David Gillespie (Lyne, National Party) Share this | Hansard source

I rise to speak in support of the Primary Industries (Excise) Levies Amendment (Dairy Produce) Bill 2014, which has been brought forward at the request of Australian Dairy Farmers to make provision for future biosecurity capability. The electorate of Lyne on the mid-North Coast includes some of Australia's oldest and most naturally blessed dairying country. It is blessed with extensive alluvial plains running back into the hinterlands, in the Manning, Hastings and Macleay valleys, and the Gloucester Valley with its many rivers. Normally, it has reliable, moderate to high rainfall, but currently it has had to cope with below average rainfall and drought conditions, particularly in the south-west.

The historical context of dairying in the region is important. It started off with timber-getters arriving in the region in the 1800s and then in the 1900s they quickly recognised the natural attributes of soil fertility and a temperate climate, and the governments of the day supported their endeavours to get dairying running in the region. It was the highest returning enterprise of the time. Farming ventures sprang up along the rivers and the creek systems; communities grew on the back of it along with butter factories, which seemed to be on every river.

While it was hard, unending and most often low-paying work, the pay-off was that it was incredibly satisfying to have your own land and be able to raise a family on a farm, and pass it on to the next generation. This historical context is important, as I mentioned, because this is where the dairy industry's ongoing and acknowledged perseverance and resilience comes from—to keep getting the cows in twice daily for milking, day in, day out, all year, every year, and dealing with all the pressures such as mother nature, distorted markets, dubious marketing campaigns, land prices and government land-use policies, as well water policies, droughts and the vagaries of being a very poor applicant in price negotiations due to the power of the processing and retail end.

During the 1960s to the present, the situation is that a lot of farmers have left the industry because they have not been able to keep up as viable dairying units, despite trying as they did in the face of all those pressures. There has been a massive rationalisation of the industry, from the farm level to the dairy-processing level since those early days and that is well documented. Many properties in our region are still being turned over to lower-yielding beef production. The ones that are still operating have been able to do so through a combination of very good planning, very hard work, a lot of will and purpose, and a readiness to assess and invest in new techniques. They have also recognised the strategic importance of supporting the dairy industry because it is the source of essential food supply and a source of income for the regional population. Governments of all persuasions and jurisdictions over many, many years have allocated funds to research, development and extension.

The Australian dairy industry has always embraced new ways of doing things, be it with pastures, animal health and welfare, breeding and reproduction, nutrition, farm management, dairy factory operations or, most importantly, the area of biosecurity. The industry has been a world leader in adapting innovation and working collaboratively in all those areas for mutual benefit. It must continue to do so, and that is why the government is introducing this bill, the Primary Industries (Excise) Levies Amendment (Dairy Produce) Bill 2014.

The purpose of the bill is to amend schedule 6 of the Primary Industries (Excise) Levies Act 1999 to increase the maximum rate of the Australian Animal Health Council levy on dairy products for vital biosecurity capacity. Animal Health Australia is a not-for-profit company that manages more than 50 national projects improving animal and associated human health, biosecurity, market access, livestock welfare, productivity, food safety and food quality. Animal Health Australia is a public company whose members include the Australian government and state and territory governments, the peak national councils of Australia's livestock industries and various key research, veterinary and educational organisations. Part of its mission is to 'build capacity to enhance emergency animal disease preparedness'. Funding of the AHA is provided from a number of sources including the Australian Animal Health Council levy. Dairy producers, amongst others, are required to pay the Australian Health Council levy.

In the explanatory memorandum, Australian dairy farmers are documented as having asked the government to legislate for an increase to the maximum rate of the levy. But the industry has a cost-sharing deed in place to assist with emergency animal disease responses. The deed facilitates rapid responses to and control and eradication of certain animal diseases by, amongst other things, defining funding responsibilities up to certain limits for each emergency animal disease. This cost-sharing deed provides that where an emergency animal disease response plan is implemented, each party must initially meet its costs in accord with agreed principles. However, where the industry is not able to do so, the Commonwealth will initially meet those obligations. In that case, the amount paid by the Commonwealth must be repaid within a reasonable time—generally expected to be no longer than 10 years. Repayment may be made through industry statutory levy arrangements. Animal Health Australia is also a signatory to the cost-sharing deed and is entitled to recover those of its costs which are additional to its ordinary operating costs.

