Speech - Rural Press Club - Harnessing the forces of change - A sustainably profitable food and fibre sector - Thursday, 7 February 2019

I thank the Rural Press Club for the opportunity to share a few insights into what, if elected, a Shorten Labor Government might look like and what it would mean for rural and regional Australia.

I also thank you all for coming along in such large numbers and ask in advance that you excuse any partisan comments. We are after all, at the pointy end of the political cycle.

I vividly remember a time when people used to complain that there was no longer any difference between the major political parties. Well, we’ve certainly fixed that!

Labor’s agenda is quite clear: we want to both grow the economy and to make sure every Australian has an opportunity to share in our Country’s success.

To give them that opportunity we need to invest in them. That’s why a Labor Government will:

  • Give every Australian child a chance to participate in early childhood education;
  • Fully fund the Gonski school reforms;
  • Rebuild the TAFE system and properly resource our universities; and,
  • Restore funding to Primary Industries Education Foundation Australia: a not-for-profit organisation giving our school teachers the tools they need to provide our children with a better understanding of where our food and fibre comes from and how it’s produced.

To grow the economy, we also need more investment in transport and telecommunications infrastructure.  Access to education and improvements in infrastructure are particularly important to the fortunes of the agriculture sector and rural and regional Australia.

Of course these commitments require money and plenty of it. That’s why Labor has made some bold but fair policy calls.  We’ll reform negative gearing, dividend imputation arrangements, and the capital gains tax regime to name just a few.

And we’ll use the additional billions of dollars in revenue to invest in people and projects. The Morrison Government will claim that if re-elected, it will also do these things but without meaningful tax reform. Yet we all know their reliance on so-called “trickle-down” economics won’t cut it.

In any case their track record over more than five years give us reason to be concerned that the Government’s infrastructure commitments cannot be believed.

Their woeful performance with the NBN roll-out speaks for itself: many of you have experienced the frustration.

On roads infrastructure, not only have they been budgeting to spend less than the former Labor Government, they have not been spending what they’ve allocated.

Indeed the Budget Papers show that in the past four years, the difference between the amount allocated for major roads projects and the amount actually delivered is $2.8 billion. 

A Labor Government will also use the dividends of tax reform to invest in our health and hospital systems. 

I have a long standing interest in regional development policy and population dispersal.  And all my consultations and research over many years leave me in no doubt that the key to attracting the people we need - and holding on to those we already have - is to ensure local communities have good health, education and telecommunications services.  

The other thing I’ve learned is that the regional economies that do best are those where local economic strategy is being driven by energetic and innovative local people with strong policy and leadership credentials. 

That’s why when we were last in government, we strengthened the relationship between Canberra and local councils and brought them into the decision making processes.  And it’s why we established the Regional Australia Institute, to provide the research needed to make sound decisions.  Evidence based policy must always prevail over pork barrelling and boondoggle exercises.

The current Government, by contrast, showed our councils anything but love by freezing the indexation of their Federal Assistance Grants for three years. They also cut RDA funding.

Of course strong rural economies need a strong agriculture sector and all the things I’ve mentioned - people, services, and infrastructure - are critical to lifting agribusiness productivity and sustainable profitability.

But there are many more agriculture portfolio-specific policy issues to be addressed if we are to realise our ambitions.

Our food and fibre sectors are in desperate need of the capital required to drive scale and to build the on-farm infrastructure needed to lift productivity and to build resilience and diversity.

There are of course only two sources of investment: domestic and foreign. 

On the latter, the current Government could not have done any more over the last five years to discourage capital inflows, particularly those from our North.  A Labor Government will not play to the crowd on foreign investment; it’s far too important to be the subject of populist policies.

On the domestic front, people often and understandably lament the lack of interest shown by those who manage our superannuation funds. But people are too quick to offer simplistic explanations and solutions.

The sobering words of expert Gary Weaven on ABC Radio last year have remained with me. 

He put it very simply: “the returns are quite low in relation to the risks and volatility of the investment”.

His are words we should all deeply reflect on.  We think the agriculture sector is special: our farmers and fishers provide our food needs. But in the eyes of the investor there is nothing special about agriculture as an investment option.  The money will only flow to the agriculture sector when investors see the chance of securing a better return than that offered by other asset classes.

