Abolishing the ag department

If you want to save money, removing duplication is a no-brainer.

ONE of the characteristics of socialist economies is central planning. The former Soviet Union was famous for its five year plans, in which agricultural and industrial production was supposedly coordinated in minute detail. Fulfilling the plan became the watchword of Soviet bureaucracy.

The same approach was adopted by most other socialist states including the People's Republic of China. Nazi Germany (which was National Socialist) emulated the method in its Four Year Plan designed to bring Germany to war-readiness.

Market economies generally prefer to leave it to those who actually make and buy things, subject to the laws of supply and demand. The idea that a bureaucrat in a remote office can coordinate how many and what kind of new tractors, combines and augers are needed for this year’s wheat crop is just a tiny bit unbelievable.

In fact, it was utterly unbelievable in the countries that tried it. Even if they got the number of tractors right, which was rare, they were never the right size or in the right location. The resulting economic stagnation is what led to their eventual collapse.

When the free market think tank, the Centre for Independent Studies (CIS), suggested the federal government could save money by abolishing the department of agriculture, there were howls of derision. Among those objecting was the federal Minister for Agriculture, Barnaby Joyce.

This is his first ministry and perhaps it is understandable that he would be a little sensitive at the idea of losing his department. But in a newspaper op-ed in which he discussed the significance of agriculture to Australia and the “incredible future” it has in providing for the Asian middle class, he also claimed that this future depends on his department playing a vital role.

“Agriculture relies on policy, which influences bilateral trade agreements, taxation, biosecurity, infrastructure, interest rates, exchange rates, drought mitigation and consumer laws,” he wrote. “If Australia wants to be a food producing power, we will need a powerful Australian Agriculture Department”.

He asked, “Is agriculture something of national worth that is best co-ordinated at a national level?”, answering his own question with, “The more co-ordinated the plan, the better the outcome.”

It is difficult to avoid the impression Mr Joyce was advocating some kind of central planning for the agriculture industry. At the very least he seems to think our agriculture industry is incapable of benefiting from increasing Asian prosperity without “coordination” by him and his department.

Actually, while his department has responsibility for biosecurity and drought mitigation, it does not set policy on trade, taxation, infrastructure, interest rates, exchange rates or consumer laws. And if it stopped propping up producers who fail to prepare for drought, taxpayers would not only save money but the net result would be positive for agriculture. But I digress.

The proposal by the CIS was part of a series of recommendations aimed at addressing Australia’s $30 billion (and growing) budget deficit, a problem the Abbott government has described as a budget emergency.

Among the other recommendations were reforming the Family Tax Benefit, shutting down or selling SBS and ABC3, ending industry assistance, abolishing the federal Department of Education, and bringing back Medicare co-payments. Total ongoing savings from all the proposals were around $20 billion a year, not even enough to return the budget to surplus.

In the case of agriculture, it recommended transferring the Australian Fisheries Management Authority and Australian Pesticides and Veterinary Medicines Authority to the Industry portfolio and abolishing the remainder of the department, leading to savings of about $1.3 billion per year. Well over half of this would come from ending the funding of six research and development corporations.

Some would inevitably protest at that idea, especially those whose incomes would be affected, but the states are also funding research. If you want to save money, removing duplication is a no-brainer.

Even then, taxpayer funded research is dubious no matter who does it. In theory it is only supposed to occur when there is “market failure”, but that is not what happens. The private sector is often willing to invest in research but quickly steps back because the government offers.

And when the private sector is not willing, it begs the question as to why taxpayers should pay. If there are no foreseeable commercial benefits, why is it being done at all? Is it simply a case of too much “coordination”?

What the Soviet Union and countries like it discovered is that markets cannot operate when buyers and sellers are coordinated by the government. Only when they can operate freely do they have the incentive to seek each other out and engage in mutually beneficial exchange. In that respect agriculture is no different from any other market.

And just as we have no need for a powerful department to “coordinate” our coal or iron ore industries, or our large and growing exports of services, we do not need such a department for agriculture. Even if it means the Minister might lose his job.

