30 January 2009
DAFF09/74T
Minister for Agriculture, Fisheries and Forestry - Tony Burke
Sky News AM Agenda - Ashleigh Gillon
E&OE
SUBJECTS: Economic stimulus package; IMF report, European Commission dairy subsidies, food prices, biochar and carbon sequestration, Gunns Pulp Mill
ASHLEIGH GILLON: I’m joined by the Agriculture Minister, Tony Burke. Minister, good morning.
TONY BURKE : Good morning.
ASHLEIGH GILLON: Well we’re all looking forward to the government announcing this second economic stimulus package. I’m sure you’re not about to tell us when that’s going to happen. But I’d like to know, do you think that tax cuts would be a good way to stimulate the economy?
TONY BURKE: Well as the Treasurer said in referring to the IMF report, what we need is a stimulus package that has an immediate impact. One of the challenges of tax cuts is that you’re having an impact that’s spread over the entire course of the financial year. If you’re actually trying to inject some immediate confidence and get the economy moving then, similar to problems faced around the world, tax cuts don’t necessarily provide that sort of immediate stimulus.
ASHLEIGH GILLON: Malcolm Turnbull argues that a tax cut lifts someone’s permanent income which is more likely to change their spending behaviour. Does he have a point though, do you think?
TONY BURKE: Well it’s certainly not a point that the IMF agrees with. It’s not a point that most of the economies around the world agree with. We are facing extraordinary situations around the world. The concept of trying to rebuild confidence and get that immediate injection of movement in the world economy is something where there tends to be very strong opinions around the world, most of which disagree with the approach that Malcolm Turnbull is advocating.
ASHLEIGH GILLON: Yesterday we saw the release of this latest International Monetary Fund report. It has some startling figures in it, including that in the last three months of last year, world trade was slashed by a whopping 45 per cent. Just how bad is it right now for Australian exporters, and in particular Australian farmers?
TONY BURKE: It’s a very sobering report. Certainly Australia has been better positioned than many countries, but we’re affected. There is no doubt about it. For Australian farmers we need to recognise we export about 60 per cent of what we produce in this country. So when global markets slow down, we feel that very deeply.
While in the north of the country many farmers are coming out of drought conditions, in the south of the country there is still quite prolonged drought. And this is coming at a very bad time for many exporters.
ASHLEIGH GILLON: The European Commission has reintroduced these dairy export subsidies. How damaging is that going to be and what’s Australia doing? Do we have any hope in reversing that decision?
TONY BURKE: First up, it’s a kick in the guts for Australian farmers. Simple as that. Dairy is a classic example of a group that have been hit by the drought very badly and in the last few days. People don’t think about the impact of something like a heat wave and what that does for dairy production as well. They’ve had some very serious challenges at a time that they’ve been restructuring their industry.
Europe is now going down a path which is the complete opposite of what the world economy needs to be doing. At a time when the world economy is slowing down, we need to be pressing the accelerator – not reaching for the hand brake. The European decision goes straight for the handbrake.
I made this clear in my meetings with European counterparts over the last week and made it clear at a food security conference [in Madrid]. One of the issues is how do we move food around the world more effectively with some of the food shortage crises that we’re having. The worst thing to do is to start putting up protectionist barriers.
ASHLEIGH GILLON: The latest inflation figures show that while the overall Consumer Price Index actually dropped by 0.3% in the December quarter, food prices actually rose 2%. Why is that and how long do you think it is going to take for the decreases in costs associated with production, plastics, distribution to actually flow through and start to appear on the supermarket shelves?
TONY BURKE: People can’t underestimate how big an increase there’s been over the last year-and-a-bit with respect to farm inputs. Most of us have some understanding as to what was happening with fuel prices. But most people missed what was happening with chemical and fertiliser prices. You found some input costs actually tripling over that period.
That has put extraordinary pressure on farms and that has some necessary knock-ons in terms of cost pressures. With some of the highly trading commodities, the price has actually eased – for example the wheat price. Some of that’s connected to some of the futures markets not having the number of players that they used to have, not that long ago.
Beyond that you’ve got a combination of drought which is meaning lower production, lower harvests around the world. You then overlay all of that with coming off the back of extraordinarily high input costs.
ASHLEIGH GILLON: On a completely different issue, Malcolm Turnbull recently announced the Opposition’s green carbon initiative to support technology called biochar which safely traps carbon underground. The bonus is apparently that it makes soil more fertile at the same time. The Government though seems very sceptical about this technology. Why is that?
TONY BURKE: We’ve been talking about the importance of sequestering carbon in the soil ever since we came to office. There are many different technologies that can be used to try to deliver this and biochar is one of them. It’s untested, it’s unproven. We are going down a pathway…
ASHLEIGH GILLON: That sort of technology isn’t something that the government is looking at at the moment is it?
TONY BURKE: That’s not correct Ashleigh. We increased the extra money that was going for research into climate change from $15 million to $46.2 million. That’s been designated to three different areas. One of which is soil carbon.
Now, we will see whether the expert advice that comes back to me from the scientists, which won’t be too far away, is that that’s the best way of advancing soil carbon or not. But in terms of the importance of sequestering carbon in the soil we’ve been absolutely on the front foot on this the whole way through.
Biochar is but one of those technologies. And Malcolm has certainly decided to put all his eggs in one basket very early on and certainly a long way in advance of where the scientists are at.
ASHLEIGH GILLON: Finally, just before we go, we are running out of time. There’s a CSIRO report that’s been revealed today that shows the Gunns pulp mill in Tasmania would seriously breach water pollution guidelines. As Forestry Minister that must have been pretty concerning news to you.
TONY BURKE: Well the approvals process on this has been going through under the EPBC Act which Peter Garrett, as the Minister for the Environment has carriage on. Now in that approvals process he gave approval to all the modules except for seeking further modelling to be done on this area of the effluent.
I have been maintaining contact with the people who are putting the pulp mill project together. They still carry a level of optimism that they believe that they will be able to satisfy all those proposals. But certainly this report that’s been leaked today came out way in advance of them doing the modelling that Minister Garrett is now asking them to do.
ASHLEIGH GILLON: So what time frame are we looking at for all of that modelling to be completed? When is this all going to be happening?
TONY BURKE: There is a specific date which was announced towards the end of last year. I don’t have that at hand. But there’s specific timelines that Gunns are working to. That’s in accordance with the environmental approvals process. And our support for the pulp mill has always been subject to those environmental approvals.
ASHLEIGH GILLON: Agriculture Minister Tony Burke, thanks for your time this morning.
TONY BURKE: Thanks very much Ashleigh.
ENDS