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Transcript of address to the National Farmers' Federation Council dinner, Canberra.



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12 November 2002

TRANSCRIPT OF THE PRIME MINISTER THE HON JOHN HOWARD MP ADDRESS TO THE NATIONAL FARMERS’ FEDERATION COUNCIL DINNER,

BOOKPLATE RESTAURANT, NATIONAL LIBRARY OF AUSTRALIA, CANBERRA

E&OE…………………………………………………………………………………………...

Thank you very much Mr Carroll, Peter the President of the National Farmers’ Federation, Warren Truss, Jeannie Ferris, other parliamentary colleagues, ladies and gentlemen.

It is for me always a special pleasure to be invited to address a gathering of the National Farmers’ Federation. I have had a long association with this body stretching back to when I was first a member of the Government and then 13 long years of opposition. We shared a few political battles, usually on the same side and most particularly in the cause of industrial relations reform. Of all the policy issues to which I have been committed in my political life, none I attach greater significance to than reforming our industrial relations system. And there was no body that was more unswerving in its support for the cause of industrial relations reform than the National Farmers’ Federation. There were others that were very good too but the persistence of the National Farmers’ Federation and its commitment on a lot of issues to sensible economic outcomes and not just a narrow parochial argument.

The National Farmers’ Federation was one of the bodies that argued long ahead of other industry bodies for freeing our financial system and floating the Australian dollar. And I want to pay tribute to the NFF for the role that it has played in shaping the economic climate in this country and pointing it in towards the paths of righteousness, if I can use an almost semi-biblical expression, because these things are sometimes forgotten. Over the last 20 years you think of the debates we have had on financial deregulation, on industrial relations reform, on taxation reform - on all of those things the National Farmers’ Federation… tariff reform, how could I ever forget that talking to a gathering of farmers. The National Farmers’ Federation has played a hugely influential role and has argued for the long term policy position that would be of maximum long term benefit to Australia.

So it’s against that background that I’m very happy to be here tonight and I’m particularly conscious of the difficult circumstances now being faced by so many Australian farmers. I’m

PRIME MINISTER

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glad that your President has struck a number of positives because in all of these situations there are positives as well as negatives. I agree that farmers are resilient. They will emerge, many of them strengthened by the difficulty. Some won’t and may need to be assisted and their position needs to be understood. You all know how severe the drought is. At our Cabinet meeting in Brisbane last week John Anderson gave us a detailed briefing based on discussions he had with the Met Bureau and it indicates, as I probably don’t need to tell you, that you have serious to severe rainfall deficiency in about 70 per cent of Australia. Virtually all of New South Wales is in drought and some areas are experiencing their worst rainfall in recorded history. They’re facing their third successive year of drought.

And what I want to say to you on behalf of the Government is that we understand this. We are sympathetic. We are endeavouring to deliver some practical measures and we have a commitment to provide all reasonable assistance that should be provided by Government at a time such as this to Australia’s farmers. Fortunately there are some things that are mitigating the severity of the drought. Your President and Mr Carroll were kind enough to mention the benign interest rate climate. That is of enormous benefit. And the general strength and prosperity of the economy is important at a time like this.

The Farm Management Deposits have proved to be hugely successful and their introduction prescient, and I want to especially pay tribute to John Anderson the Deputy Prime Minister and Leader of the National Party, for his passionate advocacy of these several years ago - an advocacy that I supported and shared. But John worked and campaigned very hard because he could see the longer term value of putting in place a financial instrument that enabled farmers in better years to put something away with a tax advantage, knowing that eventually there would be some bad years when you would need to pull them out at a lower rate of tax. And so popular have they been that 43,000 farmers have invested, which is a very significant proportion. There is about $2 billion in the deposits at the present time and in tax forgone terms you’re looking this year at something in the order of $500 million which is available in the rural community that would otherwise not be available if these management deposits didn’t exist. And I think it’s important when we’re looking at the overall climate in which the rural community is trying to cope with the drought, that we bear that in mind. Now we are very committed to the maintenance of the Farm Management Deposits and we’re frankly pleased that we brought them in, and I think they have been of enormous assistance.

