This is the third Outlook conference I’ve had the privilege to speak at; the second I’ve had the privilege to open, given after the election, the Prime Minister chose to come here himself. When I spoke on that second day in the 2008 Conference, I set out what I believe were the external pressures and dealing with those external pressures that actually drive public policy in this portfolio in the years ahead.

What I’d like to do today is take stock as to where we’ve come in those two years and where we need to head. It might seem a little bit early in the day for me to be getting sentimental but as Virginia referred to I have a rather large and public job interview at the end of the year after which I find out whether or not I get to come to my fourth ABARE conference. So I do believe it’s a perfect time for us to have a look at what the expectations were that I set in 2008, where we’re up to, where we need to go.

In that speech I referred to there being two principle external pressures coming down on Australian agriculture. I referred to them as being the shrinking world, or as people often shorthand as globalisation; and I also referred to climate change. Those issues in terms of the shrinking world have implications for how that works in with our need for trade, how that works in with our need for efficiency, how that works in with our need to be smarter and to be cutting red tape wherever we can. In climate change, I referred to a need for a focus on research and development and referred to a need for us to start to challenge some of the issues we avoided dealing with as a nation for many years and to ask the hard question – are our current settings on drought policy actually working for farmers and for the nation?

And finally those two concepts of globalisation and climate change intersecting in the public policy area of biosecurity. And to make sure that we’re a part of some very serious and some very hard reform in biosecurity area.

Now for each of these areas of public policy that I have referred to there’s a choice A political choice. And if you want to take the smart political choice, you often end up with the unwise policy outcome. And that is a choice that you face every day - do we make tough reform decisions the sector needs us to make to be better positioned for the next decade or do we just keep to the easier platitudes and remain sentimental about the last century? I’ve been quite determined to work on a basis that for anyone in this particular job you only get to be here for a very short proportion of your total working life. And I intend to not waste a day of it. That’s meant there’s been some issues that have been viewed as ‘Holy Grails’ and ‘Ministers must not touch’. Not because there isn’t room for improvement, but because we just don’t go there. That was attitude in the beginning with respect to the single desk and AWB. It’s an attitude which I’ve heard with respect to the research and development corporations. It’s an attitude which I’ve heard many times with respect to drought reform. My view is there should be no areas are considered taboo if we’re actually trying to land on the best public policy. And so I’d like to work through those overarching themes of globalisation and climate change, to look at how last year they effectively between the two of them had formed the three biggest issues in the world, in terms of climate change, global food security and the global financial crisis. Those three issues combined brought into general public debate what we’d been talking about well before they eventuated as being the external pressures that would [inaudible] and if we prepared and we modified and we got smarter about how we did things we’d be well prepared for the future and if we didn’t take on that reform task, other countries would start to get ahead of us.

In trade and market access, which is always what first comes to mind for people when they hear about globalisation, there is no doubt we have a good story to tell over the last two years. Whether you go to Europe, whether you go to North America, or whether you go throughout the markets of Asia, for our horticulture sectors and our red meat sectors, there are markets which we used to not be able to access, where now they are buying Australian produce. Throughout the Middle East, the live export trade had forever felt that it was constantly under risk of ministers coming in and unilaterally shutting down markets, because we hadn’t been able to guarantee the animal welfare standards which the Australian public was saying they believe should be part of what we could deliver overseas. So we’ve invested in those overseas markets, we’ve locked down agreements throughout the Middle East, many of which I’ve been able to personally sign directly with those ministers in their own countries. And have now a situation where that live trade is meeting the animal welfare demands of the Australian community and is also being able to deliver long term secure contracts for Australian producers because the buyer at the other end knows they are no longer an industry under daily threat of ‘will we or will be not be shut down by the minister’.

