43 Outlook 2015 Wed 1130 1245 LISA ELLISTON
Thanks, Karen. Good morning. I want to start today by talking about why we think it's important
to focus on regulatory reform in the agriculture sector. I'll then take you through some ABARES
work that's being done estimating the cost of complying with the department's regulations. Next,
I'll go through some reforms the department has put in place since the government's reducing red
tape agenda came into effect in late 2013. And I'll finish with some discussion about the
priorities for continued reform.
The agriculture sector has historically achieved productivity growth rates of more than 2% a year
with a period of notable growth in the 1980s and 1990s. But despite this track record,
productivity growth in agriculture has slowed in the last decade, and it's now well below its longrun average. The challenge is to maintain or improve productivity growth in order for producers
to remain prosperous, and to take advantage of the strong growth in international markets.
There are a number of drivers of productivity growth. Continuing to produce more with the same
amount of inputs requires technological innovation, new skills and approaches, and the removal
of unnecessary impediments to producing and innovating. There are a couple of levers that the
government has to drive productivity-- encouraging research and development, and investing in
infrastructure are both topics that have been covered in other sessions at Outlook this year, and in
previous years. Governments can also influence productivity through its regulation.
The productivity enhancing reforms of the '80s and '90s were a key factor in the productivity
achievements in the agriculture sector at that time. These include the dismantling of price
supports schemes, and reductions in tariff protection, and production subsidies. The boost that
these gave the agricultural productivity in Australia have largely run their course. There isn't
much more to do by way of reducing price distortions, and increasing exposure to competition.
Our farmers are already the second least supported in the OECD.
But this doesn't mean that there aren't opportunities to improve productivity. If the reforms to the
regulation of outputs have largely run their course, the same can't be said of the regulations of
how farmers produce. This reflects community concerns about the impact of farm production on
social and environmental outcomes. There are some worrying international indicators on the
regulatory burden in agriculture despite the reforms of the past.
This indicator from the World Economic Forum suggest the burden of regulation in Australia's
agriculture sector is increasing relative to some of our international competitors. Australia's
ranking fell from fifth in 2009 to 16th by 2014, behind Chile and Uruguay, while New Zealand
remains in first position, and Canada and the United States improved their ranking over the same
period. The current government focus on reducing government burden provides an opportunity
to reflect on how the department regulates, and serves as a reminder to regularly review
regulation to ensure it remains fit for purpose, and is administered in an efficient way.
So what does the Department of Agriculture regulate? There are some really important things on
this list where we regulate for a very good reason. To focus on just a few, the biggest area is
biosecurity. The department imposes conditions on imports, and inspects goods coming into the
country to keep Australia safe from pests and diseases that could be very harmful to the
agriculture sector, to people, and the environment.
Another part of the department's work is certifying that exports meet overseas market
requirements. And this is a tricky area for regulatory reform, because so much of it is beyond our
control, and is imposed by the other country. Just by way of example, the dairy cattle that we
export to China need to come from a region that's free from bluetongue virus, and the animals
themselves need to be shown as free from a range of diseases, including tuberculosis and
leukosis. We can't reform any of this without negotiation and agreement from the Chinese.
The portfolio also includes an agency responsible for the regulation of commonwealth fisheries,
which involves among other things, making sure the amount of fish caught every year doesn't
collapse the stock. And an agency responsible for ensuring agricultural and veterinary chemicals
used in Australia are safe and don't harm people, animals, or the environment. Again, these are
important areas that require some regulation.
Last year, ABARES calculated the burden of complying with the department's regulations. This
was based on estimates of the number of people affected, the number of times that they had to
deal with the department, and the amount of time that each of those interactions took. We found
that a small number of regulations imposed the majority of the burden. Most of the costs come
from about 10% of the portfolio's regulations. The highest burdens involve the registration of
agvet chemicals to make sure they're safe and effective, and inspections of imports at the border
to look for biosecurity risk material that poses a threat.
This work was used to identify areas for possible reform working on the logic that the
regulations imposing the largest burden have the greatest scope to be reformed. But there are two
important caveats to this. Some regulations such as those associated with live animal exports and
fisheries management don't necessarily register as having a high compliance burden, because
only a relatively small number of people are affected. But where the burden on even a relatively
small group of people is seen as particularly high then we looked at those regulations to see if
there's opportunities to reform. The second caveat is that the regulations imposed by the
Department of Agriculture aren't the only regulations that affect our stakeholders. We think that
the burden imposed by the department is probably only a fairly small part of the overall impost,
so to focus only on what the department does could miss the most significant opportunities to
reduce burden.
