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RURAL AFFAIRS AND TRANSPORT LEGISLATION COMMITTEE
20/10/2010
AGRICULTURE, FISHERIES AND FORESTRY PORTFOLIO
Rural Industries Research and Development Corporation

CHAIR —I welcome officers from Rural Industries Research and Development Corporation.

Senator NASH —I will ask some questions around the Productivity Commission report.

Senator Ludwig —Draft.

Senator NASH —Draft, sorry. It is a bit like the guide to the plan for the plan for the basin, isn’t it? The court of King Caractacus.

Senator Ludwig —You said that, not I.

Senator NASH —I am stealing it from a journalist. Sorry, the draft Productivity Commission report. I am trying to get an understanding of what they have put forward within that report that would, if implemented, affect the way RIRDC operates. What impact would that have? With what they are putting forward, is there crossover or double-up with how RIRDC actually operates now?

Senator Ludwig —It becomes a little hypothetical in part, because until such time as—

Senator NASH —Okay, I will rephrase it. What is the RIRDC’s response to date to the draft report?

Senator Ludwig —Excellent question.

Senator NASH —Thank you, Minister.

Mr Burns —Along with, I think, all the other R&D corporations we will be putting in a further submission to the draft report highlighting those areas of the draft that we think are particularly relevant to our operations. There are a lot of things in the report that we would support in terms of the principles around R&D. The fact that there is an underlying support for the R&D model and the history of that is all positive stuff.

There are a couple of recommendations in particular which would impact on our work, and of course the recommendations around reductions in government matching would have a slight impact, but probably the bigger impact is a recommendation to create a new R&D corporation which would be called Rural Research Australia. It logically, reading through the draft, would acquire some of the activities that are currently undertaken by RIRDC.

The draft report does, of course, say that the exact details of what might go across need to be worked through, through the further submission process and further discussions, and obviously at the end of the day that is a decision for government, but there are some things that are recommended to go across—a lot of the public good things that we currently do that would logically go to the other organisation—so we would be building an argument in our submission that RIRDC is already established to do largely public-good work and that would be a position that we would take.

Senator NASH —I would hazard a guess that you would say the job you are doing is entirely appropriate and does not need to be changed, but I will not ask you to comment on that, and I think it is probably quite a good assumption. As the minister said, we cannot do hypotheticals. Perhaps, Minister, this one might be better for you to comment on in light of that. I think it is in the third chapter that the report goes on to talk about:

A range of other arguments for government intervention have also been advanced, including to promote food security, support regional development, compensate for disadvantageous trade conditions, foster infant industries and develop value-adding supply chains.

That all sounds pretty good to me. It then goes on to say:

However, for various reasons, these arguments do not provide sufficient—or possibly even good—grounds for intervention.

That seems to be a bit in contrast to the Primary Industries and Energy Research and Development Act, which goes on to talk about the objectives, about increasing the economic, environmental and social benefits, and so on. I am sure you know what it is, Minister. They just seem to be in contrast with the draft report saying that those types of things are not good grounds for intervention and yet, under the act itself, it is those types of things that they say should be done. Without sounding like I am trying to stick up for RIRDC here, there seems to be a real contradiction in the two things. I would be interested to know how perhaps the minister might see those two things sitting. They seem to be in direct contrast.

Senator Ludwig —I would prefer to wait for the final plan—report, I should say. It’s getting late.

Senator NASH —Report, draft, the thingy—until we get the final thingy.

Mr Burns —February 2011. I am sure you have read the draft Productivity Commission’s report. One of the issues is that it goes through a whole range of issues and it tends to weigh some issues and balance one against another, so I was keen to see where they effectively landed. What I have been saying to industry, though, is that it is a once in a lifetime opportunity to get their act together, to provide submissions to the Productivity Commission about the structure, about some of the issues raised in the draft PC report, about issues that go to balancing public good against private good, and about the particular issue you raise there, demonstrating the value of the research that government is investing in.

Clearly, what the draft Productivity Commission report also outlined was the significant investment by government in RDCs in Australia as compared to other industries outside of agriculture, but—correct me if I am wrong—they did also make the point that it was valuable and it did provide a justification for that increased funding and, of course, they went on to make other findings about that as well, which I will not go to.

The strength of the RDCs has been demonstrated through the draft Productivity Commission’s report, and that is encouraging, but I think it is now incumbent upon the RDCs, and particularly the stakeholders in the RDCs, to take the next step in the submission to the Productivity Commission draft report, particularly about those issues that they have mentioned, and I think particularly about the research that the PC has looked into, about the various issues you have mentioned such as the infant industries argument—some of those—and about lifting productivity. Ultimately it is about ensuring that we do continue to strive for improvements in productivity, increasing productive capacity in our rural area, and we do not, as government, undertake to pay for what we would call industry’s responsibilities in providing private good.

Senator NASH —True. Thank you. We shall look forward to talking with you about it at the estimates in February. But, on that point, nor do we want to see a shift going on to industry for a financial responsibility that, in the public good, should remain with the government.

Senator Ludwig —That is where it is really incumbent upon stakeholders to ensure that the submissions they make to the Productivity Commission manage to convey an accurate picture about public good and private good, about the adaptive research that is undertaken by the RDCs and used for industry, and also about the blue-sky research that RDCs can contribute to.

Senator NASH —I would hope that you would be able to reassure the committee, though, that any potential changes would not result in an overall reduction in the quantum of government funding going to research and development?

Senator Ludwig —It is an excellent question. I am going to wait for the Productivity Commission’s report before I make any announcements in this area.

Senator NASH —And I shall wait for your excellent answer, at that point in time, that will reassure this committee there will be not one dollar dropped off the research and development budget! Thanks, Minister. Thanks, Chair.

CHAIR —Thank you, Senator Nash. As there are no further questions of RIRDC, we thank the representatives very much.

[10.01 pm]