In the same way for horticulture, whether it’s mangoes, whether it’s lychees, whether it’s cherries, across the whole range, kiwi fruit as well, there are customers now able to buy Australian produce who simply were not able to buy our produce three years ago. That has meant that we’ve played the rules straight as well. If we want to be able to access markets in other countries, then we can’t play the game here. We have to be honest with having a science-based approach to our own biosecurity rules. Which means - whether it be Filipino bananas, whether it be Tasmanian apples or whether it be some of the red meat discussions which have dominated the media in the last few weeks – if there is a scientific argument or a public health argument for keeping something out, then you keep it out. If the science comes back and says, if protocols are followed there is no possible public health argument here, there is no biosecurity argument here, then you don’t use quarantine as an excuse for protectionism. We export 60% of what we grow; we do well out of engagement in global trade. We have every right to protect our biosecurity. We have every right and every expectation to have an absolutely risk-averse set of principles when we’re talking about public health, but when there is no scientific argument to the contrary, we cannot use our quarantine rules as an excuse for protectionism. It’s not in the interests of the economy, it’s not in the interests of our farmers, it’s not in the interests of the Australian consumer. In the same way, it’s not just dealing with those quarantine barriers, to be able to access other countries. There are barriers to trade which when I came to office we had voluntarily imposed upon ourselves. And the classic one was the single desk in wheat. What that meant, very simply, was an Australian farmer had the right to plant their own crop, had the right to grow their own crop, to harvest their own crop, but did not have the right to sell their own crop. I believe that was public policy that was patronising in the extreme. It was viewed as one of the areas where I was given advice from people who had been around for a very long time, suggesting Tony, if you can find a way out of delivering on this election promise you should. But for me, the principle became clearer and clearer after I continued to do what Virginia referred to in the introduction and that was spend as much time as I could, not just dealing with the people, the lobby groups and the people from my own Department, but dealing with farmers on their own properties. And there was no argument more compelling put to me, than the argument of one WA grower when he said “why can’t I sell it to whoever I want? After all, it is my wheat”. It is so often the case that the easiest public policy stance, is the least courageous and the least helpful in the long term. I’m very pleased on that, that for all the demonstrations that were outside of this very conference the first time I turned up to it, and the different protests that turned up inside the Parliament and the different political arguments that ran in the media that this would be the death of the wheat industry for Australia, I’m very pleased that we have now have access to double the number of export countries that AWB was exporting to in its final year of monopoly status. I am pleased that you can go through a whole series of nations including places like in Saudi Arabia all the way through to Malawi, that we hadn’t been able to access for more than four years, that we access now. How growers choose to take up those opportunities is their call. But it’s important that Government systems don’t get in the way of the ingenuity of smart farmers.

But there’s more to be done in terms of removing some barriers. There’s more to be done in terms of some of the extra areas where the red tape just seems to be almost unweilding. I haven’t had a lot to say about one agency within my portfolio in speeches so far, but I want to put a bit of a flag up there today and that’s the Pesticides and Veterinary Medicines Authority, the APVMA. From every angle they have a very difficult job to do. They have to make sure that they can have maximum safety standards and specify particular uses for the chemicals that get used on farms. To make sure that we are being safe for the environment, to make sure we are being safe for farmers themselves in handling those materials, to make sure we are being safe to consumers who end up with products. But there are so many different examples that have come to me, when I’ve been on properties, when I’ve seen some of the public health concerns that have been raised in the media, when I’ve had some of the environmental arguments put to me as well, that I do not believe for a minute, that at the moment we have an agency that is working under the best possible framework. For that reason, Lindsay Tanner and I have embarked on a reform partnership for the APVMA. Lindsay Tanner and I are working together to make sure that we can keep the principles in place under which the APVMA functions, but find every possible path to delivering greater efficiency. We want to make sure that when a chemical is dangerous, it can be restricted and restricted quickly. We also want to make sure that when a chemical is clearly safe, it can be made available and made available quickly and done so in a way that provides a minimum amount of red tape for everybody involved. I don’t believe for a minute that the current framework under which the APVMA is operating is the ideal landing point. And Mr Tanner and I will be able to have more to announce on that in the future as the next stage of red tape reduction in this part of the portfolio.

