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RURAL AFFAIRS AND TRANSPORT LEGISLATION COMMITTEE
20/10/2010
AGRICULTURE, FISHERIES AND FORESTRY PORTFOLIO
Agricultural Productivity

CHAIR —Welcome.

Senator COLBECK —I just want to ask one question of the minister. It does relate to the last area. You have written a letter to the committee, Minister, to deal with an issue that we have in relation to the EADRA for horses. I want to specifically ask if there is any capacity for flexibility in the 1 December date, bearing in mind the committee is very keen to participate and assist with the progression of this issue. We are going to put a reference in, as I understand it, to the Senate next week for inquiry. The question is, is there any flexibility from your perspective in that 1 December date so that we can get the industry in to provide their input into the process?

Senator Ludwig —The short answer is no, because it is the industry that I am trying to get focused on 1 December, so I do not feel minded to push the date for this committee on the basis that, if the industry wanted to come to me and argue cogently why 1 December was too soon or they might be able to meet the requirements prior to or just after 1 December, I might be minded to look at that. But for the purposes of changing the date for the committee, I am sorry, no.

Senator COLBECK —No, I understand your rationale. What would be the process by which you would promulgate the use of vaccinations?

Dr O’Connell —We have just lost the people who are the right people.

Senator Ludwig —We will take that on notice and provide you with that.

Dr O’Connell —Basically there are regulatory processes that need to be managed at state level and a couple at Commonwealth level.

Senator COLBECK —That probably does answer my question and we do not need to go any further. I think that covers where we need to be for this, and I am sure that we will have continued discussion on the matter as the next six weeks move forward.

Senator NASH —In terms of the potential impact of the Murray-Darling Basin Plan and any permanent removal or reduction in water, will Agricultural Productivity be doing any work on the impact that that might potentially have on the meat, dairy and wool industries? Has that been done at all or is that something you are likely to be tasked to do?

Mr Glyde —The estimates of the impacts of that work have all been done by ABARE-BRS. It does not sit within the Agricultural Productivity Division.

Senator NASH —So it sits with ABARE and it has been done?

Mr Glyde —Yes.

Senator NASH —Is it publicly available?

Mr Glyde —In terms of the impacts on the industry, yes. The documents that Mr Morris and Mr Gooday were referring to go through each of the sectors and describe the impact in each sector.

Senator NASH —Great. I have not had a chance to get right through that yet. That is all contained in there?

Mr Glyde —Yes.

Senator NASH —Great. Does it also have impact on exports and what the likely outcome is going to be on the export industry, given the significant nature of Australian agricultural exports? Has any work been done on that?

Mr Glyde —I am not sure, to be quite honest.

Senator NASH —Could you come back to me on that?

Mr Glyde —Sure.

Senator NASH —And perhaps take into consideration that, if it has not been done, that is something that absolutely needs to be done. On an entirely different issue—this one might actually go to the minister, I think, rather than the officials—which is the live sheep export trade, I know there are a number of your colleagues in the Labor Party who are keen to see an end to that. Just for the committee, are we to understand that the government policy will remain the same?

Senator Ludwig —There is no change to government policy at this time.

Senator NASH —There is no change? So those other Labor Party colleagues—

Senator Ludwig —I think since about day two in the job I have been getting emails at a fierce rate.

Senator NASH —Yes, you have indeed. So they are barking up the wrong tree and they are not going to get anywhere, those colleagues of yours that want to change it?

Senator Ludwig —There is no change to government policy.

Senator NASH —Thank you very much, Minister.

Senator COLBECK —The department provided the Horticulture Code of Conduct review report to the minister’s office on 14 September 2009 and the minister released the report publicly on 1 November 2009 and said that the government would consider it. Considerable consideration later, where are we at?

Mr Grant —We have not progressed a great distance since the last time we met. The response to the recommendations made by the ACCC and the input from the Horticulture Code Committee is still being considered by the government. As you would appreciate, the issues around the Horticulture Code of Conduct, the recommendations made and the range of possible responses to that are very complex. We are now working with the new minister’s office to explain those complexities and complications and to come to a position in the near future about trying to finalise a government response to that.

Senator COLBECK —So any time line is effectively in the minister’s hands?

Mr Grant —It is still with the government to consider the response.

Senator COLBECK —I understand he is a new minister, he has a whole heap of stuff on his plate and he has to get up to speed on things, including this complex one. It is taking a while, obviously.

Senator Ludwig —I am happy to say they are still in the process. I have not formally had an opportunity—

Senator COLBECK —We know it is still in the process. I think that is obvious to everybody.

Senator Ludwig —It has been less than four weeks.

Senator COLBECK —Are there any particular pressure points apart from us? What is industry saying about this?