Exceptional Circumstances, which is a policy that has now been operating for a number of years, it has been subject to a bit of criticism. I think it has been caught in the crossfire of interjurisdictional politics, if I can put it that way, which I must say Australians whether they are farmers or city dwellers get very angry with when you’re dealing with something that’s important to the country. Now can I say that my heart goes out to Warren Truss as my ministerial colleague who has got to be at the sharp edge of all of this and to deal with the administration of a system that does involve straddling both State and Federal considerations. As you know, there have been a number of applications lodged. We did change the criteria. We made them more benign. We now make an assessment based on a prima facie judgment and the welfare assistance is available for a provisional period of six months from the date of that prima facie judgment. And that has meant that in cases where applications have been made recently, that assistance begins to flow far more easily. We’re already providing under existing declarations about $75 million on an annual basis for areas in Queensland and Western Australia and I have no doubt that that could treble or quadruple or even go five fold over the months ahead. Even if there were to be a sudden change in weather conditions, and unfortunately there is nothing to suggest that, there are two recent applications and I expect Warren to be saying something about that even as early as tomorrow morning.

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Can I just round off what I’ve said about the drought in saying again it’s very important that this peak body accept this very directly from me on behalf of all the members of the government. We are intensely acutely aware of the pain and adversity that the drought is inflicting on so many farmers. We want to work with you. We recognise that not everybody is affected by it and even in these difficult times there are some very good stories, but we also understand that other people are struggling and we want to work with you with the policies we have and commit ourselves to responding in the most effective way and can I say in a cooperative way with state governments I do not want to argue with state governments in relation to drought policy. I don’t think farmers want state and federal governments arguing. They want them both working together to produce an outcome which is important for the nation.

There are three other issues that I know are very important to you that I want to canvass in my remarks tonight. The first of those relates to the issues that your President identified as the signature or number one issue of the National Farmers’ Federation and that is the question of water property rights of land holders. This is crucial to you, it’s crucial to the long term water policy of this country, it’s also crucial to long term environmental values of Australia. We do need serious comprehensive reform. We recognise the fundamental Australian principle that if somebody’s property right, be it a water property right or some other property right is disturbed and diminished or cancelled then that person is entitled to a proper level of compensation and that is a very important principle. State water regimes do need to be improved to provide better investment certainty. We have to remove what we’ve come to call the rail-gauge problems that exist in relation to water property rights around Australia. I think the ideal of having a common water right across the nation if we could achieve that would be of enormous value, and it’s important that we move in this direction because the absence of greater uniformity and the existence of a sort of varied regime between the states is holding up water trading between regions and across borders. The water issue is, if I could put it this way, blind to state borders, and state differences and state borders are a hindrance rather than an aid in this area. This will be on the agenda for the COAG meeting which is now to be held, because of the Victorian election, is now to be held on the 6th of December rather than the 30th of November.

We did as you know have a very lengthy presentation to the Cabinet meeting last week from the Murray Darling Basin group and also representatives of the so called Wentworth Group of scientists. It was a very valuable presentation. to those of us in the Cabinet who are not as well versed in matters relating to water as some of the others it was a very informative session. I was saying to Peter earlier that the issue of the long term availability and use and quality of water in Australia has become in the last 12 months, and especially in the last few months, a topic of general conversation and interest to the entire Australian community. I know a range of views have been put up and perhaps some of the views that have been advanced may not be realistic. But can I say in relation to all of those who are putting forward views they are doing so properly motivated for the national interest and there are a lot of people out there who’ve had no previous connection with rural Australia that are concerned about this issue and want something done about it, and want to help, because they have the long term interests of Australia and particularly the long term interests of rural Australia very much at heart. And can I just say in relation to that that I think the public spiritedness of those who sponsored the Farmhand appeal should be applauded by this group and I pay tribute to all of those in the media and otherwise that have been involved in it, and John Anderson will be saying something in relation to that on behalf of the Government tomorrow.

Can I mention in the context of water that our $1.4 billion national action plan for salinity and water quality is a very important beginning in tackling the problem of salinity. Once again

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cooperation between the Commonwealth and the states and local government is absolutely crucial. If we don’t have that it’s going to be very slow moving. We are making progress. It varies a bit from state to state, but we are beginning to make progress on that and importantly a significant financial contribution has been made by the two levels of government.

Telecommunications has inevitably been in the news with the release of the Estens report. As all of you will know in the last election campaign I made a commitment on behalf of the government that we would not sell any more shares in Telstra unless conditions, meaning telecommunications conditions, in the bush were up to scratch. Some people sort of wondered about such a generic colloquial way of describing it. But I think I conveyed a meaning that most people understood and we were serious about that and that led to the establishment of the Estens inquiry. We got that inquiry result a few days ago and the Cabinet will be examining it and formulating a view within the next week or so. I think it’s fair to say that although the Estens inquiry didn’t find that things were perfect, they did find that a great deal of progress has been made and they did, of course, place a great amount of stress on future proofing and I think that's very understandable and very justified. The report did find that pockets of substandard service remain and that looking forward there were challenges in ensuring that regional Australia shares in the benefits of broadband and other telecommunications advances.

