and thirties similar projects were done throughout Australia to provide jobs and provide real infrastructure for the community. I believe this is a challenge that the government could look at and take up.

CHAIR —Did you have anything to add, Tony?

Mr Bawden —Those transport linkages are, I think, really crucial to the western area of Victoria in terms of highways, as we said, but also for getting the rail working in a consolidated workable manner—good work has commenced on that—and a passenger air link to this region. The airlines that we talked to are just not prepared to bite the bullet. I think they need some sort of assistance, beyond that which we as local councils can provide, in underwriting losses and such. So there is an opportunity for some incentives for those companies to at least be given some seed opportunities to provide such a service to get the Melbourne and Adelaide people out here and vice versa. It is another opportunity.

CHAIR —Do you have anything to add, Mr Hawker.

Mr Hawker —I think it has been covered more than adequately.

CHAIR —Thank you for your evidence today. I thank Horsham Rural City Council for its submission. If after having provided evidence here anyone would like to send further information to the committee please feel free to do so. If we have further questions the committee secretariat will write to you. You will receive a proof copy of the Hansard transcript of today’s proceedings and we invite you to advise us of any changes you would recommend.

[10.28 am]