Alby Schultz (Hume, Liberal Party) Share this | Hansard source

The purpose of the amendments to the Primary Industries and Energy Research and Development Act 1989 is to improve the governance of the eight statutory rural research and development corporations. The PIERD Act provides a legislative basis for the funding and administration of the RDCs. These amendments in the Primary Industries and Energy Research and Development Amendment Bill 2007 reflect the government’s endorsement of the governance arrangements of RDCs against the Review of the corporate governance of statutory authorities and office holders.

The government’s Uhrig review process has involved extensive and very thorough consideration of corporate governance and accountability. Mr John Uhrig AC was engaged by the government to assess the governance arrangements of Commonwealth statutory authorities, with particular focus on those that impacted on the business sector. A key task was to develop a broad template of governance principles that, subject to consideration by government, might apply to all statutory authorities and office holders.

In his report of June 2003, Uhrig made six major recommendations. He recommended that the government should clarify expectations of statutory authorities by ministers issuing statements of expectations and that statutory authorities should respond with statements of intent. These would be public documents.

The role of portfolio departments as the principal source of advice to ministers should be reinforced through strong information flows to portfolio secretaries in parallel with ministers. Governance boards should be utilised in statutory authorities only where they can be given the full power to act. The government should establish an Inspector-General of Regulation. The government should establish a centrally located group to advise on the application of appropriate governance structures, and financial frameworks should generally be applied based on the government’s characteristics of a statutory authority.

The Financial Management and Accountability Act 1997 should be applied to statutory authorities where it is appropriate that they be legally and financially part of the Commonwealth and do not need to own assets, typically budget funded authorities—the executive management’s template. The Commonwealth Authorities and Companies Act 1997 should be applied to statutory authorities where it is appropriate that they be legally and financially separate from the Commonwealth and are best governed by a board—the board template.

The government accepted all these recommendations, except for the establishment of an Inspector-General of Regulation. In August 2004, the government announced that ministers would assess their own portfolio agencies against the governance templates of the Uhrig report and implement appropriate improvements to existing governance structures. In making his assessment of the eight statutory RDCs in his portfolio, the Minister for Agriculture, Fisheries and Forestry, the Hon. Peter McGauran MP, concluded that their future governance arrangements should continue to be based on the board management template. This reflected the need to provide statutory RDCs with sufficient entrepreneurial freedom in their three key roles of setting investment strategies and priorities for primary industry R&D, as funders and investors in R&D services and as facilitators of the adoption of R&D outcomes by industry.

A board structure in line with the Uhrig report’s board template was best placed to enhance the partnership between industry and government, determine investment strategies and priorities, keep pace with changing industry demands for R&D and maintain key relationships with the extensive range of primary industry stakeholders and research providers. This is a wide-ranging mandate which requires the RDC boards to set corporate strategies and directions and to operate with entrepreneurial freedom. In keeping with Uhrig’s best practice, Minister McGauran also recommended that the practice of appointing an Australian government director to each statutory RDC board should be discontinued. This would remove the potential for conflict of interest for serving public servants and, at the same time, the skill set for board selection would be expanded to include expertise in government policy processes and administration.

Other amendments proposed to the PIERD Act also respond to the Uhrig report’s intent to improve corporate governance and to improve board expertise, experience and management arrangements. These amendments follow an internal review by the Department of Agriculture, Fisheries and Forestry of the PIERD Act’s operational and reporting requirements to consider the appropriate balance between the minister’s role, effective communications and accountability and the role of the RDC boards. The interactions of the PIERD Act with the Commonwealth Authorities and Companies Act 1997 in regard to accountability and management obligations were also considered. These amendments also provide a practical response by the government to recommendations by the recent report of the inquiry into women’s representation on regional and rural bodies of influence, the At the table report. Minister McGauran has also assessed against the Uhrig report a number of other statutory agencies in his portfolio, including the Australian Wine and Brandy Corporation and the Australian Pesticide and Veterinary Medicine Authority. Amendments to their legislation will be introduced into parliament shortly.