While they are obviously part of the equation, the success of the sector is not measured only by the volume of product produced, the prices secured, or numbers exported. 

No, the numbers that really matter to them are profit and return on investment over time. That’s the bottom line for investors. 

Fogging up their reading glasses are two key concerns:  perception and risk.

While there are exceptions, sadly when farming is in the news it’s usually in the news for the wrong reasons.  Making it worse, too many politicians too often and too quickly run to the cameras to reinforce the negative message.   I regret all of that, none of it encourages investment.

On the risk front, investors baulk at least 7 things:

  1. The vagaries of agricultural export markets and our heavy exposure to them;
  2. Growing global competition in our key export markets;
  3. Commodity price falls over time in real terms;
  4. Increasing foreign investment hurdles;
  5. The constant presence of agri-politics and the ever-present fear of irrational government intervention;
  6. The uncontrollable and unpredictable influence of weather events, climate-change, and the sector’s dependence on natural rainfall; and,
  7. Rising community concern about the treatment of animals and the health of Australia’s natural environment.  

That’s a lot of concern to overcome; we have a big task ahead of us as we strive to capitalise on rising global demand for clean, green, safe, high quality and ethically produced food.  I want to work with the sector to overcome these barriers to investment.

Government certainly has a key role to play in capitalising on the opportunities.

  • No one farm business or group of farm businesses can hope to secure access to export markets on fair terms. That’s the work of government and it will be a priority for a Shorten Labor Government.
  • Farmers alone can’t protect our product from pests and disease, or guard our reputation and brand, that’s primarily the role of government. As is ensuring our farmers have timely access to the chemicals and animal medicines they need and our customers trust. If elected, I expect to inherit problems on both of these fronts and nothing will be higher on my agenda.
  • We can’t fulfil our aspirations if we don’t have world’s best research. The need to aggregate investment and the challenges of spill-over demand government involvement and leadership.  I’m energised by the prospect of having the opportunity to ensure that every dollar invested in research is a dollar effectively and efficiently spent.
  • The majority of our farm entities are small and lack market power. Government has a key role in ensuring they are not subject to market power abuse.  Trade Practices law has always been an area of interest for me.
  • Trade-exposed industries can only compete if governments keep costs down.  The cost of energy is a key issue for agribusiness and a Shorten Labor Government will deliver an overdue framework to get more investment flowing to and accelerate new technologies.
  • Government has a key role to play in the management, health and the efficient allocation of our water and soil resources, an area which has been largely vacated by the current Government although it’s had a keen interest in water, but for all the wrong reasons.

But there is one further big task we need to tackle together. We’ve all become very familiar with the term “disruption”.  Most of the conversation about disruption has been focused on the impacts of technology: Uber and Airbnb are the obvious examples.  Technology will also impact on the agriculture sector but happily, in many positive ways.

But two other significant forms of disruption will continue to challenge us: a changing climate and changing community attitudes.

We should see the latter not just as a challenge, but as an opportunity.  We need to harness changing community attitudes and food preferences and turn them to our advantage. Let us be in no doubt, consumer preferences will continue to evolve.

More and more, they’ll want our producers to respect the welfare of animals, and they’ll want our product produced in a sustainable and ethical way.  They are also growing more health conscious and each day face a wave of advice on what they should or should not be eating. They are voting with their feet and will continue to do so in increasing numbers – both here and in export markets.

As a wealthy and innovative nation, Australia is well placed to give consumers what they want.  Just as our savvy fast-food retailers have responded to their changing consumer ask.

But let me share two anecdotes. Three years ago I released Labor’s animal welfare plan. It was, I would argue with confidence, a sensible and measured document.  The industry opposed it.  But following further controversy, it now supports it.

Eight months ago - following another bad incident in the live sheep sector - I came to the conclusion that the live sheep export sector was unsustainable and posed a threat to both Australia’s reputation in global markets and the social licence of the live cattle sector. 

The live sheep sector initially argued the Awassi Express controversy was an isolated incident and that the trade was just fine.  Eight months on, the industry has voluntarily suspended much of its operations and is attempting to embrace new regulatory measures which are much tougher than those it would have faced if it had moved earlier.

In both cases, the sector opposed change only to be forced later to embrace it. But along the way they suffered even more reputational damage. 

