House debates

Tuesday, 26 November 2019

Matters of Public Importance

Dairy Industry

3:29 pm

Photo of Tony SmithTony Smith (Speaker) Share this | | Hansard source

I have received a letter from the honourable member for Hunter proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The government's failure to support Australian dairy farmers.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

Photo of Joel FitzgibbonJoel Fitzgibbon (Hunter, Australian Labor Party, Shadow Minister for Agriculture and Resources) Share this | | Hansard source

I can see that it might seem a bit of an overreach at first blush to say that in Australia we are at serious risk of losing our dairy industry but, sadly, that is true. For those who doubt it, I refer them to the most recent figures, which indicate that in the last decade we've lost around 35 per cent of our dairy farms. That rate of departure has accelerated in recent years as dairy farmers find themselves more and more in the middle of a price squeeze. Costs are rising, now exacerbated by drought, and, of course, prices at the farm gate are stubbornly staying very low, sometimes below cost. As hesitant as I am to say it, we are at real risk now of having to import most of our dairy products and, I fear, even some, if not all, of our drinking milk. That would be a disaster for this great Australian agricultural sector.

I just saw the Minister for Water Resources, Drought, Rural Finance, Natural Disaster and Emergency Management shaking his head. He does need to shake his head, not at what I'm saying but rather at what his government is not doing. I have some very genuine sympathy for the minister for drought. I thought that when he was the agriculture minister he didn't make a bad fist of it. He'd begun to tidy up the very significant mess left by the former minister, the member for New England. Just as importantly, he was creeping away from what I call National Party fundamentalism. You might call it National Party economics. He was trying, at least, to take his party away. He did respond, although not as extensively as we would have liked, to the live sheep trade, for example. I know that caused him a lot of grief internally, but at least he had a bit of a crack at it; he had a bit of a go. Sadly, as a result the rug was pulled out from under him, and the National Party made it very clear to the Prime Minister that they would not have the member for Maranoa as the agriculture minister. To his credit, the Prime Minister said: 'Well, I'm not cutting him loose entirely because he does understand the problem with National Party fundamentalism. I'll create a new role for him as the drought minister so I can leave him in that space.' The minister should acknowledge that I'm trying to extend to him a compliment.

Now we've got Minister McKenzie, and I ask my colleagues to think about it for a moment and ask themselves to name one thing that Minister McKenzie has done for the agricultural sector in her six months in office. Of course, the silence is deafening because the answer is absolutely nil. This is the minister who told her party room that the dairy sector couldn't have a code of conduct until July of next year but told the National Party they could have one by Christmas this year, such is the incompetence she demonstrates both in her party room and in this parliament.

But the real problems in the dairy sector, as we know it today—notwithstanding the fact that there have been significant challenges since deregulation under former Prime Minister Howard back in 2000—began in April 2016 with the collapse of Murray Goulburn. That event reverberated through the dairy industry extensively. It began with Murray Goulburn farmers, it moved quickly to Fonterra farmers axiomatically and then it caused damage and chaos right across the dairy industry. What were the government's response to the collapse of Murray Goulburn? They could have intervened. When Murray Goulburn went to its farmers and retrospectively cut their farmgate prices without notice, the government could have acted. In fact, at the time, we appealed to the government to act, and there was an opportunity for the government to act and to call upon the Murray Goulburn board to use the powers available to it under the profit-sharing mechanism to deny the Collins Street investors their returns and to leave the dairy farmers alone.

If the government had joined us then in calling upon the Murray Goulburn board to do so, surely they would have had no choice. The pressure not only in the community but in this place—and I know we would have been supported by the member for Kennedy—would have been so overwhelming they would have had no choice. But no, the government failed to act. What was their response? They commissioned an ACCC inquiry. You know how it works on that side: when all else fails, have an inquiry. We don't have any problem with ACCC inquiries. In fact, I have a high regard for the ACCC. It doesn't always get it right, but it is a fair organisation and it does its best. It has some very good people. What did the ACCC recommend? Its only really substantive recommendation, after an 18-month-long inquiry, was a mandatory code of conduct for the dairy industry—something we on this side of the parliament have been committed to for at least three years.

So there wasn't any political interference. There is nothing stopping this government from introducing a mandatory code of conduct for the dairy industry. In fact, they did it for the sugar industry literally overnight, in 24 hours. When the now Prime Minister was Treasurer, he introduced a mandatory code of conduct for the sugar industry in 24 hours. But here we are, 20 months on from the recommendation from ACCC on the dairy industry, and we don't even have a final draft of a code because those who sit opposite can't even agree on what it should look like. It is time they acted. Our dairy farmers should not have to wait until July next year.

The last parliament is behind us. Those opposite made some terrible errors. They abandoned our dairy farmers. But it is a new parliament, and I call upon them to now work with us on a bipartisan basis to act, if belatedly. We are not off to a good start. The last week we were here we gave them an opportunity again in the Senate to back a minimum farmgate milk price for our dairy farmers—a guaranteed price so farmers can rely upon at least cutting even when the processor comes shopping. Again, National Party aligned LNP senators sat on the other side and voted against dairy farmers—again, that is behind us.

