Towards a Blueprint for Revitalising Rural and Regional Australia

Second, there are further economic reforms in the pipeline that will bring additional benefits to rural Australia. These include the introduction of the GST and, importantly, the business tax recommendations of the Ralph Committee. Rural Australians should loudly applaud all of these initiatives and should be particularly vigilant in monitoring the passage of the business tax package through the Senate.

Why is it that after receiving all these "dividends" from economic reform, many in country Australia are still battling? Part of the answer lies in cyclically low commodity prices and before that in unfavourable seasonal conditions.

But these factors do not provide the whole story. The economic policy chain is only as strong as its weakest links. And there are some weak links that impact particularly on the process of regional development.

These weak links include under-investment in rural education and training; poor infrastructure, especially communications infrastructure; excessive regulation of agricultural marketing; "crowding out" of private sector biotechnology development; and, crucially, the attenuation of property rights for land, water, native vegetation and forests.

Education, Training and Communications

The proportion of farmers with formal post-school education is less than half what it is in the general population. Yet farm businesses that have people with tertiary agricultural qualifications in the management team generate incomes more than 40% higher than those that don't.

This situation reflects a community failure to invest adequately in young farmers.

Fortunately there are solutions available that will speed the rate of human capital formation amongst existing farmers. These rely on investing in farmer training in such a way that they will generate their own "social capital" and continue the process themselves. The recently-reviewed Nuffield Farming Scholarship scheme is an outstanding example. The problem is that we are underinvesting in such programs.

It is self evident that in today's world, communications technology is critical to increased business efficiency. This is especially true in regional Australia. Yet you only have to travel in rural areas, as I do, to see how poorly rural people are serviced.

It seems strange to me that many see the answer to this problem being in continuing public ownership of telephone companies. After all, the existing inadequacies have emerged in a regulated environment! Why should we expect that more regulation, rather than less, will propel us to a solution?

Agribusiness and Biotechnology

Despite being a leading exporter of agricultural products on world markets and despite being a world leader in some areas of bio-scientific research, Australia has neither a world-scale agribusiness corporation nor a world-scale life-sciences business. Yet these businesses are growing rapidly in other parts of the world and they are a vital part of the circuitry in the rural development process. I believe that the answer to both questions is related to the way we have managed agricultural marketing and rural research as public-sector activities.

Following deregulation, today's wool market is at last emerging as a commercially-driven business. Product and process innovation is picking up pace and new marketing, pricing and risk-management systems are coming into play.

The progressive deregulation of the dairy industry has, at least until now, provided handsome dividends to farmers and processors alike. Today we have a world-class industry.