When I referred in that speech two years ago, about those two areas of shrinking world and climate change intersecting with biosecurity, it was before I’d actually received the report from Roger Beale with suggestions as to how we fix the problem. So it was very easy the speech, to be able to simply highlight problems without highlighting solutions. Once again the solutions that came back from Roger Beale and the Beale Report for how to change from a quarantine system to a biosecurity system involved policy prescriptions which were not the easiest political outcome. And which if we get it right will never generate a good media story, never. For one very simple reason: biosecurity is about avoiding the news story from happening. There is no news story when nothing goes wrong. And you’ll never know how many times a better system protected people, it’s impossible to quantify. But biosecurity is the essential, national insurance scheme for Australian agriculture. That’s what it is. And we were running it under principles that were there to provide KPIs for ministers, rather than to provide outcomes for farmers and for the Australian environment. And I can say that because there was one very simple principle wrong with our quarantine system. And it was this – the first principle was not risk management, the first principle was not to find ways of minimising risk. The first principle was a whole lot of individual assessments called IQIs which may be relevant to risk, which may not be relevant to risk, and they were the benchmarks and so long as the Minister was delivering against them, you’d get to put out an annual report and give yourself a tick. But being able to have good reports come out that said yes, you’re meeting all the KPIs for a minister, provided very little comfort to the Australian horse industry when it had a one billion dollar hit during the outbreak of equine influenza. It would provide very cold comfort in the future for the Australian red meat industry if we were ever to see FMD hit Australia again; it would be something in the order of an $8-13 billion dollar hit to industry. The nature of the Beale reforms is such that they are incremental. There’s no single media release where we get to do the big announcement and suddenly a whole lot is happening at once. You can’t do that in a risk management organisation where you have to make sure that you at no point drop the ball as you move to a new system. With export certification we went through a difficult period last year but ended up getting to a good point of reform so that we will see a whole range of efficiencies and red tape removed for Australian exports. We also are now working through the different principles where we have something in the order of 70 to 80 or so different computer systems in that one section of my department, almost none of which can talk to each other. To go through a fundamental IT upgrade of all of that, and in that IT upgrade to make sure that we do it in an incremental fashion so that you don’t have the one big day when everything changes and there is some glitch that you haven’t thought of. To go down that sort of path would be putting industry at risk for the sake of a good media engagement and that’s something I certainly have no intention of doing.

We then move to the concepts that I referred to under the heading of climate change. Which go to much more than climate change because part of dealing with tougher climatic conditions, is simply to find new areas of efficiency; if you’re more efficient, then you can deal with those tougher climatic conditions. It was interesting when one of the international bodies not that long ago put forward a report for what was the adaptation task around the world particularly in the developing world for dealing with climate change in agriculture. And most of the changes they were recommending were about transport, were about the need to be able to make sure that food can move. And just as we are always in trade discussions – and Pascal Lamy when he was last here in Australia remarked this is one of the only countries in the world where the  agriculture Minister could be found attending a friends of trade function, it’s not something that is attached to the portfolio in other countries, even when it’s in their interests. For the very simple reason that the politics of protectionism are always easier; the politics of changing nothing are always more convenient. But as an export nation, it certainly doesn’t do us any favours. But that’s an argument about moving between nations. This report that I refer to is about moving food within nations. But every step of the way, that concept of being able to streamline your full value chain is part of making sure that whatever the hardships are that we confront in the future, we can continue to be viable and vibrant and successful as an industry. That’s why we promised to conduct a review for the grain rail lines for both WA and NSW. Those reports are both in. WA is particularly advanced now in working their way through different investment models to see how we can find some significant improvements to growing freight in Western Australia, the state where obviously with the mining boom we are finding increasing pressures on the available infrastructure and want to make sure that the grain doesn’t at any point take a back seat in that.

