Mr HOGAN (Page) (20:21): Coming from a regional electorate like Page where we have a strong dairy industry, it concerns me when I hear the two words ‘levy’ and ‘increase’. However, the Primary Industries (Excise) Levies Amendment (Dairy Produce) Bill 2014 is not about raising the industry levy our dairy farmers’ pay. In fact, it will not necessarily cost the farmers or the industry one cent. This is about establishing a free insurance policy that will give our farmers the flexibility they need to quickly respond to a health crisis in their industry. This bill leaves it up to the farmers to vote to increase the levy to a new maximum rate in the event of a disease outbreak. Australian Dairy Farmers Limited asked for this piece of legislation to increase the maximum cap. This will allow it to continue to meet its obligations to Animal Health Australia and to other animal health and welfare initiatives.
The Australian Animal Health Council, which was set up in 1996, manages more than 50 national collaborative projects that improve animal and associated human health, biosecurity, market access, livestock welfare, productivity and food safety and quality. Part of the Animal Health Council’s mission is to ‘build capacity to enhance emergency animal disease preparedness’. The bill increases the maximum permitted rates the Australian Animal Health Council can levy on dairy produce from 0.058 cents per kilogram of milk fat to 0.145 cents, and for protein milk from 0.138 cents to 0.346 cents. What it does not do is increase the actual levy payable by industry members or impose a financial burden on our dairy farmers. This is because any actual increase to the levy must first be put forward by the dairy industry, demonstrating widespread consultation and support, in accordance with the Australian government’s Levy Principles and Guidelines.
We know from bitter experience that, if we are slow off the mark following a health outbreak, there can be serious consequences. We need look no further than the outbreak of mad cow disease in the UK and closer to home to the equine flu. These diseases caused serious financial and personal hardship for individual farmers and breeders, for the industry as a whole and for the national economy, which our then Treasurer Peter Costello noted.
Global competition in the dairy industry is intense. This bill removes a roadblock to allow farmers to respond effectively to an outbreak so they can protect the industry and its domestic and global market share. We all know that large parts of northern New South Wales and Queensland are in drought and this government, to its credit, is now working on an assistance package. The Minister for Agriculture, Barnaby Joyce, and the Prime Minister, Mr Abbott, visited the drought affected areas a week or so ago to look at the type of assistance needed to support these industries. I want to put this in context: this should not necessarily be looked upon as an industry handout. If we were to look at the industry handouts that happen across the world in agriculture, we would see that Australia is at the bottom of the chart. Australian government assistance to farmers is barely measurable on a chart, whereas many other countries give very heavy support to their farmers. This will be assistance in the sense that it is a one-off because of the weather experienced recently.
The drought did not start yesterday or last week. It has already affected milk production, with output falling last year. We cannot make it rain but we can provide the right economic and regulatory conditions for the industry to adapt and prosper. That is what we are doing by introducing the Primary Industries (Excise) Levies Amendment (Dairy Produce) Bill 2014, by announcing 19 March as the government’s first repeal day to scrap thousands of suffocating pieces of regulations and by negotiating free trade agreements such as the one with South Korea. Many dairy farmers and many people in my electorate have told me that they felt the previous government’s answer to anything was to provide more regulation and more rules. We know that that does not help any person trying to produce wealth or jobs in this country.
This bill should be seen as part of a package that provides the framework for the dairy industry. It will help farmers to withstand domestic shocks, like the outbreak of disease, and to protect and grow their industry’s profitability and market share so it can continue to employ tens of thousands of workers in regional Australia.
Over the last few years, overseas investors have shown intense interest in many of Australia’s dairy companies. While this has caused some consternation, it reflects a global recognition of the importance of Australian dairy and agriculture in meeting the dietary needs of a rapidly growing world population and, in particular, Australia’s role in becoming the food bowl of a burgeoning Asia. We all know that, in Australia’s infancy, our nation was said to ride on the sheep’s back. Now, in what many are calling the Asian century, it is Australia’s food industry that will increasingly feed the world.