It's not too late, Minister, and this is what we need to do: we need to get that mandatory code of conduct, the right code of conduct, in place immediately. We need to embrace a minimum farmgate milk price, set by an independent regulator, just above the average cost of producing a litre of milk in each dairy industry. This is not Hanson economics; this is common sense. I heard one of them say, 'What about our export industry?' I say again that, if we have to pay our dairy farmers below their cost of production to be in an export market, we probably shouldn't be in one. It's as simple as that. This makes sense. While the costs of production are rising, we cannot afford to have our farmers paid at or below the cost of production.

But there's a third thing the government can immediately do: get on with developing a truly strategic national drought policy for this country. The agricultural sector suffering most from drought is arguably the dairy industry. But no, the minister at the table laughs at this idea that we should be working on a bipartisan basis to develop a strategy for the drought in this country—a drought which has been going on for nine years for some farmers and for fewer years but more severely for others. Mr Deputy Speaker Hogan, you understand this because you know what is happening in your own electorate.

So I extend the offer again today to the minister and to his Prime Minister. It's not too late to reset. You'll be forgiven for all your mistakes. You'll be forgiven for all the pain you have inflicted on the dairy industry for the last six years or more if you just commit yourself to a code of conduct, to a minimum farmgate milk price and, finally—you are the drought minister—to putting in place a truly national strategic drought plan rather than just kicking the issue down the road hoping that tomorrow it will rain.

3:39 pm

Photo of David LittleproudDavid Littleproud (Maranoa, National Party, Minister for Water Resources, Drought, Rural Finance, Natural Disaster and Emergency Management) Share this | | Hansard source

What we just heard from the member for Hunter has demonstrated the deep seated impact the last federal election has had on him personally, because the people of Hunter turned on him. They turned on him, and one of those parties that nearly beat him was One Nation—not just the National Party. It seems now that the member for Hunter has been able to convince the Australian Labor Party to forget about Swan economics. They're now going to look to One Nation and Pauline Hanson to give them a direction on the economy and on agricultural industry. God save Australia, because if the member for Hunter has become so disturbed by the near-death political experience he had on 18 May, then the Australian Labor Party has got real problems.

The member for Hunter talks about the ACCC report and says, 'Yes, it was me who took that report and acted on it.' The member for Hunter talks about how he believes in the ACCC. In fact, he wasn't going to put in a price floor; he was going to ask the ACCC to do an investigation into a price floor. Let me tell the member for Hunter and the Australian Labor Party: we can save them a couple of million dollars, because the ACCC gave a clear direction for a mandatory code of conduct. We are putting that in place in a calm, methodical way to make sure it is right, because it is important. It's an important pillar in making sure that we reset the dairy industry and in making sure that there is equality in the marketplace. There are a number of factors within the marketplace that need to be addressed. The ACCC gave us a pathway to do that, not to go back to the economics of One Nation and shut ourselves off from the world and forget about the fact that we are a nation of 25 million people that produces enough food for 75 million people.

We need to engage with the world. We need to trade with the world. The reckless, careless actions that the Australian Labor Party are talking about would put at risk the trade agreements that we have put in place. That would not just jeopardise the dairy industry but would jeopardise agriculture. If you're a beef producer in Kennedy, if you are a cotton producer in Maranoa, if you're a citrus producer down in Victoria, this would put at risk the trade agreements that are giving us real returns at the farm gate. That is what this would do. To say that it wouldn't shows no understanding of our place in the world and the dangerous nature of populism and politics that the Labor Party is now entering into with One Nation, a party they condemned here endlessly in the last parliament. They are now going hand-in-hand with Pauline Hanson and One Nation in deriving their economic policies. The economic policies that Swan economics brought us have now been taken over by Pauline Hanson and One Nation.

We understand that there's more reform in the marketplace, and that's why we're creating a market platform that allows our dairy farmers to create and to trade like other agricultural production systems, and that allows them to have more power in who they sell their products to and to create more market tension. That's how you address this. It's not just one silver bullet. That doesn't add up.

I recall the member for Hunter being in this chamber and talking about the last time there was a price floor in this country. It was for wool. He sat here and heralded the fact that it was John Kerin, the former Labor member, who broke and destroyed the wool price floor. He addressed that to the member for Kennedy, who is in the chamber now. Yet, now, the member for Hunter wants to put in place exactly what John Kerin got rid of. Pauline Hanson has really got hold of the member for Hunter. This last election has really upset him. He is running scared in his own electorate; he is running scared right across the country with the dairy industry. It's nothing more than a cruel hoax.

But there is another part of this whole dairy industry that needs fixing, and it's the supermarkets. When I stood up—

Photo of Joel FitzgibbonJoel Fitzgibbon (Hunter, Australian Labor Party, Shadow Minister for Agriculture and Resources) Share this | | Hansard source

And you were going to fix it!

