SUBJECT/S: Multi-peril crop insurance
ABC NSW COUNTRY HOUR
WEDNESDAY, 30 AUGUST 2017
MICHAEL CONDON: The Federal Government is considering a White Paper to encourage farmers to insure themselves by offering a 150 per cent tax break. Joel Fitzgibbon is the Shadow Agriculture Minister and he joins me now, good afternoon.
JOEL FITZGIBBON, SHADOW MINISTER FOR AGRICULTURE, FISHERIES, FORESTRY AND RURAL AND REGIONAL AUSTRALIA: Great to be with you Michael.
CONDON: Are the ALP in favour of such a move, this big tax break for farmers if they take out insurance? I think the proposal is for five years.
FITZGIBBON: There are two things we are definitely supportive of and that is the ongoing development of a drought policy in this country. It’s something that began right back in about 2008 and seemed to stall after the 2013 election. We do need to focus on how we better manage drought into the future and we certainly support a market based risk management approach to drought and all the associated adverse impacts of drought. The general answer is yes, but we do need to get the policy right. That’s the key point here.
CONDON: I guess we are right in thinking the governments, whether they are Labor or Coalition, there isn’t much support for funding, the sort of drought assistance payouts we saw in the past?
FITZGIBBON: We know there has been a moral hazard in drought assistance in the past in that it tends to reward those who have acted least and therefore have relatively disadvantaged those who have done what is possible to prepare for drought, so we need a policy –
CONDON: There is also a strong history of rorting the system in some parts.
FITZGIBBON: We need a market based approach supported by government, all the way through education in the early years, I suppose spreading the cost of premiums and sadly, the White Paper that was released two years ago now, allocated around $20 million for such a project but it has just been another example of poor policy development and program design and implementation. As you know, almost as much money has been spent advertising the scheme as has been taken up by growers. It has been a failure and if the Government is going to go back to the drawing board four years after it was first elected and four years after we stopped talking about drought policy, then we are supportive, but I do lament the four years lost.
CONDON: There is still quite a bucket of money there available if some sort of scheme, like the tax break scheme, actually came into effect.
FITZGIBBON: Yes, well Barnaby Joyce is very fond of talking about ‘money on the table’ which is the phrase he likes to use, but it seems that so many of these programs, like the cooperatives program for example and a number of others in the white paper where designed to fail. The money is put in the budget but is taken back by Treasury at the end of the four years because no one has been able to take up the opportunity. There is no better example than the multi-peril crop insurance scheme which was part of the White Paper. But look, this is the last thing we want to play politics with. Nothing would call for a more bipartisan approach than dealing with drought and its impact on producers and growers. We stand ready to assist and embrace any market based approach that takes us forward and improves things in the future.
CONDON: But why is a market based approach or insurance, what they are talking about here, better than assistance? Is it just about this sort of farm subsidy issue?
FITZGIBBON: Well I think it is very important that we look at this with a number of solutions. Obviously farm management deposit scheme is a critical part of the equation. So is assistance in water infrastructure and other on farm efficiency schemes but I think in terms of insurance, we have learned in the past that there is that moral hazard in Government handouts and we want to, if you like, share the responsibility with the farmers, but more particularly, ensure in sharing that responsibility we are putting in place a scheme that is going to improve practices in the future but also insure farmers against that drought event that can’t possibly be properly planned and prepared for.
CONDON: Why should, and we have had a few texts on this issue over the last couple of days we have been talking about multi-peril crop insurance - Why should farmers get a special deal. What is the case for that?
FITZGIBBON: Well of course in any insurance pool you need critical mass. I think it makes sense for Government to become involved - both in education and therefore steering people on the right course but also then making sure in the early years the insurance policy is affordable. If you have a very small pool of growers, producers and farmers generally then in those early years, particularly when we are still struggling what the risk looks like, the premiums are likely to be quite high. If Government can play a role building the insurance pool, helping people to determine and assess risk then we can bring those premiums down over time and therefore in turn, it’s a virtuous cycle, yet more farmers interested in taking out the insurance. So there is a bit of a market failure there, although I did see IPART in NSW the sort of price regulator there suggested there is no market failure so I think we need to have that conversation. I believe without Government intervention, we are not going to ever put in place and secure what is a sensible drought policy and goodness me, the climate, and you were just talking about it in your weather break, the climate is getting more harsh, less predictable and there has never been a more important time to be tackling this problem.
CONDON: The other issue too is this has come back on the radar again. There was a meeting last week with grain growers from all around Australia meeting with policy advisors in Canberra I understand. Maybe we are getting close to some sort of a resolution or a move on this. What are your thought on that? Are you hearing whispers on that?
FITZGIBBON: Well let’s not restrict it to policy developers and those who work behind the scenes. I recently had a very successful Beef Round Table at the EKKA in Brisbane where I sat down with some of my Shadow Cabinet colleagues and key stakeholders in the whole beef supply chain to talk through the opportunities and challenges facing the industry. This would be my style as a Minister, to sit down with the key stakeholders in this area of drought and the responses to drought and to talk through the issues and work together. You can never have too much consultation and I think there are a lot of smart minds around. The GrainGrowers currently have a very good paper on the table. The Minister needs to sit down with the stakeholders and work these issues through. That would be my approach.
CONDON: Joel Fitzgibbon, thanks for joining us on the program.
FITZGIBBON: Thank you very much Michael.