ProductivityCommissionRegulationof
Agriculture-IssuesPaper
CottonAustraliasubmission,February32015
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Introduction
CottonAustralia(CA)isthekeyrepresentativebodyforAustralia’scottongrowing
industry.ThecottonindustryisanintegralpartoftheAustralianeconomy,worthover
$1.25billioninexportearningsinthe2014–15season,andemployingonaverage10,000
people.Theindustry’svisionis:Australiancotton,carefullygrown,naturallyworld’sbest.
CottonAustraliaispleasedtoseethegovernmentissuetheProductivityCommission's
publicinquiryintoRegulationofAgriculture(IssuesPaper)andwewelcomethe
opportunitytomakeasubmission.WesupporttheGovernment’sdrivetorepeal
unnecessaryandredundantregulation,butbelievemoreneedtobedone.
Oursubmissionhasfocusedprimarilyonregulationon-farm,howeverwehaveconsidered
thesupplychain.Indevelopingthesubmission,wehaveconsultedwithmanyofour
affiliateindustrybodiesincludingtheNationalFarmers’Federation,QLDFarmers’
FederationandNSWIrrigators’Council(ofwhichwearemembers).Wehavealsosought
inputfromourmemberbase,theAustralianCottonShippers’Associationandotherkey
industrycontactse.g.largerural-basedbusinesses.
Wewishtohighlightthefactthatsinceatleast2007,therehavebeenanumberof
significantexercisesundertakenwhichhavesoughttodefineandaddressthe‘redtape’on
agricultureandsmallbusiness.CottonAustraliahasengagedwithmanyoftheseonbehalf
ofourmembers.WethereforeexpectthatthisInquirywilldrivesubstantialand
meaningfulchangethroughgovernmenttobetterpositionagricultureandlessenthe‘red
tape’burden.
CottonfarmbusinessesinAustralia–likemostacrossagriculture–alreadyfunctionina
complex,challengingoperatingenvironment.ItiswellknownthatagricultureinAustralia
is:
• Ariskybusiness
• Experiencingdecliningtermsoftrade
• Experiencinglaggingproductivitygains,incontextoftheemergenceofmajornew
competition(e.g.SouthAmerica)inglobalagriculturalmarketsoverthepastdecade,
andinthecontextofincreasinginputprices.Inaddition,globallycottonisfacing
increasedcompetitionfromman-madefibres,whichhavecausedcotton’smarket
sharetodecline
• Receivesminimumgovernmentsupport,competingagainstheavilysubsidized
countries
Thecottonindustryisnotimmunefromanyofthesechallenges.Despitetheseand
increasingoperatingcosts,theaveragepricereceivedoverthelast20yearshascertainly
notrisentomatch,remainingrelativelystagnant.However,typicalofAustralian
agriculturalindustries,wehaveaworldclassproductionsystemandproduct.The
AustraliancottonindustryissupportedbyahighlycapableR&Dsystemandresearch
institutions,anexcellentstoryandenvironmentalcredentialstosellaswellasaproduct
soughtafterbythemarket.Itisthereforecriticalthatallregulationbeeffectiveand
efficientandwherepossibleprovideasupportiveframeworkforbusinessessothatthey
canoptimizetheirbusinesses,productivityandvalue.Theextrapressureofregulatory
burdencaninhibitinvestment,growthandinnovation.
Regulationinagriculture-generalcomments
AsacknowledgedintheIssuesPaper,“improvingtheefficiencyandeffectivenessofthe
regulatoryenvironmentisimportantforallsectorsoftheeconomy,butparticularlyforthe
agriculturalsectorgivenitshighdependenceoninternationalmarkets”.Thisisparticularly
pertinentforcottonwhichisnearly100%exported.Inaddition,westronglyagreewiththe
ProductivityCommission’sobservationthat‘regulatoryburdenscanhaveasignificantand
disproportionateimpactonsmallbusinesses’giventhefactthattheyhavenarrowmargins
‘overwhichtospreadwhatarefrequentlyfixedcompliancecosts’.Manyagricultural
businessesaresmallbusinessesandthischaracteristicdefinitelycontributestothe
regulatoryburdenexperienced.