Photo of David LittleproudDavid Littleproud (Maranoa, National Party, Minister for Water Resources, Drought, Rural Finance, Natural Disaster and Emergency Management) Share this | | Hansard source

I did. I got rid of $1 milk, my friend, because I had the courage to call out the supermarkets and say to Australians: 'Stop going in and supporting those supermarkets that don't support dairy farmers.' But, no, the member for Hunter crawled back under that rock he'd been hiding under for six years. He didn't want to show his face. He'd been hiding away. He did not show his face. He was tucked up, away underneath that rock, hiding. He wouldn't call out the supermarkets. In fact, he criticised me for actually calling for Australians to boycott those supermarkets until they passed money onto Australian farmers. You know what they did? They passed on the money. They found a mechanism to make sure that money got back to the farm gate. But nothing from the member for Hunter. In fact, he was supporting corporate Australia and the big supermarkets, and he knows he was, because he was tucked away down here for the last six years. The member for Hunter was tucked away, because then the opposition leader wouldn't allow him to put his head up. Now he's found some morals. Now that he's had a near-death political experience he's finally found his front. He's finally found that he can come out and say the things he wants to say. Well, he's a bit too late and he's taking the wrong advice from One Nation.

You have to be calm and methodical if you're in government. You have to make sure you put in place the reforms that work and are long-lasting, not those that will have detrimental impacts like a floor price. That's nothing more than a cruel hoax. Why do that? As you've even articulated, those farmers are doing it tough. They are doing it so tough out there, yet you propose a cruel hoax that will not work. And, in fact—

Photo of Kevin HoganKevin Hogan (Page, National Party) Share this | | Hansard source

The minister will address the chair.

Photo of David LittleproudDavid Littleproud (Maranoa, National Party, Minister for Water Resources, Drought, Rural Finance, Natural Disaster and Emergency Management) Share this | | Hansard source

Sorry, Mr Acting Deputy Speaker. The member for Hunter knows full well that he is doing nothing more than providing a cruel hoax and playing on the misery of Australian dairy farmers. I thought he was bigger than that but unfortunately not. We will continue on. We will continue on on the pathway to resetting the dairy industry. I say right here now to the supermarkets—

Mr Fitzgibbon interjecting

I'll take the interjection from the member for Hunter, because I have a strong record of standing up to them. I say to them again, as I said when I was agriculture minister: you have a role to play. If these reforms come in, you need to work with an industry that will be there and be sustainable, so you have an opportunity to prove what you did last time and support dairy industries now and provide that mechanism that you did. I broke that $1-a-litre milk and made sure that that money went back to them. They created the mechanism. They can do it tomorrow.

We understand the drought. There is a drought on. Unfortunately, when we talk about a national strategic plan the member for Hunter, again, wants to play politics on the misery of Australian farmers, not just dairy farmers. We are the first government that is not only dealing with the here and now of the drought but looking at the next drought. For the first time, we've said, as a government, that we are going to tackle future droughts while we're in the middle of one. A three-pillar stimulus of putting money back in farmers' pockets now, keeping them there. There is the Regional Investment Corporation that dairy farmers can take up, refinancing up to $2 million of an existing debt from a bank. They can put it in the Regional Investment Corporation—no principal and no interest for two years. If you had a rate of 6½ per cent you would be saving over $150,000 a year. We're taking that out of the big banks' pockets and putting it back into the farmers' pockets. We're making sure they have the cash flow to survive.

There's the farm household allowance—over $120,000 that will be put in their pockets to give them the dignity and respect they need to put bread and butter on their tables. We're supporting the communities, because the drought extends past the farm gate to the communities that support them. There are hundreds of millions of dollars in stimulus to keep them going—to keep small towns moving as we go through this.

As I said, we're the first government to look to the future with a Future Fund giving a dividend of $100 million a year to provide programs that will build the resilience that we need to stave off future droughts. We have come a long way. I used to be a bank manager. I used to sit around farmers' kitchen tables. I remember the days when we used to take out cheques for $250,000 in interest rate subsidies. Those days have gone because the farming industry has moved away from it, and so we should because we wouldn't have the trade agreements we have got in place now. Farmers have prepared themselves for these droughts, but we're going to give them the tools they need to go further.

Finally, we're going to put over $3 billion out there and hope that a state will take our hand and build some dams—some water infrastructure—to harvest the water to build the resilience to grow regional Australia. Unfortunately since 2003 only 20 dams have been built—16 of those have been in Tasmania—because we have state governments who are inept. Unfortunately, the states have the responsibility to build the water infrastructure. We're prepared to pay for it. Come and take our hand. When the member for Hunter sits here and feigns concern about the dairy industry, because of his near-death political experience on 18 May and the deep-seated impacts One Nation had on him at a local level—and now he takes the advice of One Nation in how he would run Australian agriculture and dairy—then I say to the Australian dairy industry: you are better off without the member for Hunter.

3:49 pm

Photo of Graham PerrettGraham Perrett (Moreton, Australian Labor Party, Shadow Assistant Minister for Education and Training) Share this | | Hansard source

We have just had 10 minutes from the CV of the modern National Party. We can actually see why there are problems with the National Party. 'We've got bankers, we've got journalists, we've got footballers and we've got police officers in the National Party. But we've got no farmers.' They're all noble professions, but there are no longer farmers in the National Party. And you can see why they are deserting the dairy farmers of Australia. It's a disgrace.