Mr Grant —We have not had a lot of representations from industry to try and resolve the horticulture code. There has been a regular series of meetings with the industry and ministers in the department. The issue comes up, but I would not say that it is a burning issue that we get asked at regular meetings. There also has not been a lot of activity through the mediation service that has required mediation, although that service probably has not been as effective as it could have been in the past in any case, so that is not necessarily a key indicator of problems in the industry. We have not been knocked over with complaints about the fact that we need this resolved and we need it fixed, because there is such a divergence of views across the industry about some of the outcomes.

Senator COLBECK —So there would be some people who do not support the code as it stands, others who would desperately want to see it changed and some who do not want to see it there at all.

Mr Grant —And some who would want to see it changed to be more rigorous and to widen the scope and some who would want it to remain within the current scope. There is a very wide range of views about the code itself.

Senator COLBECK —So while nothing is happening, everyone is just getting used to it and getting on with life.

Mr Grant —Perhaps, yes.

Senator COLBECK —Are we tracking any of the issues that were identified earlier to see whether they are verified or not?

Mr Grant —We continue to meet with relevant industries and to talk to them about their experiences under the code, as a way of monitoring their experience, but nothing in particular about tracking those issues, no.

Senator COLBECK —Is anyone’s story changing much?

Mr Grant —It is hard to tell, because HAC—the horticulture advisory council—

Senator COLBECK —Horticulture Australia, yes.

Mr Grant —folded recently. They were one of the main proponents for trying to resolve issues with the code and they had quite strong views. Since they have fallen over it has been hard to find a consistent view across the industry about the code.

Senator COLBECK —That was Horticulture Australia Council, was it?

Mr Grant —Yes, that is right, Horticulture Australia Council.

Senator COLBECK —And they folded in and around the process of the biosecurity stuff, I think—just after that. Okay, we will leave it there, and I am sure we will have another discussion. In May’s budget there was a cut to the Regional Food Producers Innovation and Productivity Program of $5.5 million over two years. During the election the government diverted $1.5 million of the remaining funds to its national food plan. Can you advise what the remaining funds are over this year’s and the next financial year’s program?

Mr Grant —There are approximately $8 million of funds that remain uncommitted from the Regional Food Producers Innovation and Productivity Program. Of that, the government committed $1.5 million in the election to implement the new national food plan.

Senator COLBECK —Is there going to be another round of funding?

Mr Grant —That is an issue that the government is still considering, although, as you are aware, the program runs out in June 2012. In order to progress a full round of funding from a tender process, an assessment of applications and then a grants program which involves payment on a retrospective basis, there really is not a lot of time between now and June 2012. So, while there has not been a decision made about another round, I think it is debatable whether there will be time to run another round.

Senator COLBECK —So there is potentially $6.5 million sitting there that could effectively lapse.

Mr Grant —It is uncommitted.

Senator COLBECK —We can argue about the interpretations on the titles. How much has been spent over the period on the seafood industry?

Mr Grant —There have been grants approved to date of $3,194,720 for the seafood industry. What has been contracted to date has been $2,073,577.

Senator COLBECK —It is a bit short of the $10 million that was promised at the 2007 election.

Mr Grant —All we can do is assess the applications that we get. We did try and promote the program extensively to the seafood industry, and we assessed the applications on a consistent basis across all sectors.

Senator COLBECK —So it would almost appear that the leftover money comes out of the seafood sector. Perhaps that is a simplistic way of looking at it. There is $6.5 million left and $3.2 million out of $10 million has been spent.

Dr O’Connell —That is not as a result of saying that the seafood industry does not have access to the original—

Senator COLBECK —No, I did not say that. I am just saying that is where the shortfall potentially lies, and it might be their fault.

Dr O’Connell —I still would not want it to be characterised as there being a shortfall in the seafood area as opposed to other areas.

Senator COLBECK —There is a clear shortfall in the seafood area, isn’t there?

Dr O’Connell —There is a shortfall in the announced amount—that is absolutely right—and, as Mr Grant says, that is because of the sorts of applications we had coming through and their assessment. We still have to settle on what to do with the remainder of the amount. There should not be an assumption that that will not be expensed.

Senator COLBECK —Although we have had an indication that it will not be expensed during the period of time.

Mr Grant —I think I indicated it was unlikely to be a funding round.

Senator COLBECK —I understand the logistics, so I get that, but you have a contracted amount of just over $2 million and a possible high mark of $3.2 million, so there is $6.8 million that has not been expended on that program that was committed to be spent on that program. Let’s not argue about the rationale, but that is a fact.

Dr O’Connell —Yes, that is right.

Senator COLBECK —So effectively the other elements of the program are down by something of the order of $7 million as well, given that there was $5.5 million taken out and there is another $1.57 million.

Mr Grant —The total funding contracted in the program to date has been $11,298,000.

Senator COLBECK —Total contracted?

Mr Grant —Yes, of which seafood is $2.073 million, as I said.