Attacking and demonising those who raise environmental and animal welfare concerns while defending the status quo - no matter what that looks like - has proven to be a failed strategy.
We have to accept that the status quo does not always look good or meet consumer expectations and as a result we risk losing the initiative.

There has to be a better course, and politicians and industry leaders must work together to chart that better course.  Together we need to anticipate change and work with those in the sector who are not moving sufficiently quickly to accommodate growing opposition to outdated practices. 

We need to swim with the rising tide and surf the currents of activism to a more sustainably profitable place.  Just as the Red Meat sector has done by pledging to be carbon neutral by 2030. Putting up the barricades and engaging in a shouting match will not serve the sector’s interests well.
A more strategic response will better serve producers, fishers and growers; those who have already moved will benefit because it protects the reputation of the sector and therefore, their market. And it helps those who have fallen behind because together, government and industry can best help if we are singing from the same hymn sheet.

And governments will be more willing to invest in those who need a partner – those who need a hand up - if they can see that there are both long term benefits and the policy approach enjoys public support.  Of course this approach will produce good outcomes for the broader economy because it will lift productivity and increase the value we secure for our allocation of, and investment in our human, financial and natural resources.

Yes, there will be those on the extreme left with multiple agendas and extreme views. I am willing to stand with the sector and stare them down. 

But to win and maintain the trust of the growing majority who are listening to the debate, we need runs on the board.  We need to demonstrate that we are moving, and we need to be able to point to the things the industry has already achieved or is on track to achieve.  We don’t talk about our environmental and animal welfare achievements regularly enough or loud enough or even convincingly enough.

Our natural resource base is in decline and our ecosystems are under enormous stress.  Agriculture policy should begin and end with a focus on our natural environment which is also - next to technology - the most likely place to secure productivity gains and to produce the best defence to drought. 

I would like the opportunity to build a consensus that our soil and water resources should be our overarching priority.  And if we can achieve that, to then work with the sector to secure the best policy responses: responses which achieve and secure sustainable profitability.

Of course success will require strong partnerships between the Commonwealth and the States and Territories. That’s why restoring a formal and effective COAG process will also be a priority for me.

Let me conclude with a bit of recent history.

When Kevin Rudd appointed me his Agriculture Minister a few of the usual suspects were immediately on the job, suggesting I “wouldn’t know one end of a cow from the other”. 

You can imagine then how relieved I was five years later when newly-minted Prime Minister Scott Morrison avoided another collapse in the wool price when he declared he “was not pretending to know one end of a sheep from the other”.

Of course, I did know a bit about agriculture when Kevin appointed me because by then I’d represented a rural constituency for more than 17 years.  That doesn’t mean I didn’t step onto a steep learning curve, every new Minister does. Five years on I’m still learning; particularly the lessons of agri-politics.

Now I’m sure there are farmers capable of making a good agriculture minister, but I’ve seen no evidence that being a farmer is a necessary pre-requisite - quite the contrary.  I believe non-farmers have an advantage; they are not subject to peer pressure, they have no vested interests, and they bring no pre-conceived ideas or prejudices to the job.

The agriculture portfolio requires the same set of skills and competencies as any other portfolio; public policy is public policy. Economics is economics. A market is a market.  The minister’s role is to weigh up the advice - often competing advice – and to apply sound decision making principles. Evidence-based decisions produce the best results.

Knowing where the role of government begins and ends is also a critical skill but all important is the ability to persuade cabinet colleagues.  If I’m given the opportunity to serve as minister again, doing these things well will be my focus.

On the policy front, my guiding objectives will be productivity and sustainable profitability and I would love the opportunity to take the conversation about our food and fibre sectors to a higher and more sophisticated plane.

While it’s important to know where we’ve been, I prefer to look forward: to a modern, efficient and high tech sector using the latest and best innovation off the back of the best research.

I want more talk about agriculture in our capital city board rooms and in the financial pages of our newspapers. I want us to think big, not small, to speak positively, not in negative tones.  To speak at least as much about product value as we do volume. And I want the sector to be open to positive change.

When city-folk think of a farmer, I’d like them to imagine not just a farmer on a tractor, but also a farmer on a lap-top.

United and strong we can do big things – let’s get on with it: we don’t have a moment to lose.

Be the first to comment

Please check your e-mail for a link to activate your account.