We've just had a banker standing up there talking for 10 minutes about the Labor Party. Just before I got up to speak today, I spoke to Joe Paronella, the mayor of the Tablelands Regional Council in the member for Kennedy's electorate—I will catch up with Joe at Christmas; all my in-laws live up in the tablelands—to get some insight into what's going on. They've actually had rain and they've got fodder. But fodder prices have gone up. He was saying the costs have gone up significantly, from $350 a bale up to $500 a bale. They have had a bit of rain, but they will still see 43 dairy farmers in that region that cannot produce milk at a profit because, as the member for Hunter has outlined, of some of the market forces.

We need a National Party, the fair dinkum National Party of my childhood, that believes in the bush, that actually has people who are focused on agricultural production. As we see in this letter from Joe Paronella, the mayor of the Tablelands Regional Council, these farmers are doing it incredibly tough. We've seen a Queensland senator say today that we're losing a dairy farmer a week from the industry in Queensland. We're down 311, and it has to stop today. And what's the suggestion from the Minister for Water Resources, Drought, Rural Finance, Natural Disaster and Emergency Management? Cheap capital. Well, capital is the cheapest it's been for 5,000 years, since the Sumerians first hung up a shingle. That's their solution. They're not prepared to actually step in. They're happy to spend $300 million on a stunt in Christmas Island to keep some poor Biloela family in prison; they're happy to throw money anywhere except at farmers. What happened to the National Party? Who put the muzzle on the mouth of the National Party? What has happened to the party of Black Jack? What has happened to that National Party of my childhood?

I know there has been rationalisation in the dairy industry; it started when I was a boy. When I grew up in St George, there were four dairy farms. That changed with refrigeration, and now there are no dairy farms in St George. We have a situation in the tablelands. Apart from Gallo, which has a chocolate business, the mayor says the dairy farms up there will be flat out lasting six or 12 months. They're down here at the moment trying to talk to the government, trying to make sure they can get as much support as possible.

I would say to those opposite: if we get to the stage where we can no longer access fresh drinking milk in Australia, that would be reprehensible. We have seen this on the Liberal Party's watch and, more importantly, on the National Party's watch. We have seen a merger in Queensland where the Liberals and Nationals have come together, and what it has created is a coalescence of Liberal Party thinking rather than National Party thinking—that National Party of my youth. I'm happy to finish early so that the member for Kennedy can have some input into this debate, and I'm sure he'll have plenty to say as well.

Mr Katter interjecting

Photo of Kevin HoganKevin Hogan (Page, National Party) Share this | | Hansard source

I will alternate the call. I call the member for Barker.

3:53 pm

Photo of Tony PasinTony Pasin (Barker, Liberal Party) Share this | | Hansard source

Thank you, Mr Deputy Speaker. It's a bit rich for the member for Moreton—that great agriculture advocate from that great agricultural electorate—to seek to attack the National Party. Mate, I come from a farm. I grew up on a family farm; I know what farming is like. I hope very much to retire to the farm and get into farming in the second phase or maybe the third phase of my career.

It's true: dairy farmers are facing very difficult times at present, and it's important that this place acknowledges that. These are challenging times. Input costs in some places are at record highs. The effects of drought, the cost of temporary water in the basin, the cost of electricity: these are all making times quite difficult for dairy farmers.

Those of us on this side think that we should listen to industry when it comes to what industry wants for its sector, and industry doesn't want re-regulation. Industry came to government in 1999 and asked, collectively, that we deregulate the industry. The industry came to government in 1999 and we did exactly that.

Photo of Bob KatterBob Katter (Kennedy, Katter's Australian Party) Share this | | Hansard source

Oh you've got to be joking! That is an absolute lie and you know it to be a lie! Come with me to my dairy farms!

Photo of Tony PasinTony Pasin (Barker, Liberal Party) Share this | | Hansard source

In fact, the member for Kennedy can bluff and bluster all he likes; the industry today is not asking for us to re-regulate the industry. The industry knows that is not the solution. And why is that not the solution? Why would, for example, a floor price on milk be a bad idea? Firstly, it's bad economics; secondly, it's bad for the future of the industry; and, thirdly, as I said, dairy farmers don't want it.

The member for Kennedy lived through this much more than I did, given that I was born in 1977. We only have to turn to the wool industry in the 1970s. In 1974 we established a floor price for wool. Anyone who knows anything about the history of agriculture in this country knows that it was an unmitigated disaster. We got to a point in 1991 where there were 4.7 million bales—

Photo of Kevin HoganKevin Hogan (Page, National Party) Share this | | Hansard source

The member for Kennedy, on a point of order?

Photo of Bob KatterBob Katter (Kennedy, Katter's Australian Party) Share this | | Hansard source

I really don't think people should be allowed to lie in this place. I really don't think—

Photo of Kevin HoganKevin Hogan (Page, National Party) Share this | | Hansard source

The member for Kennedy will withdraw.

Photo of Bob KatterBob Katter (Kennedy, Katter's Australian Party) Share this | | Hansard source

I withdraw.

Photo of Tony PasinTony Pasin (Barker, Liberal Party) Share this | | Hansard source

We got to a point in 1991 where there were 4.7 million bales of wool in storage in this country. It failed catastrophically. The difference between wool and milk, if I have to point it out to the member for Kennedy and those opposite, is that you can effectively store wool in bales. What you can't do is store fresh milk. The future of this industry is outward looking. It's about the free trade agreements we've set with the rest of the world, let alone the fact that if we go down the road of a fixed-price model then we'll lose all the export markets we have.