Can I commend the NFF for working with Telstra on improvements to the customer service guarantee as it applies to rural and remote areas. The CSG was introduced and strengthened by this Government and it provides guarantees on connection times and fault repairs and it's a key part of the legislation framework of consumer safeguards. In relation to mobile phone coverage, which is important to all of us but certainly very important to rural Australia, there are a number of Government contracts under a $50 million program to improve mobile phone coverage in regional Australia, which is still being rolled out, including a $20 million program to improve mobile phone coverage to 62 sites on 34 regional highways. And we've also committed $43 million to improve mobile phone coverage to 187 regional towns. It goes without saying that the mobile phone coverage issue is very important. And we believe that on completion of Government initiatives, the terrestrial mobile network will cover 98 per cent of the population and for the remaining two per cent, satellite mobile services are supported through significant Government subsidies for handsets. The CDMA network has provided extended mobile coverage, approximately twice the coverage of the former analogue network.

Telstra has been an issue on the Australian political scene now for some time. Quite plainly, we're not going to go further in relation to the sale of further shares until we are satisfied having examined Estens that it has responded in a way and we're able to respond in a way to what it said to meet the stipulation that I laid down on behalf of the Government during the election campaign. Clearly, if we were to reach that conclusion, and I speak hypothetically at this stage because Cabinet has not considered it in detail, there would be two other issues involved. One of those, of course, would be to try and secure legislative authority for a sale of the remaining part of Telstra and if that were obtained, then importantly, a sale would have to take place at a time and in circumstances which maximise the return to the Australian people.

In the long run, you can't have a telecommunications company like Telstra, in my view, which is half-owned privately and half-owned by the Government. I don't think that is good for the Australian public. I don't think it's good for the fortunes of Telstra as a commercial enterprise. I think it hobbles and inhibits its commercial operations. And I recognise that Telstra is no ordinary corporate beast. It has special responsibilities and has a special place in the information infrastructure and, of course, it's integral to the communications network of

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Australia. And therefore, I stress again that further action by the Government in relation to Telstra will be heavily conditional upon us being satisfied in relation to our obligations to rural Australia and also being satisfied that the guarantees that are now in place remain and they provide for the delivery of improvements in telecommunication services right through out Australia in a way that are reasonably equivalent to the services that are available in metropolitan areas.

Issues have arisen regarding the disposition of the proceeds to the sale of Telstra. There is still a widespread belief in the community that if you sell Telstra, the rest of Telstra for say -and I emphasise that expression very much - for say $30 billion, that that $30 billion comes on the income side of the Budget and that if you spend $5 billion in the year in which you receive the $30 billion, the Budget's $25 billion better off - it's nothing of the kind. The accountants do not let you do that. They raise objections. They say that's dodgy accounting and so it is. And it flows from that that the only real gain to the budget of the sale of an asset such as Telstra are the net savings in public debt interest that accrue from the liquidation of debt with the proceeds of the sale. And that, of course, will vary according to what you get, the share price and assessments made about the dividend flows under existing arrangements.

One of the reasons why we have low interest rates, ladies and gentlemen, is that we have low levels of Government debt. And I myself have held the, perhaps simplistic view, that one of the best things that this Government could do for future generations of Australia is to leave them entirely free of Federal Government debt. And repaying debt with the proceeds of the sale of assets if that sale takes place, and I stress again that it's conditional on the things I've indicated is very high on my priorities, I know it's very high on the priorities of the Government. But you'll hear a little further on issue as we examine the Estens report.

