Carbon

Six issues to watch with the new government

Eric Barker and James Nason, 01/06/2022

Prime Minister Anthony Albanese being sworn in by Governor General David Hurley.

IT has taken a little over a week to acheive but there is now clarity on the 2022 Federal election outcome, with the ALP securing a majority Government yesterday, and swearing in its new Ministry this morning. With confirmation of the result, Beef Central looks at six key issues of pressing importance to the agriculture sector as the Albanese Government takes up the reins in Canberra’s corridors of power.

Labour shortages

With many parts of the agricultural industry suffering a significant labour shortage, both the major parties promised visa schemes dedicated to the sector during the campaign.

Labor’s agricultural visa will be different to the Coalition’s, focusing on the already existing Pacific Labour Mobility Scheme – providing up-front travel costs for workers coming to Australia.

The Coalition had an agreement with Vietnam to allow workers to come from its country on the ag visa, but Labor said it will not honour the deal. The National Farmers Federation who led the Coalition’s visa has expressed disappointment at Labor’s approach.

Pressure is likely to keep building on governments to address labour shortages with all sides of the industry – including cattle stations, feedlots, processors and various contractors – raising concerns about access to labour and it has been exacerbated by the Omicron COVID wave.

Market analysts say labour shortages have had a noticeable impact on production.

Carbon and climate change

Many have labelled climate change as the big clincher this election, with The Greens and the “Teal” independents winning on the back of campaigning for stronger action. Also, conservative MPs in the National Party speaking out against a “net zero” target have been blamed for losing inner-city Liberal seats.

Labor is looking to beef up the “safeguard mechanism” which was created by the Liberal National Government in 2016 and requires all companies with more than 100,000 tonnes of scope 1 emissions to reduce emissions or purchase offsets. The government is also backing methane reduction technologies and carbon farming opportunities.

While the carbon industry is hoping to cash in on the new agenda, newly sworn-in minister for climate change and energy, Chris Bowen has promised a review of some carbon farming methods on the back of concerns raised by former government advisor Professor Andrew MacIntosh. What the review will involve is still unknown.

A series of renewable energy promises has also been made by Labor, including 85 solar banks around Australia and 400 community batteries. The Greens and Teals are both calling for 80 percent of the country’s electricity to come from renewable energy by 2030.

The rollout of the renewable energy has already been controversial, with solar banks and wind farms taking up productive farming land.

But with plenty of political will behind it and the construction of more renewable energy infrastructure inevitable, some sides of the agricultural industry say there will be opportunities to supplement income.

For more on Labor’s climate policy, here is some analysis from The Conversation.

Biosecurity

The spread of Foot and Mouth and Lumpy Skin diseases in Indonesia has put the livestock industry on high alert and put pressure on the incoming Labor government to dial up its biosecurity controls.

Industry responses have been wide-ranging from calls to restrict travel between the two countries to others saying border checks should be ramped up.

Anthony Albanese has announced a long-term funding pipeline for biosecurity, but it is still unknown how the government will directly address the serious threats the two diseases pose.

In the meantime incoming Federal Treasurer Jim Chalmers has underscored the importance of Australia “working harder” to build its relationship with Indonesia.

The comments came after Dr Chalmers spoke with his Indonesia counterpart Sri Mulyani, ahead of Indonesia hosting the G20 finance ministers’ summit in July.

Prime Minister Anthony Albanese is flying to Jakarta on Sunday for high-level talks, noting the relationship with Indonesia was “very important”.

Inflation and supply chain disruptions

The incoming Government faces a major challenge to balance election commitments to ease cost-of-living pressures while managing what is increasingly being described as an overheating economy, amid claims rising costs could push Australia into recession before the end of this year.

The ALP has committed to pushing for wage rises of 5.1 percent in line with the rate of inflation.

While welcomed by workers whose real incomes have barely increased in the past decade, concerns have been raised that Mr Albanese’s position risks creating a “feedback loop” of higher business costs leading to higher prices for consumers, and in turn triggering the Reserve Bank to possibly lift interest rates faster and to a higher level in an attempt to contain further inflation.

The obvious implication for beef producers from rising inflation and interest rates is rising operating and financing costs, but there are also implications for real beef prices and debt values, as Ian McLean from Bush Agribusiness recently explained to Beef Central readers.

Businesses that have a safe level of debt, a competitive cost of production, and operating costs that don’t increase faster than inflation, will be best positioned to prosper, whatever the economy, seasons or cattle market throws at them, he maintains.

China

Responsibility for handling Australia’s important and vexed relationship with China now falls to the new ALP Government.

At a Queensland Rural Press Club event earlier this year, ALP Senator Murray Watt, who was this morning sworn in as Australia’s new Federal Minister for Agriculture,  blamed the Morrison Government for mishandling Australia’s relationship with China, saying its use of “war-like language” had been aimed at scoring domestic political points and had not been helpful for the national interest.

“What you can expect from Labor as I said earlier is we stand up for the national interest, we always stick up for our national values, but we don’t do it in a way that is for domestic political gain,” he said at the time.

“And if you look around the world there are many other countries that have been able to manage these issues with China much more successfully.

“Japan, South Korea, they have had tensions with China for decades, they have fundamental differences of values and beliefs, but they have been able to handle those in a way without trashing their economic relationships, and that is the way we think is the way forward.”

After the election China’s Government ended a more than-two-year-freeze of contact with Australian ministers by sending a message of congratulations to new Prime Minister Anthony Albanese.

Mr Albanese told reporters on Tuesday that he welcomed the Chinese Premier’s letter, saying that Australia seeks good relations with all countries.

But he also added that “it’s not Australia that has changed, China has changed”, and called for Beijing to lift trade sanctions.

“It’s not Australia that’s changed, it’s China that’s changed. It is China that placed sanctions on Australia, and there’s no justification for that, so that’s why they should be removed,” he said.

Live exports

One agriculture sector which faces direct implications from the outcome of the Federal Election is the livestock export industry, given that the ALP pledged to end live sheep exports if it won the election.

The Party claims to have “no plans” to change the live export of cattle, but its previous treatment of the industry, including its snap decision to suspend cattle exports to Indonesia 11 years ago, and conflicting messages through the campaign, has done little to engender trust within the billion-dollar sector.

The industry now also faces another round of potentially significant cost increases in July, under scheduled Departmental cost recovery arrangements.

Industry fears the cost-per-head impact is now going to be far greater than the previous Government suggested, because trade volumes are so much lower this year.

Seeking clarity on the future of sheep exports and ascertaining the impact of next month’s scheduled round of cost recovery charges will be key issues for the sector now that a new Government has been formed.

What other issues do Beef Central readers see as important that are not included above? Share your views in the comment box below

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Comments

  1. Richard Ham, 01/06/2022

    You have overlooked the Murray Darling Basin Plan (latterly recognised as at least partly based on false science) and the split of agriculture (Watt) from water (Plibersek). Agricultural production in irrigation areas will surely suffer from this structuring of ministerial portfolios.

  2. Paul Franks, 01/06/2022

    There is one thing not mentioned. A federal national EPA.

    I have already heard the dozers in Queensland are awakening from a bit of a slumber with fears of new draconian federal controls on vegetation. I know the Greens want in Qld, PMAV’s gone and Category X areas removed from being able to be recleared. Labor needs the Greens to pass legislation in the senate. It would be very easy for Labor to simply stomp on those areas that do not vote Labor to get an easy pass for their other legislation in the senate. It would only win them votes.

  3. MR MICHAEL TEELOW, 01/06/2022

    You forgot the most pressing issue
    Finalizing the class action for the affected producers

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