The RDCs are already highly successful. They make a major contribution to the agricultural sector’s average productivity growth rate, which has been 2.3 per cent per annum over the last 30 years. Through the RDC partnership, industry and the government in 2005-06 spent over $540 million on rural research and development. Most rural RDCs were established in 1990-91 as statutory single-focus research and development corporations, with the intent of improving the performance of the national R&D effort for rural industries. Under the enabling legislation, which is the Primary Industries and Energy Research and Development Act 1989—the PIERD Act—the RDC model was intended to provide best value for money for government, industry and the broader community in pursuing the objectives of increasing economic, environmental and social benefits, achieving sustainable use and management of natural resources, making more effective use of human resources and skills and improving accountability for expenditure. This model has evolved to include industry-owned multipurpose companies responsible for managing R&D and/or combinations involving marketing, promotion, regulation and industry representation.

There are currently eight statutory R&D corporations: cotton, fisheries, forest and wood products, grains, grape and wine, Land and Water Australia, rural industries, and sugar; and there are six companies: Australian Pork Ltd, Australian Wool Innovation, Australian Egg Corporation Ltd, Horticulture Australia Ltd, Meat and Livestock Australia and Dairy Australia. The features of the model include that its key elements centre around the broad scope of rural research activities and may be funded by RDCs; a rational and integrated approach to R&D priority setting and a strong focus on outcomes; close involvement of industry through the whole process of priority setting and reporting; independent boards that are charged with taking a strategic approach to rural R? and dual accountability to both industry and parliament.

The evolution of the model to include private companies to provide marketing and/or service the R&D needs of rural industry was premised on the need to give industry more control over its affairs as well as involving industry reforms and rationalisation of existing organisations. The rural and R&D expenditure model has been most successful in generating significant funding of rural R&D by industry. In a number of industry sectors, such as grains and wool, industry contributions have far exceeded the government’s general matching of industry R&D expenditure up to a limit of 0.5 per cent of an industry’s gross value of production.

The model has seen RDC expenditure grow from $173 million in 1989-90 to $541 million in 2004-06. Performance reporting by the corporations and companies has also highlighted the success of many R&D projects in improving industry competitiveness and sustainability. The PIERD Act provides for clear and strong accountability by the R&D corporations to parliament and industry, including through requirements for preparation of written R&D plans covering five-year periods, which must be submitted to the minister for approval; preparation of annual operational plans, which must also be submitted to the minister for approval; inclusion in annual reports of particulars on R&D activities coordinated or funded; an assessment of the extent to which R&D plan objectives have been achieved; ministerial declaration of at least one representative organisation for each R&D corporation, with associated reporting requirements to that organisation; and ministerial appointment of directors of R&D corporations other than the executive director. A further layer of accountability in reporting obligations was added for the R&D corporations under the Commonwealth Authorities and Companies Act 1997, which is largely modelled on arrangements applying to companies under Corporations Law.

The accountability of companies to parliament is enhanced through the obligations included under the statutory funding agreements. The SFA obligations include: requirements for the establishment of systems, processes and controls to manage the levies collected by the government on behalf of the company and the matching by the government of funds on eligible R&D expenditure, subject to a maximum 0.5 per cent of GVP; planning processes which substantially mirror those applying to the R&D corporations; and reporting directly to the minister for regular meetings and annual reporting processes, including compliance and statutory auditing. Those are the key principles in the bill.

Today I was pleased to gain a further insight into how the R&D program works. I attended a breakfast with the Grains Research and Development Corporation. It was a very interesting breakfast because it centred on climate change and what this R&D corporation is doing to assist farmers. As the former President of the National Farmers Federation, Peter Corish, said, ‘Possibly the biggest risk facing Australian farmers in the coming century is that of climate change.’

The goal of the R&D program is to increase the capacity of Australia to capture opportunities and manage risks related to climate change and variability. The objectives are two-fold: develop more accurate climate forecasts with longer lead times and translate forecasts into tools that assist farmers and natural resource managers to make decisions that capitalise opportunities and reduce exposure to risk from climate.