The other issue that I want to touch on very briefly is that of world trade. I've had an opportunity this year to rail on your behalf in many foreign capitals, including the United States Congress, about the perfidy of the trading practises of other countries, especially but not only the European Union. There's probably no audience in Australia, indeed probably no audience in the world, that is better versed in the arithmetic that… what four per cent of the total value of farm production in Australia is subsidised in some way, it's 35 per cent in the European Union and it's 22 per cent in the United States and it's certainly very high in Japan, but I don't have the figure readily to mind. The signs out of Europe are not good. When I was in Brussels in July and spoke to the Farm Commissioner Fischler, he was talking optimistically about some beginnings of change to the common agricultural policy of taking away the production subsidy element and tying the subsidy, still in contemplation at the same level I might say, but tying it not to production levels but tying it rather to environmental standards and other considerations and other agricultural values, whatever that might be defined to me. But it looks as though even that very tentative start has not received a lot of political support and there are suggestions that understandings have been reached between the French and the German governments to delay, perhaps to the year 2013, the beginning of any reform. It will be crunch time on this issue during the Doha round because unless we can get a significant beginning on agricultural reform at Doha, it’s not going to work. The Cairns Group of countries are not going to see an arrangement that doesn’t include a significant start on change with agricultural as being in any way a genuine comprehensive trade negotiation. At the initiative of Mark Vaile we’re having a mini-ministerial on world trade meeting in Sydney this Friday, and it’s going to be attended, amongst others, by Bob Zoellick the special trade representative from the United States, from Mr Lamy from the European Union and from many other senior figures. And it will be a very important opportunity for us to argue not only our case but importantly in a world that talks a lot about the imbalance between the rich and the poor but the impact of farm subsidies and farm protection on the poorest

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countries in the world. Getting rid of even a modicum of the levels of protection now would do as much if not more for underdeveloped countries than the value of all of the foreign aid they now receive from the wealthier countries. And I can’t think of anything that’s more likely to help them in a dramatic enduring way than that.

So it remains, as always, as a huge challenge. I’ve just seen the Japanese figure, I’ve forgotten it, it’s 59 per cent. So Japan’s agricultural support was 59 per cent of the value of their production, the European is 35 per cent, the American is 21 per cent and the Australian is four per cent. Now those figures say it all very dramatically and emphatically on our behalf and it’s a case that we argue with great passion and great commitment.

The final issue I want to mention is that of the possibility, and I can’t put it any more strongly than that on negotiating a free trade agreement with the United States. This is an issue that has been discussed between myself and the President, between Mark Vaile and Bob Zoellick and between representatives of the different organisations. It will be difficult, I can assure you that we are not going to in any way compromise or sell out the interests of Australian farmers in pursuit of a free trade agreement with the United States or indeed with any other country. But given the size of the United States economy and given the value to Australia in the long term if we could negotiate an arrangement and given the fact that there are many elements inside the United States that are very strongly supporting the idea of a free trade agreement, it is a process if the Americans are willing to sit down and start talking to us, it is a process which is worth investigating to see what outcome can be achieved. And I think in the long term if we could reach a proper basis for an agreement with the United States it would be of incalculable enduring benefit to the Australian economy but there is not a natural fit between our farm constituency and the farm constituency of the United States. I’ve noticed that, I’ve observed it, I’ve picked that up as I’ve moved around both the United States and I’ve moved around Australia and the farm bill was not something that we saw as going in the right direction to say the least and there’ll need to be clearly a change of attitudes. But importantly with these things you have to be prepared to exhaust the possibility listen to all the arguments, try and engage the Americans because what we are doing at the moment is adopting a very pragmatic attitude towards trade. We’re not ideologues when it comes to trade, we’re interested in only thing and that is a better outcome for Australia and Australia’s producers, whether they’re on the land or elsewhere and that means really taking a dual track approach, of course we try and get outcomes multilaterally through the World Trade Organisation but if we can do a bilateral agreement with another county that confers advantage on Australia, which we look as though we’re on the eve of doing with Singapore, we’re crazy not to take advantage of that opportunity. And that’s the philosophy that we bring to talking to the Americans. I have no blinkers, I have no misconceptions about how difficult it will be and it may come to nothing but it’s worth trying and they now have trade promotion authorities so if they’re willing to commence the negotiations then that’s a matter for them at this stage to indicate then we would be certainly willing to sit down in the circumstances and on the conditions that I’ve stipulated.

Can I just finish ladies and gentlemen by again thanking you for having me here tonight. We are as a government and as a group of men and women in that government very committed to rural Australia, not only for what rural Australia means economically and that’s huge because of its contribution, not only in food production but it’s enormous contribution to our export income. But we're also, even more importantly than that, very committed to rural Australia because of what it represents in the fabric of the Australian identity. It’s one of the things that has shaped our country, it’s one of the things that marks our country out and our people out to others around the world. And that’s one of the reasons why the vitality and the survival and the resilience of Australian farmers is so tremendously important and I’m encouraged to come

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here tonight and to hear that despite that all the adversity you have you find pockets of optimism and hope and positive things to say, that is characteristic of Australians, particularly of Australian farmers and we in the Government want to help you all we can through these current difficulties.

Thank you.

[ends]