Relevant to this bill, schedule 6 of the act provides for the imposition of the Australian Animal Health Council levy on relevant dairy produce and provides that the levy is paid by the producer of the relevant dairy produce. It sets the maximum milk-fat rate for the purposes of the levy. Item 2 of the bill sets the maximum protein rate for the purposes of the Australian Animal Health Council levy, so that the potential rate, should there be a need for it to be increased, can rise from 13c per kilogram to 35c per kilogram. However, the proposed amendments do not change the levy rates. Instead the bill increases the cap on the rate of the Australian Animal Health Council levy which may be payable in the future.

Before this can occur, industry consultation will be required, including the requirement for a vote of levy-payers to be conducted and the preparation of a proposal to the government containing a recommendation on the preferred levy rate. It is important to recognise that this bill is not raising the levy, but putting in a framework for the Australian Animal Health Council levies to be raised to assist with emergency animal disease responses, should the need arise. This will make it much easier for industry and government to get to work straight away and respond to any biosecurity issue that may arise in the future. There needs to be eternal vigilance against the ever-present threat of exotic pests and diseases.

There are many diseases in the world from which Australia, through both good fortune and good management, has been able to safeguard its producers and consumers. Some of these have been mentioned and they include foot and mouth disease, rinderpest, swine fever, screw-worm fly, scrapie, anthrax—and the list goes on. There are literally hundreds of pests and diseases in the world that we do not have—and we do not want. Animal Health Australia has played a pivotal role in ensuring our livestock industries have world-class plans in place to prevent these diseases from entering our country, and ensuring our industries have plans and funding mechanisms in place in case they do enter the country, and control or eradication programs are required for the greater good.

It is pertinent to make some observations on the current state of the dairy industry to see that it is not an inappropriate time to be introducing this bill. International market fundamentals were weighted towards higher commodity prices for most of 2013. Our producers have had to cope with the vagaries of the environment. We have just gone through an extended very dry period during which feed and fodder had to be purchased. A lot of these costs cannot be factored in, even for future purchasing agreements. Milk supply from most producers is yet to fully recover from the setbacks of the low milk prices and higher debt loadings of last year, but demand continues to expand.

With high international commodity prices now being hopefully reflected in farm-gate returns, 2014 will see global milk production grow. I hope that will translate into higher milk production volumes in the electorate of Lyne. The recently signed free-trade agreement with the Republic of Korea will also offer Australian exporters a more competitive position in the growing dairy market, but it will take time for this to have its full effect. It will not happen as quickly as some would like, but there will be an improvement.

Ongoing dairy demand is now translating to improved returns to farmers, with farm-gate prices overseas up to 25 per cent higher in the EU, the USA and for some Australian contractors, and over 40 per cent in export-focused New Zealand. Producers in our electorate have traditionally focused more on the domestic fresh milk market and we have not seen the same jump in milk price as that experienced by dairy producers in export-focused regions, but they are still facing similar cost pressures as a result of unfavourable weather and tight regional feed supplies. The most important thing that the dairy industry in my electorate needs is increasing farm-gate prices, which will boost confidence and provide further latitude to capture profitable production opportunities as the season progresses.

Significant change has occurred as a result of supermarket transitions to more direct relationships with farmers, such as Coles's decision to enter into a long-term contractual arrangement with Norco and others for the supply of fresh milk. In the Manning Valley Woolworths has increased its direct supply arrangement with farmers to supply Farmers' Own milk brand and recent increases into that retail outlet have been announced. I fully support that.

The dairy industry will continue to evolve in accord with market and policy changes, but one thing is sure: a good, workable biosecurity framework is essential now and into the future. This bill enables that and I commend it to the House.

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