But that concept of looking across the whole of the value chain goes to research and development as well. One of the things that we have been very good at doing in research and development is looking inside the farm gate. That’s where the levy  payers who have so much say on the research and development corporations are themselves based within the farm gate and so we tended to look at that very strongly. We haven’t done nearly enough, nearly enough at looking at the whole value chain. And some people say ‘well, why should we look further down the value chain, isn’t this about helping farmers?’ To which I simply say, we can’t in one breath every time there is a cost imposed somewhere along the value chain say that will be passed back 100% to farmers and then pretend that if there is an efficiency further down the value chain that there will be zero benefit to farmers. We can’t maintain the logic of that argument. We know that farmers have always been more price takers than price makers, we know that. But to presume there are no benefits from efficiencies down the value chain is simply rhetoric and wrong. The wine industry have been one of the great examples of this. Only in the last – and you probably won’t notice this if you’re just picking up one bottle, if you’re carrying a case you might spot the difference – wine bottles are now about 20% lighter than they used to be making a massive difference on freight charges, a massive difference of what we’re able to do in overseas exports in terms of the associated costs. The new light-weight bottles are also stronger, therefore reducing shrinkage. All of that is incredibly powerful and the benefits do float all the way back through to the grape growers. You cannot say at a time where we had such a massive oversupply of wine grapes, every efficiency anywhere along the value chain needs to be found. I don’t believe the research and development corporations as a general rule have done enough of this. I asked them to do more of that; some did, some didn’t. Some have done an excellent job, some haven’t. That’s why I set up the review by the Productivity Commission which will now be forcing through and looking through ways to come back to Government and say, here are ways of delivering better efficiencies, here are ways with the same amounts of money at least of being able to say we have waste, lets find ways of putting that waste into better research. And lets also find ways of targeting whole value chains rather than only looking inside the farm gate. If we do that, we deliver efficiencies that work for everyone along those value chains, that help deliver regional employment, whether it be on farm, whether it be in food processing, whether it be in the transport mechanisms that comes as a result. And that research and development needs to be able to look at all of the technology, that must as I’ve said before, not close its eye to any areas of technology, not close its mind to any areas of biotechnology and not close its mind to genetically modified crops. I am pleased that the WA Government have now lifted their moratorium on the use of genetically modified crops. I always get back to the argument ‘but consumers don’t want it’. And it is true, if you conduct an opinion poll ‘do you want to eat genetically modified food?’ You will get people saying no. In the same way as if you asked people the question, ‘do you want food that has been treated with chemicals and pesticides?’, you will get people answering the question no. And those too will very frequently point in different directions. In the same way, as when you ask people ‘should we ever hold back on finding better science to make sure we can feed a future global population of nine billion people?’ people will again answer no. I have no time for a moral argument against genetically modified food when its competing with a moral argument for feeding the world’s population; we should close our mind to none of the technology.

But the greatest taboo in this portfolio has always been if you’re going to talk about drought policy, the only thing you should be doing is keeping the current framework and just offer them more money. I have had letters from my political opponents over the last couple of months where they have been asking me to do just that. People might be aware that the Howard Government put in place a limit of half a million dollars on the maximum amount of interest rate subsidy any recipient could receive. Some people are starting to reach that limit. They are in a situation now where they are making very hard decisions. The answer which has been proposed to me by my political opponents is well we should boost the limit because people are getting near the cap. Before I respond to that, let me go right back to the beginning and right back to Virginia’s introduction. Because can I tell you spending time with farmers on their own properties as much as I have - and if you have a moment of total boredom and you decide to visit my webpage, you’ll see a map of Australia with the dots of the places I’ve been to, many of which I’ve been to on more than one occasion, there’s a lot of them out there and there’s half a dozen farmers for most of those dots. There is a conversation I have had with each of them, which I’ve largely kept private until recently so I want to share with you now. And I can share even though it was a private conversation because I’ve had it with something close to one hundred people. And it’s the same conversation and all of them thought they were the only one saying it to me. And it happens when I visit a farm, the moment the farmer is on their own. When the farm organisation is not there, when the media is not there, and often when my staff and department are not there, when it’s just me and the farmer themselves. And the conversation begins this way:

“Now Tony, nobody is going to tell you this, but the drought policy, the interest rate subsidy, yeah sure, there are some people it’s helped, but it is hurting a lot of people.

