Peter Reith's Solution for Australian Agriculture

Attention has been focused on the plight of Australia’s dairy farmers in the wake of the decision by Coles and Woolworths to cut the price of their home brand milk to $1/litre.  In addition to the poor returns for their output, dairy farmers like all primary producers in Australia have suffered from higher input costs including fuel, electricity, labour and fertiliser. 

Peter Reith recently weighed into the debate about the viability of the dairy industry and proposed a six point plan to reduce costs.  Given much of Australian agriculture is facing similar problems to dairy farmers, it may be appropriate to use Mr Reith’s blueprint for other sectors.  Below, I consider if the Reith plan could be extended to other farm sectors. 

 

1.        Cut municipal rates; councils have been increasing expenditure above inflation.  This needs to stop. 

This is certainly applicable to most farmers.  In our case, shire rates increased by 9% last year following similar increases in previous years.  This was an outrageous increase given the Shire provides no services to us. 

2.       Abolish payroll tax on all dairy processing plants. 

Abolishing payroll tax on manufacturing plants including meat and dairy processing would indirectly benefit the farm sector.  Taxing employment has always seemed like one of the most insidious forms of taxation. 

3.       Reduce energy prices by abolishing the carbon tax and remove impediments to other initiatives like gas, including coal seam methane. 

I will sidestep the issue of coal seam gas, but certainly agriculture is an energy intensive business and will therefore benefit from lower prices.  The carbon tax has certainly negatively impacted on the meat and dairy processors and thus affected farmers in these sectors. 

4.       Reform labour market policies introduced by Labor for the benefit of unions. 

In our case we have problems getting labour so reforming labour market policies have not affected us too much. 

5.       Slash government waste, cut wasteful expenditure, and stop the boats to cut costs. 

No-one could argue with this point.  In addition to reducing wasteful expenditure, Governments should also reduce the regulatory burden they place on business. 

6.       Slash the petrol tax to lower business costs.  Improvements to transport should be a much higher priority ……

Again lowering taxes will obviously assist business in a period when input costs for farm businesses have increased significantly.  Investment in transport infrastructure and other infrastructure such as ports and rail will also assist export focused sectors such as agriculture. 

 The response to Peter Reith’s plan has not exactly been ebullient.  On www.milkmaidmarian.com dairy farmer Marian Macdonald thought the plan, at first, was a spoof.  It is notable that Mr Reith does not mention the elephant in the room – the supermarket duopoly. 

What affect would the Reith plan have overall on the agricultural industry?  The results would be minimal in the short term – the problems of the dairy industry and my own industry, the northern cattle industry, have specific problems not addressed by Mr Reith. 

Should the Reith plan be implemented?  Absolutely – the medium and long term benefits from his ideas would be substantial across all agricultural industries. 

Will the Reith plan be implemented?  Probably not – Governments of both political persuasions have shown little appetite for meaningful reform in areas such as Government spending. 

FURTHER READING

Reith, P (2013).  Stop milking our dairy farmers.  http://www.abc.net.au/unleashed/4464198.html