Senator COLBECK —So we are talking about $11.3 million effectively contracted. Is there any more that could be—I cannot recall the term that you gave to the $3.194 million.

Mr Grant —The term was ‘awarded’. Grants were awarded as part of the negotiations on a funding agreement. You tend to vary the amounts that get—

Senator COLBECK —That is over and above the $11.3 million contracted for? Was more than that awarded? What is the awarded sum?

Mr Souness —I can clarify. Decisions are initially made on the applications that meet the criteria and that should be awarded funding. For the regional food program, that totalled just over $16 million. But, either in the period of negotiating funding agreements or after negotiating funding agreements, applicants pull out—for example, with the seafood component. We have had three applicants pull out, so in excess of $1 million was not taken up. So we indicate that about $16.13 million was awarded but, when we refer to funds committed—the $11.3 million that you refer to—that amount is after certain applicants pull out for various reasons.

Senator COLBECK —It is still not a really good result. Even if the amount awarded was fully expended, you are almost $20 million down on your commitment over the five years. It is not a good result.

Dr O’Connell —There was reallocation as well.

Senator COLBECK —Okay, you have reallocated $5.5 million, or $7 million. But take the $7 million out of the $20 million and you are still $13 million down.

Mr Grant —We have actually reallocated more than $7 million. I can run you through that, if that would help.

Dr O’Connell —The available budget in the end was $20.3 million—

Mr Grant —Correct. After the reallocations that were made through different programs, the available budget was $20.369 million.

Senator COLBECK —You are still only running at almost 50 per cent. But let’s go through the reallocation, to make us all feel better.

Mr Grant —In 2008-09, $3 million was allocated to the Promoting Australian Produce (Major Events) program, which was a new program committed to by the government in that year. $3 million was unspent in 2008-09 and returned to the consolidated revenue.

Senator COLBECK —That is hardly a reallocation, but please continue anyway.

Mr Grant —In 2009-10, there was $1.39 million allocated to the Promoting Australian Produce (Major Events) program and $830,000 reallocated to the Climate Change Adjustment Program.

Senator COLBECK —What was that spent on?

Mr Grant —I do not have that information. I will have to take that on notice.

Senator COLBECK —Different division?

Mr Grant —Yes, a different program. In 2010-11 there was $1 million allocated to the Promoting Australian Produce (Major Events) program, and there was $1.5 million in savings made as part of the 2010-11 budget, announced in the budget process, that was allocated to the new Horticulture Code of Conduct funding arrangements of the mediation service, through the Department of Industry, Innovation and Science.

Senator COLBECK —The one that is not working as well as it could?

Mr Grant —To the new mediation service—it is still being implemented—and to the Pacific leaders forum. That was a budget measure. I think you could find that. That is in the PBS.

Senator COLBECK —Pacific leaders forum?

Mr Grant —Yes.

Senator COLBECK —Which does what?

Mr Grant —A major component of its work is on Pacific fisheries issues. It was a savings measure taken in the 2010-11 budget.

Senator COLBECK —That was how much?

Mr Grant —$1.5 million. In 2011-12, $4 million was allocated as part of the same savings measure.

Senator COLBECK —To what year?

Mr Grant —To 2011-12, the forward year.

Senator COLBECK —Four million dollars?

Mr Grant —Yes.

Senator COLBECK —It seems like it has been the honey pot for bits and pieces. Obviously, it was a complete failure as a program. When you consider the program it replaced, only $11.3 million out of a $35 million promise has actually been delivered to food producers and innovation. That is a complete and utter failure.

We are running out of time, so I will move on. Has the department made a submission to the Productivity Commission draft on R&D?

Mr Grant —Yes, we have.

Senator COLBECK —You have? It is on their website?

Mr Grant —Yes, it is.

Dr O’Connell —Not on the draft report.

Mr Grant —Sorry. We made a submission to the original—

Senator COLBECK —Gee, for a minute there I was going to go away satisfied.

Mr Grant —You meant on the draft report?

Senator COLBECK —Yes.

Mr Grant —Sorry, my apologies for misunderstanding. We made a submission in response to the original request for submissions. The due date for submissions on the draft of the PC’s report is not until 26 November.

Senator COLBECK —Are we making a submission to the draft?

Mr Grant —We are still considering that within the department, but certainly our intention at this stage is that we would.

Senator COLBECK —Do we not have a view?

Senator NASH —Why would you not do that?

Mr Grant —I think it is highly likely that we will make a submission from ABARE at least, because ABARE does not think that a number of the conclusions that the PC made about the history of the research and development components and contribution to productivity analyses were supported by the research done over the last 10 years. There is a lot of work being done by ABARE at the moment to—

Dr O’Connell —I might just add to this. There are two sorts of submissions you can make: one is factual or analytical to help people work through things; the other goes to policy issues.

