Andrew Laming (Bowman, Liberal Party) Share this | Hansard source

I rise to support the Primary Industries (Excise) Levies Amendment (Dairy Produce) Bill 2014, which restructures the maximum rate cap for dairy levies in this country. It is also an opportunity to speak about the importance of the dairy industry in Australia. I was lucky enough to spend a week working on a dairy property near Maryborough a number of years ago, and I must say it was probably the hardest week of work I have ever done. It is a tough business, dairy. It has been through significant ructions. It competes in tough international markets against competitors who often receive significant protection and support. With our small population, a significant amount of our dairy production is exported of course; and, thanks to the deregulation decisions that were made a number of years ago, I am proud that Australia is a very, very effective dairy producer and able to survive in the open export market.

Much of that is due to the tremendous work of our dairy farmers, who have increased their herd sizes and used a number of scientific techniques, including artificial insemination, to maximise the productivity of their herds—more about that later. It is great that the sector can work together to collect a levy that effectively ensures that Animal Health Australia is properly funded and is able to do its great work in protecting the livestock in the industry that underpins it. It is a $17-billion industry, and it is tremendous that this sort of levy that is collected through the industry is so broadly supported.

Dairy is potentially Australia's oldest industry. Dairy cows arrived on the First Fleet. I am not sure how long they lasted—how long until they wandered off, were lost overnight or were slaughtered in a famine—but dairy goes right back to the first days at Sydney Cove. There were significant advances possible, really, only in the 1880s as refrigeration improved, given the short shelf-life of dairy products. But it was obvious that Australia's natural endowments placed us in a position, particularly in the south-east of this great continent, to maximise the higher levels of rainfall around there and produce dairy products—the highest-quality dairy products in the world—not only for our own consumption but also for our near neighbours, the Pacific islands and Asia.

There is a cautionary note, though. New Zealand has made extremely insightful decisions and tough decisions early, and have really streaked ahead, I dare say, with their free trade agreement with China. Now New Zealand interests are purchasing significant parts of Australia's dairy industry. It is a massive part of their economy—50 per cent of the entire GDP of New Zealand comes from agricultural exports—and New Zealand's actions are a lesson to us across the Tasman that grasping the challenge in agriculture is vital and that informed debate about improving our agriculture, particularly our dairying, is really important. We never want to allow the fact that two-thirds of the members of this chamber live in urban Australia to abrogate our connection to the debate on agriculture. The debate must be informed, insightful and inclusive.

Most importantly of all, if there are tough decisions to be made, we have to look into the future. I regret that we have not always done so here in Australia. Too often we have been conservative in our decisions—too often we have not taken the tough decisions—and this fact has been to our disadvantage. A large number of dairy farmers have gone to the wall and left the industry. Even today there are $300 million worth of dairy properties for sale in this country which after 12 months have not yet been sold. The GFC, because of its impact on our international markets, was a massive blow to all of our agriculture—particularly in the states, such as Victoria, where dairy products are produced for export.

Of course, there is also an upside. For example, there is the recent free trade agreement with Korea, which is our 10th largest dairy partner. China is No.1—as you would expect—Japan is No. 2 and then there are Indonesia, Malaysia and countries as far afield as the Middle East. We are even sending significant amounts of cheese to Morocco. The great initial concern of farmers, once we had deregulated the industry and taken away the floor price, was somewhat eased when the international price started to rise. It was impressive that, five to 10 years after the removal of the floor price, international prices were equalling those which were being paid domestically—and artificially—just 10 years earlier.

I once worked in Dirranbandi, and, fortuitously for me, in my first couple of weeks out there, when I was looking for a home-cooked meal, a farming family invited me over for dinner. Invitations such as this were among the great highlights for an urban professional living in the bush. The conversation quickly turned to the wool floor price, and the head of the household turned to me and said, 'How would you feel about the government cutting your wage by two-thirds?' It was really hard at that time, as a barely decent doctor, to try to work out the implications of a floor price. To me it was completely intuitive that the free market reigned supreme. Still, I could not see how farmers could survive if they lost a floor price and ended up getting just a third of what they had been receiving in the previous year. But that is life in rural Australia; that is life as a small-business person. One moment you are poring over spreadsheets; the next day you are out thinking about the quality of your pasture and making decisions about fertiliser and—Australia's great scourge—wondering when the next rain will come. Rural people, these great Australians, live with such things every day of their lives. Everyone here enjoys the security of regular income, but we must never forget what a gamble it is to live and work on the land in Australia.

