There is an old saying, “if you look after the pennies the pounds look after themselves”.
However, the Gillard government has the opposite philosophy: a few extra costs here, a bit more regulation there, won’t matter in the larger scheme of things.
The dairy crisis meeting at the Kolora-Noorat Football Club’s rooms this week confirms what most of the public in the real world already know: small business cannot continue to absorb extra and growing costs.
While the high Australian dollar is also hurting our competitiveness, the carbon tax is a classic example of governments adding unnecessary costs to industry and threatening their viability.
Warrnambool dairy consultant Mike Hamblin’s assessment that the average Australian dairy farmer will pay an extra $7500 a year in increased energy and processing costs, with many larger farmers paying $20,000, is probably conservative and despite the resources of thousands of public servants, the government has been unable to disprove it.
Instead, both Julia Gillard and her Climate Change Minister Greg Combet are on the record saying farmers can just pass these costs to consumers. Again, you don’t have to be Einstein to work out that this is a load of rubbish. The reality is that as price takers, farmers get lumped with those costs and they come straight out of farm profits — if there are any.
Rightfully, supermarkets deserve their share of the blame but the government’s ignorance of the impacts on industry continues to astound the agricultural sector.
From the start of the $1 litre milk campaign, minister Joe Ludwig came out in support of Coles claiming that it is “good news for milk drinkers” before even speaking to industry to understand the impacts. This inability to stick up for his portfolio industries has been symptomatic of his failure as minister, whether it be the dairy industry, live exporters, apples or potato growers.
So domestically while supermarkets keep selling milk at $1 per litre, prices not seen since the early 1990s, it is impossible for these costs to be passed onto the consumer. And for our large dairy export industry — at around $2.8 billion a year — we still can’t pass these costs on. Most of our competitors in international markets don’t pay the carbon tax or in the case of the EU are heavily subsidised to offset these costs.
If we look at Murray Goulburn, it has a carbon cost of around $14 million a year that it cannot pass on internationally or domestically and whatever cost it does not pass back to the farmers is still worn by the farmer as member of the co-operative.
It is calculated that dairy farmers will now milk for about a week for no pay whatsoever as a result of the carbon tax.
Oh, and don’t forget the carbon tax is going up in July this year and will go up again next year, so those costs and losses are only set to get worse under Labor.
The carbon tax is just the tip of the iceberg. Dairy farmers have lost workplace flexibility to employ people on shifts of less than three hours and the government has been asleep at the wheel getting improved access to overseas markets. New Zealand has up to a 20 per cent tariff advantage over Australia into China for some dairy products.
The Coalition, if elected, will scrap the carbon tax and review the Competition and Consumer Act to assess supermarket powers and push for arrangements that ensure the long term viability of the dairy industry. I look forward to hearing dairy farmers concerns when I visit the area with Dan Tehan shortly.
John Cobb, federal opposition spokesman for agriculture and food security, Parliament House, Canberra