Sofitel Wentworth Sydney, 20 July 2005

Feeding the World: Australian Farming can Answer the Challenge

It's almost dinner time in Silicon Valley, where a web designer will sit down to a hamburger made with Australian beef.

It's an hour before dawn in Khartoum. After the sunrise prayers, a Sudanese shopkeeper will eat flatbread made from Australian wheat.

Australian farmers have been feeding the world since the days when the Strathleven sailed for the Suez Canal and London, with our country's first cargo of refrigerated meat and butter.

We should never forget that Australian farmers are the heart of our regions and much of the soul in our national identity.

One of the challenges we now face is that so many people in the cities have forgotten the importance of the farm sector, even though agricultural exports help pay for their imports of plasma televisions and South American coffee.

The Nationals in a Coalition Government have continued to deliver good policy for Australia's farmers. We have done it by putting forward disciplined and rigorous arguments within the government.

Today I'm going to talk about some of the key issues that we are dealing with as part of a strong Coalition Government - and how the NSW Farmers Association could make a positive contribution that benefits its members.

Multilateral trade reform

Australia exports two-thirds of its agricultural production, so expanding our trade access overseas has always been one of our principal objectives.

The World Bank has estimated that trade liberalisation would boost the world's income by 269 billion US dollars.

• Australian farmers would be huge beneficiaries, with income gains of between 50 and 65 per cent;

• It would also be the single most effective policy the world could adopt to alleviate global poverty, because almost half the total increase in world income would go to developing countries. It would lift 140 million people out of poverty.

We are therefore determined to achieve an ambitious outcome to the Doha Round of Negotiations in the World Trade Organization.

We have reached a crucial stage in the talks. There are no major overseas elections in 2005, so we have the opportunity - if the world has the vision to take it - to break the back of the negotiations by the Hong Kong Ministerial Conference in December this year. We would then be able to conclude the Round during 2006.

It's going to be a long five months, for we face an exceptionally difficult environment for trade liberalisation:

• In the United States, there are strong domestic political pressures against reform;

• the European Union is facing significant internal issues that are compromising its ability to show strong leadership in the negotiations;

• Rich countries such as Japan, Norway, Korea and Switzerland are not only large subsidisers but often maintain prohibitively high tariffs on agricultural goods; and

• Developing countries are generally in favour of reform by developed countries, but are much slower to make reforms themselves.

So there are challenges ahead if we are to agree on the guidelines for a new agreement - what we call modalities - in Hong Kong.

Australia has made it clear to everyone, however, that the subsidising countries cannot expect to make progress in other areas, such as services and industrial goods, if they are not prepared to address agriculture.

It is the most distorted sector of world trade; it affects the welfare of developing countries more than any other area; it must be at the forefront of the Doha Round.

My discussions in China last week confirmed the difficulty and importance of our task. The meeting did not live up to the expectations created by the G8 summit in Gleneagles. The leaders there called for renewed momentum in the world trade talks, but those press conferences have yet to be turned into action. To do that, there has to be more vision and leadership from the countries who maintain the greatest agricultural protection. European farmers receive 33 per cent of their income from the Government, in the US the figure is 18 per cent - and in Australia the figure is four per cent.

Free trade agreements

The WTO is our priority, but as last week's meeting showed, progress is slow and difficult.

To ensure we maintain our trade competitiveness the Government will keep on pushing for comprehensive Free Trade Agreements to open up markets faster than we can through the WTO negotiations.

We have recently announced an extra $11 million to ensure we have adequate resources to negotiate our broad trade agenda.

• The FTAs we have already concluded with the United States, Thailand and Singapore will deliver real benefits for the Australian economy and Australian farmers.
• For example, the Centre for International Economics has predicted that the US Free Trade Agreement will add six billion dollars to Australia's GDP and create an additional 30,000 jobs.

We are now working on a possible Free Trade Agreement with China.

China is already Australia's second most important export market, and its demand for agricultural products is changing and growing rapidly. For example, its consumption of dairy products has more than trebled over the last decade.

