For the good of all Australians we need to rethink Australian agriculture

It's not just the misleading of Parliament that should have true liberals throwing their arms up in horror over the latest ethanol scandal. At a time when we are being told that there isn't enough money to pay for public institutions like health, education, and the ABC, the government has happily found a further $37 million to go to subsidise a small group of farmers to produce a type of fuel motorists do not want, and which is of dubious environmental benefit.

Australian governments are sacrificing economic progress, the environment and the well-being of rural Australians by failing to lead the way to sustainable agricultural industries. Relying upon urban nostalgia for the bush, our political leaders are wantonly bidding for rural votes. The river of taxpayers' cash that has been turned inland is actually causing harm when a new approach is possible.

The conservatives who demanded the blitzing of manufacturing industries to improve national productivity are conspicuously silent on the rural sector. The ALP, having abandoned socialism in the cities is strongly defending it in the bush. So a uniting of true liberals, now dispersed among various political allegiances, is the only hope for promoting a comprehensive rural renovation.

Agriculture's significance to the Australian economy has been in steady decline - down from 30 per cent of GDP a century ago to around 3 per cent today. The number of people working on the land is also declining - down from 150,000 families in 1986 to less than 135,000 today. Many of these farmers are efficient, innovative and successful. And these productive farmers are among those who suffer most under current policies.

The problem is not a shortage of funds. In 1992, the Commonwealth and the States, in a failed attempt at reform, agreed to phase out transaction-based drought subsidies to encourage self-reliance and reward farmers who prepared for droughts. But, using the creation of a system of "exceptional circumstances", this Government actually boasted, in late July, that it was providing some form of assistance to 80 per cent of farming areas.

Drought assistance has cost more than two billion dollars over the past ten years.

Beyond the direct financial support payments for drought (and flood), there are a myriad of benefits including interest rate subsidies, tax relief, waived fees and charges, transport subsidies, and other payments.

But there are many other cash flows beyond drought relief. In a May 13 press release, Agriculture Minister Warren Truss proclaimed proudly that more than half the nation's farmers were benefiting from the government's "AAA" $800 million agriculture package.

Milk producers are on an eight-year, $1.74 billion transition to market reality. Sugar farmers are receiving $150 million over four years, paid for by an 18 cents levy on every kilo of sugar. Assistance to the ethanol industry will cost a further $37 million and motorists will get a type of fuel they do not trust.

Consider some of the other forms of largesse. A typical metropolitan council receives an annual grant from the Commonwealth of between $15 and $20 per resident: an average grant for a medium-sized rural based council is $275 per person, with many grants exceeding $500 per head.

The provision of Telstra's Universal Service Obligation costs around $400 million every year, largely focused on the bush. Now the government is committed to getting Telstra to spend hundreds of millions of dollars on a range of rural projects. Taxpayers, shareholders and customers will foot the bill.

But all this money has not solved the problems. The ongoing, unmanaged decline of some rural communities, kept from facing up to change by government policies, has led to serious social problems. The bush has a tragically high rate of suicide. In the 2003/2004 NSW State budget, Premier Carr stated that, on a per capita basis, the Department of Community Services budget was three times higher in areas outside Sydney, Wollongong, Newcastle and the Central Coast than inside that area.

Environmental problems are also reaching crisis point. Dryland salinity now affects about five million hectares of Australian land. Along with other soil and water problems, this costs the economy about $2 billion per year in rectification programs and lost productivity. The Australian Conservation Foundation and the National Farmers Federation recently produced a joint report suggesting that $60 billion of public and private capital will be needed over ten years to fix the land.

Yet 70 per cent of farmers surveyed three years ago thought that taxpayers should carry the responsibility of paying for environmental remediation and that farmers should be compensated for any loss in farmers' rights as a result of improved environmental management.

Financial hand-outs to some farmers artificially lift farm prices, preventing the land consolidation which would promote better environmental management, and better economic outcomes.

The government's obsession with agriculture is also a handicap to the export success of the rest of the economy. Attempts to get a better trade deal for farmers are worth some effort but the potential benefits of agricultural trade liberalisation are so unlikely and so limited they do not justify the huge effort now devoted to them.

The Reid Group advocates the formation of a Rural Assessment Commission. This expert and independent agency could assess the long-term viability of regions and recommend economic and socially viable futures.

Governments should withdraw all support from the remaining single desk marketing authorities.

Rural subsidies should be reassessed and those that survive should be quantified annually.

Drought relief should be limited to the social welfare program and put on the same basis as applies to all other Australians who are in need of income support.

True liberals should be outraged at this endless largesse being directed towards the privileged agricultural sector.

Real reform would produce more efficient farms and a better environment. Taxes would be better spent. Communities and individuals would thrive when fear of change was replaced by a planned transition to real economic and environmental sustainability.