Address to the NT Cattlemen's Association Annual Industry Conference
31 March 2017
Thank you so much for having me here today at your annual conference. Thank you, in particular to Tom Stockwell, president of the NT Cattlemen’s Association and Tracey Hayes, your CEO. It is a privilege to be here to represent Barnaby Joyce. He sends his apologies.
It is also great to be here to help witness the Memorandum of Understanding between yourselves, Agforce, the Pastoralists and Graziers Association of Western Australia and the Cattle Council. It is this sort of “east-west” collaboration that we desperately need in the north for it to reach its full potential. We can’t just retreat into state or territory parochialism – we have to work together.
I congratulate you on a great step forward and something that I’m proud to see as Minister for Northern Australia because it sits comfortably within the aspirations of our white paper to develop Northern Australia.
Can I also recognise Minister Ken Vowles, the Minister for Primary Industry and Resources, and Gerry Wood, the Member for Nelson.
As a sign from the Federal Government that we need to cement that “east-west” collaboration on northern development, I will be announcing today that we will re-establish the Joint Ministerial Forum on Northern Development involving state and federal Ministers. At the federal level we have announced around $1 billion in funding for roads, dams and research and development across the north in the past year. We are in the delivery mode now and we need to work with state and territory governments to make that happen.
We hope to have the first meeting in mid this year in Darwin.
It is also a great honour to be speaking here before a living legend in Andrew Robb. I had the opportunity to work with Andrew briefly when we were developing the northern agenda in opposition. It is fair to say that if it wasn’t for Andrew’s passion I don’t think we would have ended up with the Federal Northern Development white paper.
He is also just an all-round good bloke and you are lucky to have him as a champion for your industry and for the north generally.
When Andrew was focused on the north he often would comment how we have the potential to grow our food production in Australia due to the increasing demand we are seeing from the rising middle class of Asia. In calorific terms we can feed 60 million people with the food we produce today, and Andrew would often comment how we could double that.
Getting there, of course, will mean that we will have to use the 60 per cent of the water that falls in the north, and I will come back to that later.
The other thing we will need though, that doesn’t often get commented on, is energy, and I want to start with that because it is topical in Australia at the moment, including here in the Territory.
At its basic level agriculture is the conversion of one form of energy, in the sun, soil and in organic matter, into another form of energy, embodied in food.
It takes about 100 kg of oil equivalent, in energy terms, to produce just one tonne of wheat. That is taking into account all of the fertiliser, tractors, diesel and electricity to irrigate a hectare of land.
Nitrogen is compressed into urea for fertiliser at a cost of $5 to $10 a gigajoule. The diesel used for tractors costs about $30 per gigajoule. Irrigation, which often uses diesel power, or sometimes grid electricity, is about $60 a gigajoule.
All up, when you add all of those things together and their relative uses in the production of a wheat crop, it costs around $80 a tonne in energy inputs for one tonne of wheat.
The wheat price is around $200 a tonne, so just under half the price of wheat is embodied in energy. If we do not have access to cheap energy, we will not have access to cheap food and we will not be able to feed people.
So I am very concerned about the large increases in wholesale electricity prices we have seen over summer and the large increases in gas prices too.
That is a food security issue because without cheap energy we won’t produce fertilisers here and we would become reliant on imported fertilisers for so much of our agricultural production.
The Federal Government is focusing on how we can get energy prices down. We have met with gas producers and received commitments from them that gas will be made available for electricity production at times of high electricity prices, and that more gas will be provided to domestic markets. In the past fortnight, Shell has announced more gas development, and Origin has reached agreement to reopen the Pelican Point gas-fired power station in Adelaide that will help that state alleviate its problems.
But long term we will not achieve cheap gas without more gas. The Territory is blessed with possibly some of the best gas resources in Australia since the Gippsland Basin was developed.
Geoscience Australia believe that there could be over 200 trillion cubic feet of gas in the Northern Territory. That would supply Australia’s east coast for hundreds of years.
