Peter Hendy (Eden-Monaro, Liberal Party) Share this | Hansard source

I thank the House for the opportunity to speak on this bill and support its second reading. This bill implements decisions taken in the budget that confront the realities of the budget task facing the Australian nation. It represents some hard decisions that have had to be taken.

So, while remaining utterly committed to research and development in the rural sector, we recognise that all sectors of the economy have to share in the budget repair task. In my view as an economist, the No. 1 priority for the Australian economy is to get the budget into a sustainable surplus over the medium to long run. Australia cannot go on borrowing $1 billion every single month just to pay the interest on the previous government's borrowings. This is wasted money that could otherwise be spent building roads, schools and hospitals; funding additional research and development; or paying for tax cuts for long-suffering taxpayers.

Australia has just run six straight years of record budget deficits. A further $123 billion in projected deficits and gross debt forecast to hit $667 billion was left for the new government to manage. This year's budget papers show that, even with the government's efforts to repair the budget, there will be four more deficits over the period 2014-15 to 2017-18. That would make 10 deficits in a row and would be unprecedented in our post-war history.

Over the whole 45 years of budget data published in budget paper No. 1, going back to 1970-71, the longest the budget has previously stayed in deficit is seven years in a row, through the extremely severe early-1990s recession. Extraordinarily, the last six budgets saw a faster increase in net debt than during that episode, both in dollar terms and as a percentage of GDP. This debt disaster problem occurred despite the benefit of a once-in-a-century mining boom and commodity prices that reached record high levels.

As the minister stated in his second reading speech:

Australia's rural industries are among the most innovative and productive in the world.

He noted:

The Australian government supports rural industries in a variety of ways.

For example:

To help primary producers increase their output and improve their profit margins, we support rural research and development. Much of this support is channeled through the 15 rural research and development corporations.

Part of the government's role is to be:

… a member of international commodity organisations and regional fisheries management organisations.

The minister further noted:

This bill implements a 2014 budget measure to change the way that the government pays for its membership to these organisations. The bill also reduces the red-tape burden currently imposed on some of the rural research and development corporations.

As the minister noted in his speech:

Australian research and development operates within a global system and must take into account international issues. The change to the legislation reflects this and also acknowledges that the ultimate beneficiaries of the activities of these international organisations are farmers, fishing industries and rural communities.

The bill amends three acts to allow the government to recover the cost of the memberships from the Commonwealth funding provided to relevant rural research and development corporations.

The government is of the view that:

This will provide a funding mechanism for memberships to these organisations that is sustainable in a time of increasing budget pressures.

The amendments will result in a saving to government of about $7 million over the next four years. This saving will be redirected by the government to help repair the budget.

And, as noted previously:

The bill also reduces red tape for some of the research and development corporations.

So, what do these RDCs do? As the Department of Agriculture's website states:

The RDCs invest in R&D and innovation to improve the productivity and delivery of high quality products in order to underpin the competitiveness and profitability of Australia's agricultural, fish and forestry industries.

…   …   …

The government-industry partnership model that supports the RDCs has been operating successfully for over 20 years and now provides more than $470 million in annual R&D expenditure, including around $247 million from industry and $218 million from government in matching contributions …

Based on legislated or industry funding agreements, the Australian Government agrees to collect industry levies for the purpose of R&D and/or marketing.

It then matches expenditure on R&D generally. The website continues:

The RDCs are a mix of statutory bodies and industry-owned companies (IOCs) … All undertake R&D activities and the IOCs also undertake marketing activities.

Currently, there are six statutory RDCs. They are in the areas of cotton, grains, fisheries, rural industries more generally, sugar and grape and wine research. Then the industry owned companies are the Australian Egg Corporation Limited, the Australian Livestock Export Corporation Limited, the Australian Meat Processor Corporation, Australian Pork Limited, Australian Wool Innovation Limited, Dairy Australia Limited, Forest and Wood Products Australia Limited, Horticulture Australia Limited and Meat and Livestock Australia.

It is worth mentioning that in 2011 the Productivity Commission did a review of rural R&D. It made a number of recommendations, particularly on future funding arrangements, many of which the then government rejected. However, I do want to note that the commission made an overall finding that:

It further stated:

This recommendation was not accepted, but the findings of the PC do give some analytical backing to the government's decision here to make the changes in the current bill.

The Department of Agriculture currently pays fees for Australian government membership to international commodity organisations and regional fisheries management organisations. These organisations work to improve the trading environment for agricultural products by funding and coordinating R&D, providing information and statistics, setting international standards and ensuring ongoing access to fisheries. As the bill's explanatory memorandum notes:

Australia's membership of these organisations benefits the industries concerned. The international commodity organisations deliver industry good-outcomes, such as trading standards, research on global issues, and market statistics. The regional fisheries management organisations facilitate the management of migratory stock and high seas stocks that are fished by various nations. They inform international fisheries management and stock assessments.

So, we are rationalising this area of spending. But let us not lose sight of the bigger picture on research and development. I am here referring to the significant microeconomic reform in the form of higher education reform contained in the May budget.

I believe that it is both necessary and vital for the Australian economy. As I have said before, we all know that a first-class higher education system is a necessary condition to maintain a first-world economy. It is the difference between having a wealthy and an also-ran country. Australia is a first-rank economy and one of the most developed in the world. That is not a matter of luck. Many countries have abundant natural resources but have poor and weak economies because they do not possess the intellectual firepower to utilise those natural blessings. As John Howard often said, 'Economic reform is like participating in a running race with an ever-receding finish line.'

The reform task can never end if Australia is to stay in the front rank of nations. Specifically in terms of R&D, the higher education reforms include much to be proud of. We will secure Australia's place at the forefront of research, with $150 million in 2015-16 for the National Collaborative Research Infrastructure Strategy. This will ensure that we secure the benefits of the $2.5 billion investment in the state-of-the-art research infrastructure since the strategy was created by the Howard government in 2004. There will also be $139.5 million to deliver 100 new four-year research positions per year under the Future Fellowships scheme. This will be delivered through the Australian Research Council.

A few weeks ago, the Minister for Education announced 150 fellowships awarded to outstanding researchers. As he noted, these researchers are working on a broad range of research that will deliver benefits to our nation and our region. This includes improving Australian agriculture and food security and preventing future water scarcity. In addition, there is $26 million to accelerate research in dementia, $42 million to support new research in tropical disease and $24 million to support the Antarctic Gateway Partnership. This is a fantastic boost to research and will complement the $20 billion Medical Research Future Fund that the government is also setting up. Further, the Prime Minister recently launched the Industry Innovation and Competitiveness Agenda. It included $188.5 million to fund industry growth centres in five key sectors, one of which is food and agribusiness. This adds to the current $9.2 billion annual Commonwealth investment in research.

Finally, may I conclude my speech by acknowledging the recent win by a New South Wales grazier, Pip Job, of the 2014 Rural Industries Research and Development Corporation Rural Women's Award. I also congratulate runner-up, Jackie Jarvis, of Western Australia. The RIRDC Rural Women's Award is a leading awards program that recognises women in rural communities. As the Minister for Agriculture's media release informs us:

Ms Job has instigated significant changes to Landcare policy and recognises the impact rural life can have on farming families. This has resulted in the 'Women in the Landscape' program which is being rolled out nationally.

So congratulations to this year's winner, Pip. I wish her and her colleagues all the best in their future endeavours. In conclusion, I note that the government remains strongly committed to rural research and development. I commend the bill to the House.

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