Mr Katter interjecting

And to the member for Kennedy, who thinks I might not have spoken to a dairy farmer, I can say that in my electorate 90 per cent of the milk produced is processed into products that go overseas. Are you asking them, member for Kennedy, to get that milk and flush it down the drain? No you're not. The secret here is to be more competitive, not less. More competitive, not less!

Mr Katter interjecting

Photo of Kevin HoganKevin Hogan (Page, National Party) Share this | | Hansard source

The member for Kennedy is warned!

Photo of Tony PasinTony Pasin (Barker, Liberal Party) Share this | | Hansard source

If we move to re-regulate this industry, the industry will become less competitive and not more. It will be less competitive internationally, not more. Member for Kennedy, the future, just like we've seen with livestock, is in export and being internationally competitive. The future is not in creating some sort of protected market, as we saw with wool in the 1970s, 1980s and 1990s and which ultimately led to ruin.

We need to support our dairy farmers, who, as I've said, because of drought and because of historically high input prices, are experiencing particularly difficult times. But to give them false hope and to say to them that the future here lies in a fixed price is, quite frankly, a catastrophic misrepresentation of the situation. The future here lies with being more competitive, not less. And don't take my word for it; take the industry's word for it. The industry has said: 'We don't want re-regulation. We want to continue on the path we're on.'

3:58 pm

Photo of Libby CokerLibby Coker (Corangamite, Australian Labor Party) Share this | | Hansard source

Clearly, our dairy industry is in crisis. What a tragedy for a sector that has directly employed 42,000 people and which is worth about $730 million a year in exports. And yet this industry is now under further threat, with production volumes declining markedly by more than 10 per cent in a year in states like Queensland and WA and by around four per cent in Victoria, which produces over 60 per cent of all milk volumes. At a time when dairy should be growing, Dairy Australia anticipates a further drop in milk supply from nine billion litres to around 8.3 billion litres. For too long our dairy farmers have been caught in a cost price squeeze, and their plight has now been compounded by the shocking drought in some areas of the country.

Those on the other side would try and hide their inaction by blaming the drought—although I note that the government recently tried to give drought relief funding to a south-west region of Victoria that wasn't even in drought. It is clear that there has been a failure of leadership for the last six years, especially since the dramatic events of 2016, when the then Prime Minister Malcolm Turnbull and the member for New England turned their backs on our dairy farmers when Murray Goulburn cut farmgate milk prices and backdated the clawback to July 2015. A week later, Fonterra did the same thing. It was estimated that these clawbacks created average debts of $120,000 for each dairy farmer. Giving farm families access to the farm household allowance and concessional loans is simply a bandaid and not a cure.

I remember having meetings with farmers and their families down near Lavers Hill during the 2016 election. Family members were in tears at the way they had been treated. In May 2016, my colleague the member for Hunter wrote to the then minister asking him to put pressure on Murray Goulburn in a bipartisan manner to deviate from its profit-sharing mechanisms. The processors could have directed funds back to higher milk prices for farmers to provide a significant cash flow boost. They didn't. The member for New England ignored the request and essentially ignored our dairy farmers.

Three years on, the consequences are there for all to see. Nationals senator Susan McDonald admitted on Radio National recently that she finally gets it that our dairy farmers are in crisis and, in her own words, this is 'complete market failure'. When asked about the causes of Queensland losing 311 dairy farmers, she admitted it is more systemic than just the drought. Senator McDonald was nothing but honest when she said that, without the removal of the exclusive contracts clause, they can't expand their production. It is so important that we get dairy farmers not just surviving but receiving a premium.

The government's inadequate answer to this crisis appears to be twofold. Firstly, they propose to have a mandatory code of conduct; the nine key points of the code of merit, especially in prohibiting exclusive price arrangements; and retrospective and prospective price step-downs. There will apparently be capacity for the ACCC to investigate breaches of the code and issue penalties. Is this the best the government can come up with? How effective do we believe it will be? After all, the banking industry has codes of conduct and we've had a whole royal commission into banking and financial institutions, much of it focused on the failings of the regulators to do anything but advise and mentor. Yet, in recent days, we've had Westpac allegedly involved in further countless breaches of the law and another financial institution still allegedly charging dead people for finance. At a certain point, you actually have to do more than codes of conduct; you have to have a plan for the industry and you have to regulate to protect the little people.

This crisis has been too long in the making. A Senate report into the industry in 2017 noted:

Australian milk production since deregulation over 15 years has decreased from approximately 11 billion litres per year to 9 billion litres per year—a 20 per cent decrease, while New Zealand milk production has almost doubled.

According to Senator McDonald, the second solution is for consumers to demand that supermarkets pay a premium to farmers. It is more a statement of hope; it certainly isn't a plan. This government trades on hope. It trades on letting the market rip. It despises rational industry plans and stable pricing mechanisms. It goaded the car industry into departing our shores. It has let the financial sector do as it pleases— (Time expired)

4:04 pm

Photo of Damian DrumDamian Drum (Nicholls, National Party) Share this | | Hansard source

There are over 900 dairy farmers in my immediate region. Some of those are slightly outside of my electorate, but over 900 farmers associate themselves with the Goulburn-Murray Irrigation District. Many of them have been in absolute crisis from the time of the clawbacks in 2016. They had barely got themselves back on the table when we were hit with this drought.