I understand that the Northern Territory Government has been elected on a promise of a moratorium on unconventional gas and they have to meet that promise through their inquiry. I have also read your submission to the inquiry, and you are spot on that we cannot do anything to damage water supplies or hurt agricultural sustainability.
In Queensland where I am from we have had a sustainable unconventional gas industry for more than 20 years that has a good environmental record and coexists alongside agriculture. I should stress that it is a coal seam gas industry that is different from your shale and tight gas resources.
So the protection of water and good soils must be an absolute red line before a gas industry can be developed.
The Federal Government also firmly believes that landowners deserve a return on any gas developed on their land. Not just compensation or a token cheque, farmers and graziers deserve to make real money and real returns for economic production that occurs on their land.
So the decision of the South Australian government to provide a share of the royalties with landowners is a step forward and should be a template for future decisions. I encourage the Northern Territory Government to look to replicate such arrangements in its response to its review. We need landowners and communities to benefit directly if we expect them to support development.
Some would call this mercenary but I call it capitalism. You own an asset, in land, and you deserve to make a buck if someone is going to use that land to create wealth. State and Territory governments have no constitutional right to gas. Here in the Territory mineral rights were taken off landowners in the 1950s, and it is the 1984 Petroleum Act that vests the petroleum beneath the lands with the Crown.
Your resources here are comparable to those in the United States. American companies I have spoken to are very excited about the resource here. In America, generally speaking, landowners own the gas and its funny how capitalism can work. Money talks, the proverbial walks.
So I would ask that you at least consider the benefits of developing gas here in the Territory for your industry. As a potential way of making money, generating cheap energy in the NT and perhaps kick-starting a manufacturing industry here that could produce things like fertiliser that would benefit the agricultural industry.
You will keep making most of your money though from selling cattle, and we want to help you make a profits from growing cattle. The more you make, the more people you can employ, the more fencing contractors you can put on, the more mustering jobs there will be.
That is why we fully back the live export industry. The live export industry makes nearly $2 billion for our country and helps employ around 10,000 people. The live export industry has a more than 99 per cent compliance rate with the Export Supply Chain Assurance Scheme (ESCAS). Of the more than 100 countries in the world that export live animals, Australia is the only one that requires World Organisation for Animal Health welfare standards to be met as a minimum for exported livestock.
With such a record we do not see the need for more regulation. This week the Government released the Productivity Commission report into the Regulation of Agriculture. They recommended the establishment of a Australian Commission for Animal Welfare. The Productivity Commission also wants farm animal welfare monitoring to be separate from agriculture policy matters within government. That is a recipe for animal welfare to be handled by bureaucrats with zero experience of farming.
I have spoken to Barnaby about this and we reject outright any more regulation or bureaucracies for the cattle sector. We will not be supporting these recommendations.
We have a robust regulatory system at the moment and the vast majority of graziers care for their animals as you would expect someone would when they are often worth more than $1000 a head in the current market.
You don’t need a bureaucrat watching every branding and every mustering job.
We are working hard to expand the live cattle trade. We have reached agreement with Indonesia recently to:
- increase the maximum weight average for feeder cattle to 450kg (up from 350kg);
- no minimum weight restriction for imported cattle;
- a revised maximum age of 48 months for feeder cattle (currently 30 months);
- an increased import recommendation period of 12 months (currently 4 months).
- a formal requirement that the 1:5 breeder to feeder import ratio be realised by the end of 2018 and then to apply every two years thereafter.
The first consignment of slaughter cattle exported to China by sea successfully discharged in China on 21 February 2017. This market represents a huge future opportunity for us.
We have also agreed with China over the past week to open up access for Australian chilled beef to an additional 15 meatworks and promote a protocol for the export of Australian slaughter sheep and goats. This agreement is expected to benefit our meat industry by $400 million a year.
These improvements, on top of the huge gains that Andrew Robb was able to negotiate through the Japan, China and Korea free trade agreements, provide a great platform for the growth of the Northern Territory cattle sector. You are in pole position to capture these benefits given your proximity to Asia.