After negotiating the free trade agreement with Korea, which the dairy industry hailed as ‘a step forward’ and ‘providing a range of new opportunities’, I cannot think of many things worse than farmers signing contracts with Australia’s 10th largest dairy market only to find they cannot deliver due to the slow response to an outbreak. If we are to make the most of this Asian century, we must make sure that any disruption to the supply chain caused by a disease outbreak is minimised as much as possible.
The dairy industry is critically important to my community. Norco, our dairy co-operative, was founded in June 1895. Last year it purchased 152 million litres of milk from its 159 members, an increase of 3.3 million litres from the previous year. It directly employs 413 locals. I might say that they make, in my humble opinion, Australia’s best ice-cream, in which I regularly indulge. Norco had a tough 12 months last financial year as it held up the farm-gate price for its members and restructured its business for the future. Conditions for the local dairy industry are starting to look a bit rosier, with indications the farm-gate price is rising and Norco signing a number of significant deals made possible by the restructure. One is to supply milk to Coles supermarkets private label in South-East Queensland, another is to produce that supermarket’s branded ice-cream, which I happily report to parliament scooped 12 silver medals in this year’s Sydney Royal Cheese and Dairy Produce Show.
A government member: They scooped it.
Mr HOGAN: They did scoop it. Norco is also now exporting ice-cream to Japan. Norco is currently looking with our help to export fresh milk into China and the last time I spoke to them, they had had two attempts. They are trying to sort out some initial problems, but this is potentially an exciting prospect for them. In the company’s annual report, Norco’s chairman Greg McNamara said that it was also looking for other export opportunities as:
The heightened international interest in food produced in Australia from Australian sourced ingredients should provide Norco with opportunities to enter into new business partnerships which are designed to enhance our export opportunities.
Of course, we know that Australia has a great, clean image in this field, as it has in many others.
Mr McNamara is talking about Australia’s competitive advantage. Business studies 101 states that in a globalised world, countries and businesses will reap the rewards if they exploit their competitive advantage, and it is our role as the government to ensure this industry can do just that. We have a part to play in ensuring the industry can maintain an uninterrupted supply of quality milk and other value added produce like ice-cream, butter and yoghurt.
Norco, I am happy to report, takes quality assurance very seriously. It places a high priority on assurance programs and certifications within each of its three processing facilities. This bill will allow Norco to quickly join the rest of the industry in responding to an outbreak so it can maintain its quality domestic and export dairy produce without having to wait for the government to legislate for a levy rise to pay for the emergency response.
Nationally, dairying continues to be an important rural industry. It is Australia’s third largest rural industry and a major regional employer not only on farms but also through processing, manufacturing and distribution of a range of high-quality products. I have some quick facts to put it in perspective. The Australian dairy industry is forecasting the production of about nine billion litres of milk this financial year. There are 6,770 dairy farms located across Australia. About 1.6 million dairy cows produce all of Australia’s milk. About 50,000 people are directly employed on dairy farms and in manufacturing plants. In the six months to last December, the industry earned about $1.4 billion in exports. As we know, exports increase the real wealth into our country not only from the people it employs and the taxes they pay but also from real export dollars. Owner-operated farms dominate the Australian dairy industry.
In the International Year of Family Farming, it is refreshing to remember share farming was employed on 18 per cent of farms in 2012-13, while corporate farming made up just three per cent of the total. Although the bulk of milk production occurs in the south-east corner of the country, it really is a national industry with all states having their own dairy industries that supply fresh drinking milk to our regional communities and cities. The industry adds value to the processing of milk through the production of fresh lines such as yogurt, custard, ice-cream, butter, cream and a wide variety of cheese types. Longer shelf-life products such as bulk and specialised milk powders are also produced in high volumes.
This bill will protect this industry not through tariffs or subsidies, or by slugging farmers with higher costs and more regulatory burdens, but by allowing it to be nimble and flexible, and enabling it to respond to a potential emergency health situation in a more timely way than it currently can. I commend this bill to the House.