It has been a very, very tough time for many of our dairy farmers, but to suggest that we have not been working with them is absolutely absurd. The farm household allowance has been put in place. We have kept making adjustments to the farm household allowance to ensure that more and more people are able to access this money to effectively put food on the table, to maintain their dignity and to be able to pay essential household bills. The allowance is not meant to fix up a farming business. It is there simply so that we are able to offer them the assistance that they want when they are going through a really tough time.

Right now we have no-interest loans to enable not just our farmers but also businesses associated with primary industries to consolidate their debts to no-interest loans—

Photo of Bob KatterBob Katter (Kennedy, Katter's Australian Party) Share this | | Hansard source

More debt!

Photo of Damian DrumDamian Drum (Nicholls, National Party) Share this | | Hansard source

Zero interest, so it's not more debt. It's about consolidating existing debt. It's two years of zero interest, three years of very low interest and then a five-year period of P&I.

That is what many of our people on the land want. None of them are asking for a floor price. There's a very real, very straight-up-and-down reason why they are not calling for a floor price: it's impossible to put a floor price in when the cost of production varies so much from farm business to farm business. One farmer may own his own water; one farmer may own thousands of hectares of property where they are able to grow their dry matter, their hay and fodder; other farmers have incredible scale; other farmers are crippled by debt; and some farmers have very little debt. The cost of production and the cost of labour varies greatly depending on the scale of your operation. It's the cost of production that varies so dramatically from farming business to farming business that makes it impossible to put a floor price in at a level that is not going to enable some people to make trillions while other people barely cover costs.

When the Labor Party put this hoax forward, they refused to allow any finances or funding to go with their pledge of a floor price. They wanted a floor price that somehow or other wasn't going to cost government any money at all but was going to be above the cost of production, yet they failed to point out what that was. Not only that, in the last weeks before the election in May this year the Labor Party put out their water policy. Their water policy was all about making water more expensive. The biggest input cost right now is feed and/or water to grow your own feed. The Labor Party's answer to this was: 'Let's make water more expensive. If we win this election in May, we're going to go out and start buybacks. We're going to start buying back water from farmers, forcing the water up'—the most destructive and damaging water policy that you could ever design. This is what the Labor Party's answer to the dairy industry was: get some mythical floor price that was somehow or other going to re-regulate the industry

These 900 farmers in the Goulburn Valley region are predominantly producing milk for products such as milk powder and cheese. Very little of what they produce, but a growing percentage, is going to fresh milk. What happens with the supermarket is important to us, but it's not as important as what our trade delegations can achieve by getting product into Asia and getting our milk powder a higher price. Right now, the price of milk is very, very reasonable. What's crippling people is the drought, water policy, the fact that our water— (Time expired)

4:09 pm

Photo of Daniel MulinoDaniel Mulino (Fraser, Australian Labor Party) Share this | | Hansard source

The debate today on this important MPI is emblematic of the government's failure in so many policy areas. Its response to this issue is the same as its response to other long-term, complex issues: it's piecemeal, it's reactive, it's short-term and it's ad hoc. Let's look at the way it responds to the economy. All we hear is, 'headwinds, headwind, headwinds.' It's like we're getting a weather report every question time rather than an economic update. Let's look at energy policy. All we get is hand-wringing about increasing prices and prices going through the roof when, in fact, the reason prices are going through the roof is their failure to have a plan. And that's exactly what we've heard today in relation to a lack of a plan on giving price stability to the dairy industry: 'It's all too hard. There'll be rivers of milk poured down the drain.' They wring their hands at increasing prices for farmers with no strategy other than, as speakers on our side have said, more and more debt piled on this industry. Let's look at this government's strategy—or lack of strategy—when it comes to the trials being faced by the dairy industry. When Murray Goulburn cut farmgate milk prices in 2016, as the member for Hunter indicated, this government stood by and watched with no long-term strategy. All we get now are piecemeal, short-term responses. All we get now is more and more debt for this industry and no long-term strategy.

The Victorian dairy industry produces $1.8 billion of raw milk, most of which is processed into powdered or fresh milk, cheese and other dairy products. It represents 65 per cent of national dairy production and generates $1.85 billion in exports. Global demand for dairy is increasing, yet, since peak production of 11.27 billion litres in 2002, Australia's total milk production has shrunk to 8.7 billion litres. Australia's share in the global dairy market fell from 16 per cent in the 1990s to six per cent last year. This is having a terrible effect in Victoria and around the nation. Since that time, New Zealand has doubled production. That shows what can happen when there is a long-term strategic, positive plan in place. What we have from this government in relation to the dairy industry, in relation to economic policy, in relation to energy policy, in relation to every area of long-term policy where there is a need for complex, long-term planning is reactive, short-term policies. What we've seen is a long-term decline in the dairy industry, as we've seen in so many other areas of our economy and as we've seen in so many other areas of our society.

People are getting wise to this government. It's all about rhetoric, all about hand-wringing, all about saying, 'We really care,' and all about saying, 'We really listen'—but there's no action. I have so much more to say on this but I will cut my time short so we can hear the great wisdom of the member for Kennedy. This is yet another example of this government's failure.