Senator COLBECK —Yes. So you are erring towards the factual and analytical?

Dr O’Connell —We certainly think there is quite a discussion to be had around the productivity issue and research and the work that ABARE has been undertaking over the last couple of years, work which essentially the Productivity Commission more or less rejected. We think that there is a discussion to be had there.

Senator COLBECK —So you are going to stick up for yourselves. That is good.

Dr O’Connell —There are other policy issues of a more normal strict policy base which, by and large, my inclination would be to keep within the government process for responding to the submission. We have yet to go through that discussion, but I think you can expect to see some work around productivity in the public arena.

Senator COLBECK —So effectively reinforcing the views that you put forward beforehand, defending the views—

Dr O’Connell —I think clarifying the issues that have been laid around there, because there is an analytical base on which the discussion in the Productivity Commission was relatively thin.

Senator COLBECK —Is there a ministerial council in December this year for the food labelling review?

Mr Grant —There is a ministerial council meeting in December. I think it is 3 December, if my recollection is right. It will consider a report from the Blewett review, yes.

Senator COLBECK —Has the review panel drafted its report and recommendations yet?

Mr Grant —I do not know.

Mr Souness —The review panel is still preparing its report, we understand—remembering that it is an independent review and the secretariat for that panel sits in the Department of Health and Ageing. But we understand that they are still drafting their final report and it is that that will be presented to the ministerial council in December and then—

Senator COLBECK —COAG in early 2011.

Mr Souness —Yes.

Mr Grant —Yes.

Senator COLBECK —So that program is still—

Mr Grant —That is on track.

Mr Souness —Yes. We understand it is on schedule.

Senator COLBECK —I will move on. I will ask you to take this on notice. I want to get some figures on vegetable imports. For the 10 most imported vegetables, can you give me a breakdown of imports of vegetable commodities in 2009 by commodity and origin and a breakdown of exports of vegetable commodities in 2009 by commodity and origin?

Dr O’Connell —Just to be clear, is this commodities you are talking about?

Senator COLBECK —By vegetable commodity, fresh and processed.

Dr O’Connell —There is a lot of complication with processed food imports in trying to work out the quantities.

Senator COLBECK —My problem is that some of these are inputs to processing.

Dr O’Connell —Yes, I understand that.

Senator COLBECK —I understand the complexities. I just want to get some relatively complete figures on the flows of vegetables in and out, bearing in mind the trend over recent years towards net import. I am going to need fresh and processed, I think. I am looking for as complete a picture as I can get.

Dr O’Connell —You are looking for things like frozen veg.

Senator COLBECK —Yes.

Dr O’Connell —And we can give you a commentary around it so that it is helpful, if you like.

Senator COLBECK —Yes. I specifically want to get some figures from New Zealand, and I need to get some production figures as well over, say, the last five years by state and product.

Mr Glyde —You want to go back five years so you get a bit of a trend?

Senator COLBECK —Yes. I would like to get some trend flows and inflows and outflows so that I can just look at some general pictures of where that particular industry sector is moving.

Mr Grant —Just for imports from New Zealand?

Senator COLBECK —No.

Mr Grant —But that identify New Zealand especially?

Senator HEFFERNAN —In the case of New Zealand, are you looking for country of origin or—

Senator COLBECK —No, Bill. I do not want to complicate it.

Senator HEFFERNAN —A lot of them are Chinese products from New Zealand into Australia.

Senator COLBECK —In a lot of circumstances it is not necessarily possible to identify that.

Senator HEFFERNAN —So you are not interested in whether they—

Senator COLBECK —Once I get the numbers, I can then start to look at a breakdown.

CHAIR —We do thank the officers from Agricultural Productivity. We now call the Australian Pesticides and Veterinary Medicines Authority.

Senator HEFFERNAN —I have a question for these fellows.

CHAIR —You will have to put it on notice, Senator Heffernan. We are way behind schedule.

Mr Glyde —Chair, I have a clarification on a question we took earlier on from Senator Nash. She asked whether or not, in the Murray-Darling Basin Authority report that we did on the social and economic impacts, we focused on exports. We did not. They can be calculated. The report focuses primarily on the regional impacts. But the logic would be that for those products that are heavily exported, like rice and cotton, a decline in the production of rice and cotton would inevitably have an impact on exports of those products. We could calculate the exports; we just have not done it in the report.

Senator NASH —All right. Minister, can I ask if you might have a discussion with—

CHAIR —Senator Nash, I have just upset your colleague. Time is really against us.

Senator NASH —No, I am not asking a question. I am just asking him to do something, if he would not mind. Minister, could you just have a conversation with Minister Burke around the appropriateness of perhaps doing some further work on the impact on the exports?

Senator Ludwig —I will take that on notice.

Senator NASH —That is all I want you to do. That would be great.

[9.43 pm]