I probably haven’t been as frank as this until now because I know that working your way through anything that is Government handing money to individuals is really easy politics and difficult for anyone to criticise. And there is no doubt a lot of good has been done by interest rate subsidy and there is no doubt that for people who are in their current drought it must remain and see them through the current times they are in. But just think through the logic of that payment. Point one, government support and assistance is conditional upon how much debt you are in. If for whatever reason you’ve made some really hard decisions during the good times and are not in debt, your reward for that is to get no government assistance. Secondly by virtue of it being an interest rate payment it is effectively, with due respect to Bill, it’s effectively a payment to the bank, not to the farmer. That’s what it is. Now people have locked themselves into those financial arrangements and they’ve got to see the policy through under its current policy settings. But I don’t believe for a minute that’s the best way to do things. And beyond that, what does it actually mean right down to the individual farmer? It means they were confronted with a really tough decision, for some of them seven years ago and instead of helping them get out of that we gave them just enough money to hold them in that precise situation. They then had seven years on the property where its not making money, where they’re staying just afloat, and only just afloat. And at the end of it, either because they lose their EC declaration or because they reach the maximum of the half a million dollar payment they get told, now you’ve got to make the hard decision that you probably could have made seven years earlier. I am not surprised by at a whole lot of mental health challenges that we have in this portfolio. I am not surprised at the number of times when I go into a town people talk about the latest act of self-harm that very frequently it was somebody who was getting very significant amounts of Government support. And I think we need to be brave enough to acknowledge that just because we are giving people money does not mean that we are doing them a favour. We need some really strong transitional mechanisms as we move to the new drought policy. But I don’t believe I could leave it any longer before I acknowledge very squarely the extent of harm some of the policy settings are doing. To be able to unilaterally just get rid of it would cause more harm so therefore that will not happen. And the Government position remains – any reform of drought policy is about the next drought, not the current one. But I cannot see any justification as to why a future drought policy would involve an interest rate subsidy. I do not believe we are doing people a favour by continuing to have those policy settings for the next drought. I don’t believe that gets us off the hook in money. It simply means we’re going to have to find a way of facing the music in a way that no Government ever has. Because when times are good there’s no pressure on us to give anyone anything. But if when times are good we can find a way to co-invest with farmers and help them prepare for future challenges, then we’ve actually got a situation not where we wait for someone to hit crisis and then come in and keep them in suspension for seven years. But where we actually have policy tailored to fewer people ever hitting crisis in the first place. How does all of this come back to the farmer? And at this point I’ll refer to the CPRS as well, because we did a terrible job at the end of last year of explaining the final package. Because there were a lot of changes in that final package, very different to the legislation we first introduced. And I mentioned to one of the farming groups on the other side of the country last week and I’d like to explain just the nuts and bolts of where the emissions trading and Carbon Pollution Reduction Scheme actually ended up, what that legislation before the Parliament means. Not in terms of overarching policy; what it actually means for someone on their own property. Inputs – fertiliser price, chemical price, unchanged. Fuel price goes up, fully offset by a relay. Electricity prices do go up. And there’s a direct line of money to help people with the cash to be able to move to lower energy use for their electricity with a particular focus on meat process, dairy and malt. So in terms of input prices, it’s pretty hard to argue that that in its final form actually meant much of an increase at all. [Inaudible] is probably the easiest way to describe the outcome of input prices. For emissions under that legislation the farming sector, the primary produce sector, whether it be farms, whether it be forestry, whether it be fishing industry, your primary industries of agriculture in particular, the only sections of the Australian economy where we ignore the emissions, ignore them completely. Even if they go up, we ignore them. The only section of the Australian economy where it did that. But if you’re able to reduce your emissions through abatement, you get cash. If you’re able to improve the amount of carbon in the soil through sequestration, you get cash. Now people can do their own sums as to what sort of deal that would end up being for farmers. But simply inputs roughly the same, cost of emissions completely ignored, opportunities for new lines of income created. That is the legislation in its final form. That is the deal and the agreement that was formed at the end of last year. That is the legislation for this sector that is currently before the Senate.

But what do the rest of the policies mean for that same farmer? What it means is this. Through our determination in our reforms in the area of drought, in the area of research and development, we’re making sure that we help people prepare for all the challenges of the future. We’re making sure that we find every possible line of inquiry to improve productivity. We make sure with our market access that we can significantly increase the number of customers available to that same farmer. And finally we make sure that we look along the whole value chain to make that path to market as efficient as possible. To do all of that it means confronting some areas where politically it’s a whole lot easier not to. But can I let you know, from what is probably regarded as an unhealthy number of years I have [inaudible] to be in a job like this one. I have no intention of simply occupying the job. I have no intention of using the opportunity to make speeches being sentimental about all the good things in the last century and there are plenty of them. But when it’s a choice between the good things of the last century to be sentimental about and a tough reform agenda that prepares us for the next decade, I’ll take the reform agenda and take it every time.

Best of luck for the conference.