Mr Katter interjecting

Photo of Tony SmithTony Smith (Speaker) Share this | | Hansard source

Sorry, the call alternates, as the member for Kennedy well knows. The member for Braddon has the call.

4:12 pm

Photo of Gavin PearceGavin Pearce (Braddon, Liberal Party) Share this | | Hansard source

I've listened fairly intently and I've held my tongue. I listened—

Opposition Members:

Opposition members interjecting

Photo of Gavin PearceGavin Pearce (Braddon, Liberal Party) Share this | | Hansard source

And I'd appreciate it if the same was applied to me! I listened to the member for Hunter, who made a number of outlandish claims and innuendos relating to our side. I listened to the member for Moreton, who said that there are no more farmers on our side. He rambled on for several seconds about that. Well, I can tell the members, through you, Mr Speaker, that I am one. My family has been farming in Tasmania since the mid-1800s. At 14 years of age I was a dairy farmer, and I continued to be a dairy farmer until the age of 18 when I joined the military. So I know a little bit about farming. At the moment I have millions of dollars invested in the agricultural business I have along the north-west coast of Tasmania, and I've had to lease that farm out so that I can come and fight for farmers in a similar vein in this place. So I know about farming and I know about our dairy industry. I understand the pressures and the hardships that our farmers face each and every day as they go about investing millions of dollars into something that they don't know will pay off in the end. I've been there and I've done that, so I understand.

In Tasmania, where I come from, my electorate is home to Australia's largest dairy. In fact, my Braddon electorate is full of dairy farmers. They're doing quite well, thanks very much, and they're doing quite well because of a strategy that's been put well in train by our strong Liberal Hodgman government. We've invested in tranche 3 irrigation in our state—in fact, along the north-west coast of my electorate—and that's enabled our farmers to grow, to expand and to have confidence. I think today is a classic example of why we should maintain a steady hand and a sure head. The last thing our farmers need is policy being kicked around this place like a political football, because at the end of all this ranting, raving and finger poking are farmers that are hurting—real live human beings that have got a future to look forward to. A steady hand and a wise head is what this industry needs at the moment.

From the other side I've heard a heap of rubbish in relation to regulating an industry that plays in a deregulated market. That is like placing a round peg into a square hole. It won't work. We've seen it in the wool industry with the Australian Wool Corporation and it didn't work there. Our farmers don't want that. What they want is for us to apply, like I said earlier, a sure head and a steady hand. Instead of kicking this topic of regulating our industry around like a football, they want us to listen to them, to their industry providers and to their peak bodies, who say that they don't under any circumstances want that industry regulated. You may say that this minimum price, this floor price that you are willing to apply, is not regulation. Well, I'm saying that, if you are applying any fix to a particular price within an industry, that is, in fact, regulating an industry. It's not what our farmers need, it's not what our farmers want and it's not in the best interests of our industry—definitely not.

A sure head and a steady hand—that's what we're applying here. Our government has announced over $7 billion in measures to help drought-affected farmers across Australia, including our dairy farmers. Since 2013 our government has approved almost $915 million to 1,675 farm businesses under the concessional loans scheme. You say we don't do anything. As of 30 June 2019, $201 million to the dairy recovery concessional loans have been approved, benefitting 347 farmers. At 6 September 2019, approximately 1,200 farmers and their partners were on farm household allowance, and that has been extended through our strong support of our industry. Funding is continuing to roll out to help those hit by the aftermath of the Murray Goulburn crisis. That is just one crisis that one particular company inflicted on our industry, but don't blame the industry. Don't regulate our market. Instead, what we need is a code of conduct, and we need it fast.

4:17 pm

Photo of Bob KatterBob Katter (Kennedy, Katter's Australian Party) Share this | | Hansard source

I wish these people had gone to the same university that I did, because I was taught when I went there that, if there are two buyers in a market and 10,000 sellers in the market, the sellers are going to get screwed. Every university that I know of in the world has said that. In Australia, 90 per cent of the food that is sold is sold by two people. You've got two people to sell that milk to. If you're stupid enough to stay on the free market and count on Woolworths and Coles being Father Christmas, you deserve, my friend, what you get—and you'll get it. You've got to be judged on your outcomes. You must be judged.

I was a free marketeer when I entered this place, and I just saw disaster after disaster after disaster. In the National Party room—and I'm being a little improper here—there were, I think, 16 members. Every one of them got up and tenaciously spoke and opposed dairy deregulation. All of them got up and opposed it. When they came back in here, they all held their hands up.

I'll tell you how successful you've been with your free markets: The wool industry deregulated under Keating—you blokes didn't have the glory of undermining the industry and then deregulating it. We had 172 million sheep in a regulated industry. We now have 66 million.

Photo of Jason FalinskiJason Falinski (Mackellar, Liberal Party) Share this | | Hansard source

Do you want to go back to the wool price? Where are you getting these figures from?

Photo of Bob KatterBob Katter (Kennedy, Katter's Australian Party) Share this | | Hansard source

My friend, I'll go into your electorate and debate it with you. In the meantime, shut up. In the cattle industry we had 32 million; now we've got 22 million. In the sugar industry we're down 15 per cent. In the grain industry, we're at a 16 per cent disadvantage against the Americans. So your sheep are down, like, 60 per cent, your cattle are down, like, 30 to 40 per cent, your sugar's down 15 per cent and your dairy production is down nearly 50 per cent—what a great success story!