The highlights of future R&D investment under this R&D program include: improved monsoon break prediction for Northern Australia; improved prediction of water yields; improved decision support tools for the cropping and grazing industries that link productivity and sustainability; ‘masters of climate’—connecting researchers, advisers, farmers and resource managers to foster understanding and uptake of climate related opportunities; improve national climate data sets; and scenarios for change that include regional climate drivers.

A quote by farmers Brett and Fran Francis of ‘Rocky Glen’, Kimba, Eyre Peninsula, South Australia, was included in the documentation and information sheets distributed this morning. They said:

You can’t dismiss climate information. I try and look for the positives and if someone can get a forecast half right, well then they’re getting there. The more we know, the better we can manage.

That is indicative of all research and development programs. A very interesting research and development initiative which needs to have more done with it and which has been raised with me in my role as the Chair of the Standing Committee on Agriculture, Fisheries and Forestry concerns the Australian honey bee industry. In 2003, the Rural Industries Research and Development Corporation published several reports which, between them, provide a snapshot of the honey bee industry in Australia. This is a brief summary of the report:

The overall impression is of a small but well established industry which potentially faces significant problems in the near future, but which also has significant potential for future development.

              …              …              …

The commercial beekeeping industry in Australia comprises a relatively small number of professional beekeepers deriving most of their livelihood from beekeeping and a larger number of people who keep bees for profit but who do not depend solely on beekeeping for their livelihood.

              …              …              …

Australia produces around 30,000 tonnes of honey each year. New South Wales is the largest producer and the Northern Territory the smallest. Tasmania is the smallest honey producing state, but has the advantage that its main crop is dependable and fetches a premium price. South Australia is a significant producer but lacks the diversity and area of melliferous flora enjoyed in the east. A relatively small proportion of Western Australia is suitable for beekeeping. A significant proportion of the Western Australian crop is exported.

There are a significant number of issues centred on the need for research and development in this industry. We know that the gross value of the industry was approximately $63 million resulting from the 27,800 tonnes of honey that it produced. But the industry is facing a very serious situation. It would appear from the information that the committee received that there is a potential problem with the Varroroa destructor mite. This mite could wipe out all the honey bees across Australia. What would happen then? Farmers would have time to adjust but so, too, would the honey bee producers. It is likely that a market for pollination would develop rapidly in heavily honey bee dependent industries, lowering the impact of exotic excursions largely to losses incurred while honey bee producers expanded their capacity to meet the demand for pollination services.

The evidence we took during our rural skills inquiry—the report of which has just been released—indicated a sad lack of research facilities for the honey bee industry. The committee has recommended to the government that it consider the establishment of a CRC to ensure that research and development is available for the industry. We have an ageing population in the honey bee industry, as we have in other industries right across Australia, and because the industry has not had the option of going into research and, indeed, educational facilities to train people in the workings of the industry it has been forced to import from Third World countries people who have some expertise in honey bees.

The other issue is that the honey bee industry has not been given appropriate professional recognition by people across the country because the supply of honey is taken for granted. They forget that honey bees pollinate about 70 per cent of all crops grown in rural and regional Australia. It is important that we recognise that pollination role and we must do all that we can through our R&D structure to assist the industry. I am focusing on the honey industry at the moment because it has received little publicity. It is a very small industry, but it plays a significant role. Importantly, R&D facilities have not appeared to focus on the industry.

Another important issue that the R&D system needs to concentrate on was raised by the member for O’Connor at this breakfast this morning and relates to moving away from fuel powered tractors and undertaking research on and development of electric powered tractors. That technology exists and I am sure those involved in research and development will take up that challenge as a vital part of our effort to reduce global warming. 

I thank the House for the opportunity to speak on the bill today. As most members who have spoken in this debate have done, I support the thrust of the legislation because I know it has brought and will continue to bring great benefits to our rural and regional communities and, more importantly, the farmers and producers who are looking to improve the productivity of this country. (Time expired)

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