Through the northern development agenda we want to support that growth by providing the fundamental infrastructure that you need to bring down your costs.
Our Northern Australia agenda is not about providing a hand out, it is about providing a return to all of Australia. Already Northern Australia punches above its economic weight. Only 6 per cent of Australians live in the north but they produce around 12 per cent of our GDP. The average economic output per employee in Northern Australia was $369,900, almost double Australia’s economic output per employee of $185,900.
Over the past decade economic growth in Northern Australia has vastly outstripped that of the rest of Australia, growing at 5 per cent a year, compared to 3 per cent across all of Australia. Like any good business we are investing back in the north because it is an area where we make money for our nation.
That’s why we are investing more than $6 billion to build the north, including its roads, water assets and other infrastructure.
Last year, we announced almost $700 million of road upgrades throughout the north through the Northern Australia Roads and Beef Roads programs.
In the Territory, we’re spending almost $200 million on high priority roads that support development of the north and the beef industry’s productivity.
This includes $30 million on the Barkly Stock Route and the Tablelands Highway under the Beef Roads program.
We have established the $5 billion Northern Australia Infrastructure Facility in Cairns – a bank to develop infrastructure in the north. The NAIF is open for business and its independent board is working on a number of proposals. The NAIF has received 107 enquiries from project proponents, 51 of which remain active.
Earlier this week advice from the NAIF was that five projects have strong prospects of reaching financial close in the next 12 months.
Today I will be announcing that the Federal Government and the Northern Territory Government have signed a Master Funding Agreement that will allow projects under the NAIF to receive funding. This agreement also makes clear that any funding under the NAIF will not be clawed back through the GST redistribution process. Our northern development funding from the NAIF will add to Northern Territory’s economic resources irrespective of decisions around the GST. This agreement is an important step forward.
The Australian Government’s 2016 Defence White Paper outlined significant expenditure in the Northern Territory and a focus on investment in national defence infrastructure in Northern Australia. This includes an $8 billion spend upgrading Defence facilities in the NT over the next 10 years, with a further $12.2 billion to be spent in the NT in the decade post 2025.
Northern Australia receives more than 60 per cent of Australia’s rainfall but we use only around 2 per cent of that. Knowing how much water is available and where, and building appropriate capture and storage infrastructure to suit is essential for increasing agriculture productivity and sustainability.
The CSIRO’s water accountability research in northern Australia estimates that on average two million gigalitres of water arrives in the north, and around 15,000 gigalitres could be made available for additional irrigation.
This is enough water to irrigate an estimated 1.5 million hectares, increasing Australia’s irrigated agriculture by as much as 50 per cent.
The Federal Government is funding two feasibility studies in the Northern Territory, including a CSIRO analysis of the water resources in the Darwin region and Ord Stage 3.
I want to finish by stressing how well the Territory has done since self-government. I know that there are some challenging times at the moment with the scaling down of INPEX and budgetary pressures. But so much has been achieved here in the Territory and I am confident through the strength of your industry and the investments we are making in the north that growth will continue.
Just compare what has happened to the NT and South Australia over the past 40 years. In the past 40 years, which coincides with the period of self-government, Darwin has added almost 100,000 people to grow in size by more than 3 times. You have achieved a population growth rate of 3 per cent a year. In comparison Adelaide's population increased by only a third as fast - and grew at less than 1 per cent a year over the same period.
Back in the late 19th century, the South Australian Minister for Education and the Northern Territory, Sir Frederick Holder, advised his colleagues that the South Australian border should be shifted back to the MacDonnell ranges and the rest of the Northern Territory should be given back to the British Government. The British Government declined.
I am sure South Australia wished it had a place as dynamic and future focused as the Northern Territory. If it did it may have a better chance of keeping its lights on given all your gas. As it stands though I think our country’s past may have been written in the south but our future will be made in the north.