But you've opened up all these markets. Well, in the state I come from, our biggest employer is, in fact, the sugarcane industry. 'Oh, the free market's got us into America.' No, it didn't. We don't send any sugar there at all. With the biggest economy in the world—Europe—no sugar is going there. With the third-biggest economy on earth, China, we have a little tiny bit going in. With India, there is no sugar going in there at all. With Brazil, the fifth-biggest economy, there is no sugar going in there at all. So where are your free markets? Here's the biggest industry in Queensland—where is your free market? Where did we get market access? Tell me.

Here's the outcome: we are now a net importer of pork, a net importer of seafood and, believe it or not, a net importer of fruit and vegetables. Our sheep numbers are down 60 per cent. Our cattle numbers are down 20 or 30 per cent. Our sugar's down 15 per cent. Where is this great benefit from the free market? There's no benefit there at all, and you are seriously standing up in this place and saying it's a good idea that we continue with a free market where the 10,000 dairy producers that are still left out there are going to sell to two buyers, and they expect the two buyers to be Father Christmas. Well, please excuse me for telling you that the directors of Woolworths and Coles have a duty to their owners to maximise profits. The wonderful achievement of deregulating the dairy industry was to take New South Wales and Queensland, overnight, from 58c and 59c a litre down to 40c a litre. That's what happened.

With the wool industry—I was a free marketeer at the time; I thought Doug Anthony was dead wrong on the wool—the price of wool increased 300 per cent and stayed up there for 20 years until Keating undermined the scheme and then abolished it. Surprise, surprise, the price fell 300 per cent in the three years afterwards. Well, what an extraordinary coincidence that when the minimum price scheme was introduced the price trebled and then, three years after the scheme was abolished, the price dropped to one-third of what it was. What an incredible coincidence! So, with the propositions that you're putting up here, I openly invite any of you to have me in your electorate arguing with your dairy farmers at a forum. (Time expired)

4:22 pm

Photo of Fiona PhillipsFiona Phillips (Gilmore, Australian Labor Party) Share this | | Hansard source

The Nationals and Liberals love to say how much they help farmers. They like to say they are standing up for farmers, that they have our farmers' backs and that they are the only ones working to protect farmers' rights. They come to regional and rural areas like mine at election time and they make all kinds of promises about how they will support farmers, but, once the election is over, it's a different story. It's a different story for our struggling dairy farmers on the New South Wales South Coast who have been abandoned by this government. It was a different story in the Senate only two weeks ago when the Nationals and the Liberals voted against desperately needed help for dairy farmers. The Liberal-National government are simply not serious about helping dairy farmers. They have had absolutely every opportunity to take real action, but they have wasted those opportunities. They have walked away from dairy farmers.

At the election, I worked hard to secure a Labor commitment to a minimum farmgate price for dairy. I know how dairy farmers are struggling. I speak to dairy farmers in my electorate and I hear their stories of struggle. I come from a long-time dairy farming family, and I know how hard it is for local farmers. I see they are in crisis. I see what this drought is doing to them, but the Prime Minister, when he came to my electorate during the election, wouldn't even speak with local farmers. Local farmer Rob Miller tried to talk to him. He tried to tell him, but the Prime Minister just drove on past. That is their attitude. That is how they treat farmers.

Perhaps that explains why the Liberal-National government chose to vote down a bill that could have finally helped the dairy industry. That bill would have seen a minimum farmgate price for milk investigated. The member for Hunter and I worked hard on Labor's policy at the last election. We met with farmers. We talked with them about what they wanted. But the government has voted the bill down. The bill also would have ensured that the long-promised dairy code of conduct could be quickly adopted. It was recommended by the ACCC in April 2018, and we are still waiting. We still don't know when it will come. Now Dairy Connect and other farmers fear that it will not protect family-run dairy farms like it promised—another broken promise from a government steeped in dysfunction and chaos.

I am going to keep saying this until it sinks in for those opposite: our dairy industry is in crisis. Our dairy farmers need help. The government has failed our dairy farmers. I am not going to stand by while the Liberal-National government allows dysfunction and chaos to delay the vital support that local farmers need. When the government announced its long-awaited drought package, local farmers in my electorate had hope. But that hope was soon squashed when not only were the council areas in my electorate left out of the package but it appeared we were, in fact, now worse off—absolutely shocking! What a slap in the face to farmers on the South Coast doing it tough.

Local dairy farmers are dealing with a long-running cost-price squeeze, with a race to the bottom for milk prices. This is being compounded every day by this drought that the government keeps telling them they are not in. Rob Miller tried to tell the Prime Minister how hard it is. He tried to tell him, 'It's cheaper to wash your car with milk than it is with water,' but the Prime Minister didn't want to listen, and he is still not listening. I am appalled that this government would vote against real help and support for our dairy farmers. I will not let go. I will not turn my back on local farmers. I will keep fighting for them. I am one of them.

Photo of Tony SmithTony Smith (Speaker) Share this | | Hansard source

The Prime Minister has indicated he wishes to receive the call.