SUBJECTS: Labors dairy announcement; dairy industry crisis in Australia, changes to Parliamentary advertising expenses framework.
FRAN KELLY: The Government and Federal Labor are both scrambling to try and find solutions for struggling dairy farmers as they battle a drought, a stagnant retail market and an industry controlled by overseas milk processors. Yesterday the agriculture Minister David Littleproud announced the Government would review its milk price index introduced last year to help producers to negotiate fairer deals with processors. Meanwhile Labor has promised a minimum floor price for milk with the ACCC given the job of devising a scheme and the floor price to vary across Australias nine dairy producing regions depending on the cost of production. Yesterday here on breakfast I spoke to John Hunt the President of the South Australian Dairy Association about dairy farmers and what they thought of Labors plan.
[AUDIO GRAB] JOHN HUNT, PRESIDENT SOUTH AUSTRALIAN DAIRY FARMERS: No they dont and again here was a thought bubble. We were sitting in his office when he said hey, Ive got an idea, its just come to me and four days later its out in the press. Where is the due diligence there? You know and what does is give farmers false hope. He would know that that wouldnt get up.
KELLY: Thats John Hunt President of the South Australian Dairy Association. John Fitzgibbon is Labors Shadow Minister for Agriculture and the architect of Labors floor price plan. He joins us from Cessnock in the Hunter Valley in NSW. Joel Fitzgibbon, welcome back to breakfast.
JOEL FITZGIBBON, SHADOW MINISTER FOR AGRICULTURE, FISHERIES AND FORESTRY AND SHADOW MINISTER FOR RURAL AND REGIONAL AUSTRALIA: Good morning Fran.
KELLY: Is John Hunt correct? Is your plan for a floor price for milk just a thought bubble with no due diligence?
FITZGIBBON: Well Fran John Hunt completely misrepresented what I said in a private meeting and there are plenty of witnesses but look thats neither here nor there. His real sins were these - first he agreed that the dairy sector is facing an existential threat but then he entirely rejected my credible and well thought through proposal while offering to alternative whatsoever except to go down that populist and well-worn path of bashing up Coles and Woolworths. Now thats the lazy alternative. If he wants to reject my proposition, he needs to put forward some alternative proposals something of course the government has been unable to do as well.
KELLY: Well hes saying you should talk to them more fully and have a proper consultation before you go out saying okay a floor price for milk thats whats needed when he and other dairy farmers, and we have heard from some of them since you first raised this idea, have said that this is not going to work, it probably not going to work, it could work against us internationally and its not the best idea.
FITZGIBBON: And I did consult them Fran and thats why in part he mentioned the proposition to them a week before I announced it but before then I had been down to the South Coast of NSW for example and canvassed it quietly with dairy farmers there who welcomed it very enthusiastically. Since then including yesterday, I met with other dairy farmers. Look dairy farmers on the ground Fran are welcoming my proposal -
KELLY: Well not all of them. I have heard some of them say its not going to work because how would it work? And their biggest concern is the price of fodder for instance and that changes all the time and its the real drag at the moment and they are worried about a floor price and how it would work.
FITZGIBBON: I havent spoken to a farmer on the ground that is worried. Some are energetic and enthusiastic about it. Others arent so sure because they dont quite understand it and when I take them through it they usually therefore become far more keen but the point is that we are proposing to undertake these consultations between now and the next election and as you pointed out yourself, our proposition is to put this to the ACCC and to test and assess and make some design recommendations so there will be plenty of opportunity for dairy farmers to make a contribution to this policy proposal between now and the election and if we win, beyond but some of these farmers
KELLY: Can you tell us how you think this would work, a floor price because Australia as we heard yesterday has nine dairy regions and production costs and seasonal costs vary so much.
FITZGIBBON: Thats the very point Fran, its what underpins this proposal. We do have nine different dairy regions and they are all very, very different and the price would be set in each individual region reflecting costs in that region and having determined the average cost of producing a litre of milk in any given region, the independent authority, possibly the ACCC would then set a price marginally above cost so farmers for the period ahead would know that the least they would earn is x and that will allow them to make some business decisions about investment and productivity improvement which will help them become more competitive. So the minimum price becomes a floor not a ceiling and they can use those productivity improvements to drive productivity and secure better prices and returns from the processors.
KELLY: So what you are proposing is Government intervention in what is essentially a free market? Some farmers want to know the impact that could have on Australias free trade agreements, Have you thought through the implications?
FITZGIBBON:Well some might say this is unorthodox, but when you have a -
KELLY:Have you looked at that, the implications on our Free Trade Agreements?
FITZGIBBON:Absolutely. I see no implications for a Free Trade Agreement. What impact might be on trade? First of all, some argue it will affect our international competitiveness, for example. What is the argument that to be internationally competitive you have to continue to pay your dairy farmers below their cost of production? That is not a sustainable argument.
KELLY: But that is also not what must happen is it? Dairy farmers point out, as John did yesterday, that there is an existing price mechanism that allows processors to pass on increased costs to retailers but they say the problem is the processors either choose not to or get bullied out of it.
FITZGIBBON: The market is broken Fran, we have market failure here. We have monopsony buyers; so there is one buyer exerting enormous market power over dairy farmers who have no way of standing up to these big buyers.Now in fact dairy farmers have been calling upon some form of price regulation for 20 years. John Hunt now pops up and opposes it. Some of these farm leaders need to start defending and taking care of their farmers.Because that is not what I am hearing on the ground.
KELLY: OK, you are listening to RN Breakfast, its two minutes to seven, our guest is Joel Fitzgibbon Labors Shadow Minister for Agriculture. On another issue Joel Fitzgibbon, the nation is hurtling pretty quickly to a Federal Election, the Government has just tweaked the rules a bit governing MPs electorate allowances we read, the more than $136,000 a year given to each MP to help with electorate expenses, can now be spent on political advertisements on TV and radio. How do you think taxpayers will react to that?
FITZGIBBON: Well it is a pretty audacious move isnt it Fran? And I think taxpayers will be gob-smacked and rightly cynical. Now this is something like $22 million extra that Coalition MPs will have to spend on TV and radio.
KELLY: Not just Coalition MPs. You would all have it. It would be a level playing field. Labor MPs could do the same, couldnt you?
FITZGIBBON: The big difference here Fran is that usually when these changes are proposed the Government of the day comes to the Opposition and talks them through to seek agreement. They didnt do that on this occasion. This is a change five minutes to midnight to allow them to splash television and radio ads right around the country, particularly in the regional areas. I have a bit of a theory here Fran, this is as much about Clive Palmer as it is the Labor Party. Clive Palmer is stealing votes from the Nats in regional Australia and this is an attempt to match his quite rather significant television campaign.
KELLY: OK, just finally then, would Labor MPs, if the rules have changed, will you do the same, will you use it for on-air ads?
FITZGIBBON: I have seen our spokesman says we will not, and I agree with that absolutely. This is an inappropriate change.There is an argument to spread the spend further across the media, but you dont do it this way and it is so obvious, this close to an election, a government in trouble in the polls , that this is all about allowing their MPs to spend more money on television and radio in the lead up to an election.
KELLY: Joel Fitzgibbon thank you very much for joining us.
FITZGIBBON: A great pleasure Fran.