Uncertainty about water must be a pre-eminent concern in water-intensive industries such as dairying. But political challenges have overlaid this concern. The carbon tax, for example, continues to pose great challenges, and further levels of unnecessary regulation have combined with it to make life on the land really tough. On the upside, there has been a 30 per cent increase in China's demand for our dairy produce. I see the situation of the dairy industry as somewhat balanced, but never could it be said that it is not precarious.

The price of fertilisers, which make up about 10 per cent of dairy input costs, have increased significantly. The big cost in dairying, of course, is feeding your cattle. Ultimately, dairying is turning pasture into milk—it is as simple as that. The dairy industry is utterly reliant on high-quality pasture and the maximisation of the ability of herds to turn pasture into milk. An enormous amount of science underpins these things. We need to fund such science and make sure that we lead the world in it. We also need, as this bill points out, to support Animal Health Australia and to look at areas where there is underinvestment, risk and opportunities. In these areas there is a significant role for the research and development corporations of the dairy industry. Such corporations do great work in identifying how we can better produce milk and all the other dairy products—cheese and yoghurt and cream—for domestic consumption and the important role that whey proteins and casein now play in a range of food substitutes.

So dairy has that opportunity to maximise those fluctuations in price and demand. But, importantly, if we ever choose to not take a long-term view, if we ever chose to nobble our industry by not identifying the risks inherent in the fluctuations, then people can simply move to milk based substitutes. One of the great challenges is that, once consumers move to substitutes, it is a real challenge for the dairy sector to move people back on to fresh dairy.

We are now utterly reliant on international markets. As I said earlier, I think we have missed a number of opportunities that New Zealand managed to grab. Our herd sizes have increased from what I recall two decades ago—85 beasts—to now around 220 and heading increasingly toward herds of 1,000. The US has already moved significantly towards these large herds, and the same trend is evident in Australia, albeit slow; producing, I think, 1.6 million dairy cattle in the country. There are 6,500 dairy farms where there used to be 22,000 of them. That difference, that delta, tells a real story about absolutely dedicated, committed Australian families who have been moved off the land by the changes in the dairy industry. We should never forget that extraordinarily painful transition that has occurred over the last two decades.

So where are we? We have a thriving dairy sector; I think we can say that. We have a dairy sector that is prepared to voluntarily pay a levy on the milk protein and the fat content of their milk. Obviously, the rest of it is water—it is a little difficult to tax that, although I am sure a Labor government might find a way to do that. We have that money being invested sensibly and productively in protecting our herds, developing the best possible resilience for them. By genetically improving the herds we know we can get around 1,000 litres more milk per beast per year, and that is an impressive achievement. Obviously what they are looking for is structure and longevity in beasts and just genetic potential. If you cease doing that, and if you cease investing, then ultimately you will fall behind, with very few options.

So dairy farmers do struggle because it is a water-intensive industry. They really are reliant on those fluctuations. We are lucky enough to be producing dairy products all around the country. Though, as you move out of Victoria, increasingly it is for domestic consumption. We are very lucky in my part of the world to have great, world-standard dairy products available to us. In my mostly urban electorate, I confess, there are just one or two cows that I see when I drive around the city. I do not really know who owns them; I do not know if people eat them or milk them. It is unfortunate that I have not taken a greater interest in working out exactly what kind of cattle industry there is in my own electorate. If there is, I have to admit that it is terribly small, but I am glad that it still exists. In my electorate of Bowman those cattle remain, although there were many more in the past. They cohabit with our koala population.

At every level, while we may not produce any milk in our electorate—we barely grow grass in Bowman; we have a little bit of poultry—but we strongly support every member on this side of the chamber in supporting the great work of Australia's dairy industry.

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