So you might deal with the Department of Agriculture in paying research and development levies
on your produce, or if you export cherries to Japan, and you need a certificate to show that they
were grown, fumigated, and packed in Tasmania, or if you fish in the Commonwealth-managed
Southern and Eastern Scalefish and Shark Fishery, and you need a vessel monitoring system. But
that same person also has to deal with the tax office, follow work, health, and safety regulations,
and they might need a 457 visa for a temporary skilled worker. And they also have to follow
state and territory laws, which for an agricultural producer can include access to water, to GM
technology, meeting animal welfare standards, and native vegetation regulations. And for the
fisher that also fishes in the New South Wales troll fishery in adjacent waters, they have to
follow the state laws as well even though they're catching the same fish.
It's not that these regulations are unnecessary. They are there to keep us safe or to protect the
environment. But where they are overly complex, have become redundant, or are regulated by
other arms of government, then there may be scope for improvement. In the first instance, the
focus of the portfolio has been to review its own regulatory footprint, and identify areas where
reform can reduce unnecessary burden. The audit confirmed what we already knew about the
highest areas of burden.
In some cases, they were areas where work had already begun, and the most notable is in
biosecurity where the bill review into quarantine led to the drafting of new biosecurity
legislation, and other reforms to the delivery of biosecurity services within the current legislative
framework. These include a programme of service delivery modernisation that has seen the
improvement of IT systems, enabling importers to deal more often with the department online.
Adapting our computer systems to work on tablets has meant that regional stuff can clear
consignments on site saving clients hours of time waiting for it to receive official clearance that
their goods can be released.
I see the reforms to date as falling into one of two categories. The first is about administering the
legislation in the most efficient way as possible, simplifying forms or not asking for the same
information twice. The second is adopting a greater risk based approach to regulation, and this
involves really assessing risk, and targeting where it's most needed. And that's fairly easy to say,
but it's much harder to actually implement.
Last year, the department stopped requiring lime green tail tags on cattle that were destined for
processing in the European Union. This followed an assessment that the cattle identification and
traceability systems that are already in place were sufficient. Similarly, a hot water treatment has
been introduced for new oversized tyres being imported, and it replaces the previous methyl
bromide fumigation. Without a reduction in biosecurity risk, this is costing less, and is less
environmentally damaging.
Looking to the future, the department has a programme of reforms that it will continue to
progress. Within the portfolio, the department will continue to implement both risk based
reforms, and improve the efficiency with which it administers regulation. For example,
improving the export documentation system so that exporters can deal with the department
online more often. The department and its agencies are also developing new performance
measurement and reporting systems that will measure and assess our regulatory activities against
key performance indicators related to better regulatory practise.
As part of the government's industry, innovation, and competitiveness agenda, the department
will also look at what scope there is to adopt international standards and risk assessments to
reduce burden. We're not sure just how much scope there is in that area, particularly for
biosecurity. Because we're free of so many of the pests and diseases elsewhere in the world, we
have quite good reasons for keeping our standards above that of other countries. But AFMA, the
Australian Fisheries Management Authority, is currently investigating if it's possible to recognise
Marine Stewardship Council standards rather than having separate sustainability standards.
A third area of work recognises the burdens on agriculture, fishery, and forestry stakeholders
don't always lie in this department, and involves collaboration with other commonwealth
departments and agencies, and with the states and territories to identify opportunities to
implement cross-cutting reforms. Most states and territories have regulatory reform agendas of
their own so the challenge will be to identify areas of duplication and overlap or other areas of
mutual interest.
To conclude, I want to return to the discussion of productivity, prosperity, and growth. The
regulatory environment that agriculture, fisheries, and forestry producers operate in can
significantly affect their profitability and productivity. It's one of the drivers of productivity
growth that's necessary for producers to maintain international competitiveness. It's important
that the stock of regulation be regularly reviewed to be sure it's still necessary, and delivering its
intended objective.
Changes in technology, and the way that businesses operate can mean that there are better ways
of implementing regulation with efficiencies from more sophisticated IT systems, and mobile
technology. New technologies also offer opportunities to improve productivity growth, but they
may require regulation to meet community expectations. And the challenge is to strike a balance
that meets those expectations, but doesn't unnecessarily stand in the way of businesses and
individuals as they pursue economic returns. Thank you.