David Leyonhjelm has been an agribusiness consultant for 25 years and was recently elected to the Senate for the Liberal Democrats. He may be contacted at reclaimfreedom@gmail.com

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FarmOnline
David Leyonhjelm

David Leyonhjelm

has worked in agribusiness for 30 years and is a Senator for NSW representing the Liberal Democrats.
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READER COMMENTS

cv
20/01/2014 8:30:17 AM

The People's Republic of China seems to be doing a better job than Australia as far as agriculture and food security goes. Look at the investments that Chinese govt related businesses are making in Australia. Australia's problem is we wasted the mining boom when the govt should've used those funds to set up a sovereign wealth fund.
James
20/01/2014 8:47:47 AM

Interesting take, I can only imagine if the Government stopped funding R&D bodies that industry co-payments would also cease. Which would arguably allow Farm Businesses to choose their own preferred level of R&D investment, in their local area. It has to be wondered given the vast body of research which shows positive returns to agricultural R&D, and the fact it is currently under-funded whether this is really any saving at all, and the impact on industry growth.
LTF
20/01/2014 9:26:02 AM

If you really want to do some good David, promote the sale of the State owned broadcaster the ABC. It is in a market which has adequate coverage by the private sector. ABC and SBS should no longer be a tax payer funded and subsidized business. It should be made to stand on its own feet in the market place. It is over populated with overpaid under achieving staff, who have become a law unto themselves. Let them do it all on their own money if they must. I do not want them wasting mine.
BF
20/01/2014 9:26:24 AM

Interesting article. I agree with your comments about taxpayer funded R&D. Cant exactly say anything good has come out of it for a long time now. I look at the vegetable levy I legally have to pay and can honestly say this money is just propping up researchers and industry bodies who seem to keep getting projects funded with no recourse for achieving outputs. If I had the choice I would not pay the levy and this would instantly add 0.5% to my bottom line, which after the seasons I have had its significant. Especially when I dont get a say in how the money is spent.
bg
20/01/2014 9:49:58 AM

CV Using China instead of Russia as an example of communist economic disaster is 'unaustralian'. It challenges the belief system of people like David, so must not be mentioned. BF, no individual grower gets control over their levies, but they do get a say. It's called democracy. Demand outputs, encourage your fellow growers to do the same and the research body will improve. Or sit back and whinge.
Recalcitrant
20/01/2014 10:15:40 AM

DL - you do digress quite a bit. But more importantly you have a lot to learn - especially for somebody of your age and forthcoming position.
wtf
20/01/2014 11:17:07 AM

I'm very suspicious of privatising Rd, so often we are told that selling off public assets will make it more efficient and productive, what a load of rot. Do U think Monsanto and boys are going to give us varieties that have our best interests at heart? They will sell us a farming package, which will lock us into their pockets for the rest of time. Call it socialism I dont care, but protecting our future is more important than been called a socialist or liberalist by someone who doesn't know me.
Lou
20/01/2014 12:39:34 PM

David, you obviously haven't done your research. If you did, you'd know very few, if any, R&D projects carried out by govt departments are fully funded by taxpayers. Indeed, hardworking research & extension staff frequently have to look for non-govt $$ to fund their work, and work with private enterprise and farmers to undertake projects. If you actually bothered to speak to some of these hardworking staff about their work and then also the farmers who directly benefit from it, you'd realise the absolute value of having an ag dept. To suggest it's not needed is ignorant & city-centric.
pragmatist
20/01/2014 12:53:26 PM

Ideological rubbish. Deregulation and privatisation has significantly reduced the condition of the environment (upon which the economy's long-term health relies) as well as the quality of life for the typical private, working citizen. All the wealth has been creamed off into the pockets of the few at the very top of the tree. Perhaps Mr Leyonhjelm would also like to see such inefficient public functions as the military and police closed down? Obviously if there is a real need then the private sector will step in and save us...
Fairsnotfair
20/01/2014 7:27:20 PM

Why do you persist in discussing agriculture when you obviously have no real knowledge or understanding of the intricacies of primaryroduction? Buy a farm, some cows a tractor, an implement or two, give up your day 'job' such as it is, and see how well you fair from the other side of the fence. Why do you despise farmers and their career choice so much David?
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Agribuzz with David LeyonhjelmCommentary, news and analysis with agribusiness consultant David Leyonhjelm. Email David at reclaimfreedom@gmail.com

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