The Government recognises that industry itself is best placed to identify the areas of greatest potential and the problematic trade barriers that need to be reduced. We have already consulted extensively with industry and are planning more rounds of consultation in the future.

We are also undertaking FTA negotiations in conjunction with New Zealand with the ten members of the  Association of Southeast Asian Nations, and are negotiating FTAs with the UAE and Malaysia.

Australian farmers have an important part to play in advancing our trade agenda and selling our message to the global community. The participation of the NFF at the Cairns Group Farm Leaders' Meeting, along with the Cairns Group Ministers' in Colombia earlier this year, was an important demonstration of how we can work together.

Our focus on bilateral agreements has delivered significant and lasting benefits - but our main focus and key priority is a successful outcome to the Doha Round.

Drought and natural resource management

I want to now turn to how we are supporting the farm sector through the worst drought in a hundred years.

The Government is providing an extra $250 million in drought assistance, on top of the billion dollars we have already committed.

• We have increased the Exceptional Circumstances Interest Rate Subsidy from 50 per cent to 80 per cent for farmers in the second and third year of an exceptional drought;

• We have introduced, for one year, a $10,000 offset against the Exceptional Circumstances income support test. It means that farmers can earn an extra $10,000 in off-farm income without affecting their eligibility for drought assistance.

• We have eased the assets test allowing a more generous assessment of off-farm assets.

• In addition, the Government will maintain the streamlined Exceptional Circumstances rollover assessment process, to make it easier for farmers to have their EC declarations extended.

Despite the recent rain, the drought is a warning that we need to manage Australia's natural resources better - and in a way that does not leave farmers bearing the full burden of the community's environmental expectations.

The Nationals will continue our emphasis on good natural resource management, and we will push on with implementing the National Water Initiative. It will provide farmers with the security to make long-term investment decisions and the ability to manage their own farm environment.

It is backed by our $2 billion Australian Government Water Fund, which will invest in water infrastructure, improved water management, and better practices in looking after our water resources.

It has enabled us to provide adjustment assistance to farmers and irrigators in six major NSW groundwater systems. They will receive $110 million in support from the Australian and NSW governments; they are contributing $50 million to the package themselves to secure their future.

Our decision to provide adjustment assistance recognises that water users bought their farm assets and borrowed against them in the entirely reasonable expectation that they would be entitled to use the water they were allocated. It would be unfair to now expect them to bear the full cost of correcting decisions that were made by long-departed governments.

The NSW Farmers Association made an important contribution to the National Water Initiative, with its input into the NFF's Property Rights Position Paper in 2002. It is this sort of rigorous and sustained policy work that generates results.

Fruit and vegetables

Ladies and Gentlemen, farmers must have a fair go when they sell their produce. That's why we announced in the election campaign that we would develop a mandatory code of conduct for the wholesale fruit and vegetable sector.

An independent consultant, the Centre for International Economics, will shortly release a draft code which will propose some options and help facilitate industry discussion.

The consultants will hold a series of public forums around Australia before the code is completed, which should be in September this year.

It has been suggested that the mandatory code should cover the supermarket chains as well as the wholesale sector. However, supermarkets are already covered by a separate, voluntary code - the Produce Grocery Industry Code of Conduct - so they are already supposed to be meeting all the essential requirements of the planned wholesale code.

Labelling has become a very contentious issue. We need to have a healthy debate about this issue.

To this end, Food Standards Australia and New Zealand recently sought comments on possible changes to the country of origin labelling that applies to unpackaged food, like most fruit and vegetables.

They proposed that retailers should have the option of providing country of origin information on request, rather than using labels.

The key element of this discussion should be the consumers' right to choose. Consumers would not get the information they need to make informed choices if country of origin labelling were optional.

Workplace reform

Ladies and gentlemen, the Government is also undertaking significant reform in an area of vital importance to rural and regional Australia - the workplace.

Can I start by posing a simple question to you - is it still sustainable for a country of 20 million people to have seven different industrial relations systems when our competitors are offshore, not interstate? How inefficient is that?

