AGRICULTURAL research programs will be impacted under legislation recommended by a Senate committee inquiry, despite concerns raised by key industry stakeholders.
A report on the Rural and Regional Affairs and Transport References Committee inquiry into the Rural Research and Development Legislation Amendment Bill 2014 was handed down yesterday, making five key recommendations.
The Bill seeks to empower the government to recover the cost of membership fees paid to join international commodity organisations.
It also aims to reduce the regulatory compliance burden on Rural Research and Development Corporations (RDCs) by cutting reporting requirements and removing a statutory requirement to attend annual co-ordination meetings.
The inquiry was referred in late September, held two public hearings in mid-November and received 14 public submissions.
According to the report, the Australian government is currently a member of four international commodity organisations, relating to the sugar, wine, grains and cotton industries and a member of six regional fisheries management organisations.
The Department of Agriculture pays the membership fees on behalf of the Australian government.
At a hearing of the inquiry earlier this month, the Agriculture Department estimated the government would save $7 million over four years, or about $1.7 million a year, by paying the membership fees out of its matching levy contribution to RDCs.
Department policy division acting first assistant secretary Matthew Koval said many of the international bodies undertook market analysis and market statistics, and also conducted research and development “in their own right, in some cases”.
“So there are varying layers of benefit to our farming sector,” he said.
User pays: report
The report outlined extensive evidence from industry and RDC representatives which showed shared concern about the government’s move to force costs back onto industry.
The reasons included concerns the proposed amendments would undermine the existing R&D partnership model between industry and the government and introduce a 'user pays' method of cost recovery.
Concerns were also expressed about the consultation process, whether the memberships provided actual benefits and if the use of R&D funding to cover membership fees adhered to RDC funding agreements and statutory requirements.
“It was evident that the current partnership model has general support, with industry advising that the co-operative approach to research and development funding is 'world class',” the report said.
“However, the proposed amendments, it was argued, represent a fundamental shift in Australia's RDC funding arrangements.
“Speaking on behalf of Australia's 15 RDCs, the Council of Rural Research and Development Corporations (CRRDC) contended that the proposed measures 'will change the nature of the co-investment model'.
“The National Farmers' Federation (NFF) submitted that the proposed amendments would instigate a 'slow dismantling' of the RDC partnership model, while Australia Pork Limited advised that the amendments would alter 'an agreed formula'.
“Sugar Research Australia Ltd viewed the amendments as 'jeopardising the government industry partnership model',” the report said.
“As these statements indicate, the proposed amendments were seen as arbitrary, unilateral government action rather than a funding decision taken in concert with industry.”
Despite the extensive complaints, the committee report recommended the Senate pass Schedule 1 of the Bill in its current form.
It also recommended the government monitor impacts of the cost recovery requirement on the capacity of the Fisheries RDC to continue to support R&D within the fisheries industry.
Another recommendation said the Department should liaise with RDCs prior to attending meetings of the relevant international organisations and report back to them on meeting outcomes and the benefits derived from ongoing membership.
There are currently five statutory RDCs governed by the Primary Industries Research and Development Act 1989 and 10 that are industry-owned, with funding provided through levies on primary production.
However, the Fisheries RDC receives funding from State and Territory governments and from statutory levies and Commonwealth funding.
The report said submitters' concerns were not limited to the text of the proposed amendments.
“It was recognised that, if passed, the amendments may have potentially far-reaching impact,” the report said.
“The Winemakers Federation of Australia, the Wine Grape Growers Association and the Australian Horticultural Exporters Association all submitted that the proposed amendments would create a 'loophole' for future unilateral government cost-shifting to industry.
“According to the CRRDC, the NFF and Australian Pork Limited, this loophole would create a precedent for future government action.
“The amendments, if passed, would create an uncertain future for industry and the RDC sector.”
The report also quoted strong comments from the CRRDC saying the changes would set a precedent allowing government to reallocate funding that has had a longstanding, sustainable arrangement with industry for the delivery of R&D.
CRRDC operations manager Tim Lester also told the inquiry the changes looked minor but changed the equality of the industry and government partnership through RDCs.
“What is now happening is the government has said, 'sorry, we're a bit short of cash, so we're going to use some of those funds because this appears to be an industry benefit’,” he said.
“In a sense, that is appropriate for government to do.
“Fundamentally, at the base here is a partnership between industry and government where one party is deciding to move unilaterally without consulting the others.”
RDC cuts 'whacky': Sterle
Last week, WA Labor Senator Glenn Sterle said he also had concerns about the proposed amendments.
“Every single witness saw this as the thin end of the wedge and they were worried,” he said.
“If that membership of the international body was not funded by the Department of Agriculture it would have to be sought from their levies and if it had to be sought from their levies, there will be R&D projects that miss out.
“But what also come out of it is that if the RDCs paid their memberships to the international body through their levy, they still can’t attend meetings and it would still be the government that would go – the department official or officers.
“But this is whacky.
“I think any cutting of R&D is whacky,” he said.
Australian Organisations and International Commodity Organisations:
The International Grains Council - Grains Research & Development Corporation Australia (annual membership fee $150,000)
International Sugar Organisation - Sugar Research Australia (annual membership fee $160,000)
International Cotton Advisory Committee - Cotton Research and Development Australia (annual membership fee $95,000)
The International Organisation of Vine and Wine - Australian Grape and Wine Authority Australia (annual membership fee $110,000)
All fishery organisations - Fisheries Research and Development Corporation Australia (annual membership fees combined $965,000).