In the craziness of modern politics an important discipline for every politician is to set aside some time to pause and take stock. To remind yourself why you are involved and what it is you want to achieve.
I believe it’s also important to be able to answer one’s own question in a sentence or two.
I’m in Canberra to grow the cake and lift all boats.
To promote economic growth and to make sure the dividends are fairly shared.
The best way to lift all boats is to invest in the productive capacity of our people and by protecting those at risk of falling through the cracks. Investing in people is also critical to growing the cake because education and training are a key part of any productivity agenda.
But it’s only one part of the effort required to lift Multi-Factor Productivity.
That’s in part where you come in; the innovation you bring is critical to the extent to which we leverage our human, financial and natural capital.
And if our economy is to continue along the long path of unbroken economic growth, government needs to put a high value on what you do as an industry, and do everything it can to encourage further innovation.
Another key to sustainable economic growth is the embrace of change and the boldness and courage required to drive structural change in our economy.
It was the big structural changes of the 1980s and 90s which laid the basis for the twenty-two-year run of continued growth we’ve enjoyed to the present; the opening up of our economy, tariff reform, market reform, taxation reform, workplace relations reform, and financial services reform.
Reform continued for the first decade of the twenty-first century but it seems government has lost any appetite for further change, including in the agriculture portfolio.
Worse, in response to a changing and more difficult political environment governments are turning their backs on the neo-liberal economic policy approach which have served us so well for so long.
There can be no better example than the energy sector where five years of policy paralysis has created a crisis which is inviting policy responses more at home in the Menzies era.
One of my many concerns is that if failure to embrace change can lead to radical interventionist responses in the energy sector, the same can be true of other sectors – including the agriculture sector which is more vulnerable to populism than most.
That would be disastrous for a sector so dependent on both export markets and its international competitiveness.
So the message is: it’s time to embrace change and embrace it quickly.
Of course so many opportunities lie ahead for Australia’s agriculture sector. But there are many challenges too.
Let me name a few of the challenges, and my list is not exhaustive:-
- Our changing climate and our slowness in embracing both mitigation and adaptation policy responses.
- Slow progress in turning around the farming practices inherited from our European settlers.
- Poor natural resource allocation.
- Our obsession with export volumes rather than export-product value.
- Too little Government attention to threats to our biosecurity and our relatively pest and disease-free status.
- On-going and significant market access issues.
- Our shortfalls in capital investment.
- Our poor productivity performance, poor levels of innovation uptake, and our failure to embrace all the offerings of biotechnologies.
Let me quickly say something about what we need to do in response to each of these.
Australia is the driest inhabited continent in the world. Only about ten per cent of the continent enjoys sufficient yearly rainfall for plant growth.
Of course the productivity of our limited soil resources is largely determined by the moisture we have so little of.
Historically local farming practices and other human activities have degraded our soils, raised salinity levels and damaged our waterways, ecosystems and the biodiversity they rely upon.
The question becomes, how will we grow more food in the future with fewer natural resources?
The first step in addressing these challenges is meaningful action on climate change.
The second response is the greater promotion and encouragement of better farming practices. There is a role for government in this endeavour.
The third step is to ensure our limited resources are being directed to the products which provide the highest economic returns. The Productivity Commission – in its report into the Regulation of Agriculture – recently reminded us that our pasture and grazing sectors use five times more water than the vegetables sector.
Yet the value returned on water use in the vegetables sector is four times greater than that for the pasture and grazing sectors. This is not an argument for less beef production. Rather it’s a case for further pursuing market mechanisms which influence resource allocation.
The Murray Darling Basin Plan and Tasmania’s Midlands Water Scheme are good examples. They've resulted in a contraction of low-return irrigated grazing enterprises and an expansion of higher-value dairying and horticultural enterprises. Landholders and local communities are amongst the winners.
The fourth step is a greater focus on premium export markets. Using more of our limited natural, labour and financial resources to produce more commodity products for markets where we are price-takers makes little sense.
The fifth step to provide investors with reassurances that our reputation as a provider of clean, green, safe and quality product will be protected at all cost.
The sixth step is to stop boasting about new Free Trade Agreements and more effectively deal with the significant remaining non-tariff barriers.
The seventh step is to put an end to silly populist policies which discourage foreign investment.
All of the above is dependent on the eighth step: the pursuit of better outcomes on the innovation front where our performance has been underwhelming.
To lift our game on the research, development, extension and innovation fronts we need to do at least three things:-
- We need to review the rationale for, and the structure and performance of our Research & Development Corporations, something that hasn’t been done since 2010.
- We need to further examine the decline in extension including the effects of the slow withdrawal of the states.
- We need leadership to restore universal respect for our scientists and public institutions like the CSIRO which had been suffering death by one thousand funding cuts in recent years.
And we need to reassure the crop-protection and biotechnology companies interested in investing in Australia that we are open for business.
That will remain a priority for me.