For Australia to maintain the strong economy and living standards we have enjoyed over the past nine years we must continue the reform process. We can not afford to stand still.

Our objective is the creation of more jobs and higher wages.

Under the Government's proposed changes, we will free up the system to make it easier for employers and employees alike, while maintaining the principle of a fair go for all Australians.

We will legislate as minimum conditions of employment:

• Four weeks annual leave
• Personal/carers leave
• Parental leave including maternity leave
• And maximum ordinary working hours of 38 hours per week.

We will establish the Australian Fair Pay Commission to guarantee minimum wages.

We will get rid of the Keating Government's unfair dismissal laws as they apply to businesses employing up to 100 employees.

Since coming to office in 1996, our workplace relations reforms have already delivered significant improvements:

• Real wages have grown by over 14 per cent - based on productivity.
• The lowest unemployment levels in 28 years - now 5 per cent.
• More than 1.6 million new jobs.
• 7 Million Australians in full-time work.
• The lowest levels of strikes ever.
• Higher productivity
• And more family friendly work practices.

Farmer organisations have always backed us in these reforms - we look forward to working with you again to deliver outcomes for all Australians.

Telecommunications

Ladies and gentlemen, it would be remiss of me to speak to you today and not make a few comments on telecommunications and the stance we are taking to secure the services that regional Australia needs now and in the future.

Australia is undergoing a telecommunications revolution, driven by Moore's Law - the exponential growth of computing power - and the increasing availability of broadband.

In the years to come, we will see:

• The widespread use of Voice over IP to replace conventional phone calls, which will reduce the cost of international calls to about a cent a minute;

• Farm managers using sensors and wireless internet technology to monitor their fences and livestock from anywhere in the world; and

• Dairy exporters making sure their products are at the right temperature from their loading dock to the cold room of a supermarket overseas.

All these technologies are possible now and will be cost-effective for farm businesses soon. We cannot allow regional Australia to fall behind as they become more common and are adopted by our competitors.

The Government's ownership of Telstra shares does not guarantee that the telecommunication services of the future will be available any sooner. The only way to do it is through strong laws, effective regulation and targeted Government assistance - and in this regard more than a billion dollars has been spent by government on regional telecommunications since 1997. Some of it went to Telstra. Some of it went to other companies.

• None of it was dependent on the Government holding Telstra shares.

Our position is that regional telecommunication services must be adequate before the Government sells the rest of its Telstra shares. They will only become adequate when there are fundamental reforms to the way that the telecommunications sector is regulated. There must be:

• The genuine and robust operational separation of Telstra's wholesale and retail arms, and the similar separation of all carriers and providers in the market;

• A strengthened regulatory regime, so that both the telecommunications industry regulator and the ACCC have the power to enforce competition properly;

• and finally, the security of knowing that future governments will continue to fund the provision of services in non-commercial markets.

It has been suggested that any new Government regulations could affect Telstra's profitability or the return the Government might receive from any sale.

However, our responsibility is much broader than Telstra's share price. Our job is to look after the national interest and that means the interests of regional Australia.

The position I have just set out is based on eight years of policy analysis and thoughtful reports - the Besley Inquiry, the Estens Inquiry and the recent Page Research Centre report.

Interestingly, your recent private survey about Telstra services distributed 4,850 survey forms, but only received 1,100 responses - that's a 22 per cent response - naturally, from the people with the strongest views about Telstra. What did the other 78 per cent think? Did their silence mean they're happy with their services?

Can I leave you with a challenge - if the NSW Farmers Association wants to have a voice in the debate, you need to put forward rigorous policy proposals for the Government to consider.

Conclusion

In conclusion, The Nationals are continuing to focus on the key issues that affect the farm sector. You are at the heart of regional Australia, and we are determined to be there for you, as we have been for eighty years.

We will continue to work closely with organisations like the NSW Farmers Association. In the past, you have made an enormous contribution to the development of the Government's policies, and I single out again your role in developing the National Water Initiative.

You will continue to have a role, provided you put forward rigorous and credible policy advice and analysis.

I look forward to working with you.

Thank you.