House of Representatives

Second Reading Speech

Mr Sidebottom (Parliamentary Secretary for Agriculture, Fisheries and Forestry)

I move:

That this bill be now read a second time.

Since Federation, industry and government have worked in partnership to support the productivity of rural industries and improve the reputation of Australian exports abroad. Government support developed in an ad hoc manner until, in 1989, John Kerin and the Hawke government had the foresight to establish the research and development corporation model. The research and development corporations, or 'RDCs', were established under the Primary Industries and Energy Research and Development Act 1989 (the Act). For 24 years, our investment in the RDCs has boosted the productivity and sustainability of rural industries. This bill will make improvements to the existing RDC model and ensure it remains responsive and adapted to our needs.

There are 15 RDCs providing services to a diverse range of rural industries. The RDCs provide the mechanism for industry to invest collectively in research, development and, importantly, extension. Government assists by establishing and collecting a levy if an industry requests this. After recovering costs, the government returns levy funds to the relevant RDC. To encourage this investment, the government matches the RDC's eligible research and development (R&D) spending up to legislated limits. In the next financial year almost $250 million will be invested by the government in rural innovation in this way. Our collaborative model is unique, viewed with envy overseas and benefits all Australians by encouraging profitable and sustainable rural industries.

There are many challenges facing our rural industries. These include climate change, the vagaries of the global economy and increasing populations to feed. There are also opportunities such as increasing exports of Australian agricultural products, particularly to Asia. To ensure our own food security, economic stability and the health of our agricultural resources, the RDC model needs to be updated in line with our changing needs.

Our rural research and development model has proven results, with Australian rural productivity increasing at more than double the rate of other Australian industries over recent decades.

A government member: Hear, hear!

Mr SIDEBOTTOM: Hear, hear! The high level of industry engagement and the strong support the RDC model enjoys from all sectors make it unique among research funding models around the world. Research, development and extension have a vital role in preparing Australian rural industries for the future challenges and opportunities we face together.

In 2011, the Productivity Commission and the Rural Research and Development Council reviewed the rural research, development and extension system in Australia. Consultation meetings around Australia were held with all interested stakeholders. The ideas and issues raised by stakeholders fed into the government's response: the Rural Research and Development Policy Statement. Ultimately both the Productivity Commission and the council acknowledged the strong foundations of the existing system. Both recommended improvements to the system.

This bill and its companion bills, the Primary Industries (Excise) Levies Amendment Bill 2013 and the Primary Industries (Customs) Charges Amendment Bill 2013, implement the commitments made in the policy statement that require legislative change. They will commence concurrently.

Marketing activities

Of the 15 RDCs, nine are industry owned companies and can already carry out marketing for the benefit of their industry. This bill will give the statutory RDCs the same ability to undertake marketing, if the relevant industry proposes a marketing levy and the government agrees to collect it. Government matching funding will not be used for marketing, only for research, development and extension services.

There is great enthusiasm for allowing statutory RDCs to undertake marketing. The prawn industry has already started down the path of establishing a marketing levy. We have well-established processes to guide industries through the consensus-building process for a levy proposal.

Permitting statutory RDCs to undertake collective marketing will allow industry to educate consumers about the safety and nutritional value of Australian products, the origin of our food and fibre, and the ecological sustainability of our resources.

Matching of voluntary contributions

Primary industries understand that our R&D model is unique and generates benefits far exceeding its cost. This model creates a healthy return on a modest investment. As a result, some businesses in the rural sector are willing, and are able, to make additional voluntary payments to conduct R&D.

The bill will encourage voluntary contributions by making arrangements for the contributions to be matched by government. Currently some RDCs can receive this matching funding and the bill will extend access to matching funding for voluntary contributions to all RDCs. Overall matching funding will continue to be limited by a cap based on each industry's gross value of production. However, RDCs may be able to maximise the R&D they fund by strategically using voluntary contributions to top up R&D spending. Voluntary contributions also allow supply chain partners to work with an industry on issues of joint interest.

Funding agreements

Over the last 10 years, funding agreements between the government and industry owned RDCs have been used to manage governance and performance matters. This bill extends funding agreements to the government relationship with statutory RDCs. Funding agreements will create a flexible mechanism, which can be more readily modified to reflect the changing needs of the parties.

Funding agreements will be used to promote transparency and accountability. The agreements will be tabled in parliament and contain requirements relating to corporate governance and performance. These agreements will also allow government to provide guidance to RDCs regarding the research priorities and needs of the broader Australian community. The bill allows until 1 July 2014 for the statutory RDCs and government to enter into funding agreements.

Appointment process for statutory RDC board directors

Current procedures for appointing directors to statutory RDC boards have proved expensive and time-consuming, diverting scarce resources away from statutory RDCs' core functions-providing R&D for their industries.

Amendments in the bill will streamline the selection process. Selection committees will be limited to five members and the committee will be established for up to three years to cut the expense of establishing a committee for each selection process. A 'reserve list' will be created that can be used to fill unplanned board vacancies for 12 months. If a candidate with the necessary skills is not available from the list, the process must begin again.

The presiding member must have regard to equity and diversity when recommending members to the selection committee of a statutory RDC. Similarly, the selection committee must do the same when recommending candidates for the board of a statutory RDC. Diversity of skills and background can broaden and enhance the board's skill base to ensure an effective statutory RDC board.

Fisheries research and development

The Fisheries RDC receives most of its funding through the Commonwealth, state and territory governments. The farmed prawn industry is the only individual fishery with a statutory R&D levy.

The bill creates a new class of fisheries R&D levy that can be matched by the government without having to form part of jurisdiction's contribution. The amendments will permit new, individual fishery-sector levies to be collected and matching public funding provided up to a cap specific to that fisheries sector.

Each separately levied fishery will be subject to existing eligibility rules for matching funding. In effect, the fisheries sectors which so choose, will be able to invest in specific R&D and marketing by proposing a levy for that purpose.

Minor amendments

To reduce unnecessary red tape, this bill provides that statutory RDCs will no longer have to seek ministerial approval for their annual operating plans. This has become an avoidable burden for both RDCs and the government. Ministerial oversight will focus on strategy rather than day-to-day management. Annual operating plans will be required, but ministerial approval will not.

Minor amendments will remove redundant parts of the legislation. For example, energy is no longer part of the Agriculture, Fisheries and Forestry portfolio, so all references to 'energy' will be removed from the act. References in the act to R&D councils and funds are obsolete and will be removed, making the act easier to understand and administer.

Other minor amendments encourage consistent treatment of RDCs, including standardising requirements to comply with ministerial directions and standardising delegation powers. 'Scientific and technical capacity building' will be added to the objects of the act.

Conclusion

The changes in this bill will make RDCs more flexible and responsive to deal with the new realities they face. The governance processes for RDCs will be streamlined, promoting certainty and consistency for levy-payers and other stakeholders. We will retain a strong focus on transparency, accountability and effectiveness.

Debate adjourned.