WeknowregulatoryburdenforAustralianagriculturalbusinessesishigh.Itisanissue
commonlyraisedbyourmembersandacrossthesector.Theprevious2007Reviewon
businessredtapeburden,countlesssubmissions,independentstudies,andthemorerecent
workcompletedbytheNationalFarmers’Federationonredtapeinagriculturein2014all
pointtothis.CottonAustralia,withtheNFF,commissionedareportin2014toquantifythe
regulatoryburdenimposedonfarmers.HolmesandSackettanalyzedthefinancial,taxation
andcompliancecostsassociatedwithasampleoffarmoperationsandfoundthecosttobe
between$24,000and$43,000peryear,dependingonthetypeofbusinessfarmersare
operating.Farmersspendatotalof20.6daysconsumedintasksassociatedwithredtape,
whichequatesto8.6%oftheworkingyear.Intotal,fortheaveragefarm,redtapeequated
to:
• 3.9%ofincome
• 4.5%oftotalexpenses
• 13.9%ofnetfarmprofit
Thecomplexityoflegislativeregulationinrelationtoonfarmactivitiesisdemonstratedin
thefactthatlandholdersrequireguidesandinformationmaterialsinordertonavigatethe
variouslevelsoflocal/stateandFederallegislationthatapplies.Therearecountless
examplesofthisdevelopedbygovernmentandindustry.ForexampletheQueensland
FarmersFederationdevelopedaguideforlandholders–EnvironmentalManagementand
PlanningLegislation–AguideforQueenslandRuralLandholders(Version2,2015)which
detailsapplicablepiecesofLocal/StateandFederallegislationthatappliestoagricultural
production.TheGuideclarifieslegislationthatapplieswhere:
Vegetationisclearedforthepurposeofhigh-valueagriculture
Managingpests,plantsandanimals
Landuseisshiftedfromagriculturetoanotherlandusei.e.broadacrescroppingor
introducesadditionalactivitiesi.e.thedevelopmentoftourismaccommodation.
Similarly,industrydevelopedsystemssuchas‘bestmanagementpractices’programsare
similarexamplesofapproachesthataimtohelplandmanagersunderstandandaddress
legislativerequirements,andbeyond.TheAustraliancottonindustryhasmaintainedsuch
aprogram–myBMP–formanyyears.Theyalsoexistinthesugarandgrainsindustriesand
arebeingexploredbyanumberofothers.UnderthecottonmyBMPprogram,thereare
elevenmodulesthatcoverallfarmproductionareas,includingHRandWHS.Thevast(ie,
hundreds)numberoflegalcompliance‘practices’thatexistacrossallmoduleshighlights
thelevelofregulationthatneedtobeaddressedbygrowers.
ThroughupdatestomyBMPgrowerscankeepuptodatewithlegislativeobligationsthat
maybeotherwisedifficulttotrackandtrace.OtherBMPprogramshaveincorporateda
similarlegislativecomplianceapproachesthatcanbeusedbyfarmersasaquickready
reckonerofcompliancewithlegislativeredtape.CottonAustraliathereforerecommends
thatgovernmentsmaketheefforttofamiliarizethemselveswithsuchindustrydeveloped
programs.Insomesituations,theycouldbeconsideredasameansofachievingcompliance
outcomesthatworkforbothparties.
Giventhelayersofregulationthatapplytoagriculturalbusinessesandthefactthattheyall
varyintheiroperations,sizeandsituations,itcanbechallengingtoidentifydiscrete
examplesofredtapeburdenandthematerialimpact.AsidentifiedintheNFF’s2014Red
Tapereport,thecumulativeimpactofmeetingregulatoryobligationsforfarmbusinessesis
high.
CottonAustraliacontendsthatmostregulationsarewellintentionedandarenotpurposely
designedtostiflebusinessandincurunnecessarycosts.Theycanbehighlyimportantand
benefitthesectorandbroadercommunity.However,unfortunately,thatisoftenthecase.
Theregulationthatisappliedtodealwithagenuineissueisoftenover-the-top,inpartdue
totheriskadversenatureofthebureaucraticdrafters.
Fromthisstand-pointCottonAustraliafindsithardtoidentifyregulationsthatserveno
purposeatall,butcanfindplentyofexampleswheretheregulatoryburdenis
disproportionatetotheriskinvolved.
AsstatedbythePCissuespaper,“whereexcessiveorunnecessarilyburdensome,it
(regulation)canraisecoststobusinesses,usersandconsumers,whichinturncanreduce
economicactivity,inhibittradeorrestrictcompetition”andthisiscertainlytherealityfor
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agriculturalbusinessesinanumberofcasesandgreatthreattothesectormorebroadlyin
termsofgrowthandmeetingittruepotential. Therefore,whileCottonAustraliawelcomesthisInquiry,itbelievestheonlyrealsolutionis
forallbranchesofGovernment,withfullconsultationwithindustryandbusiness,to
undertakea“rootandbranch”reviewofallregulation.
Suchaprocess,whichwouldhavetobetimetabledoveranumberofyears,wouldhaveto
challengethepurposeofeachregulation,anditsefficiencyforbothgovernmentand
business.
Australiabelievestheneedforsuchawideapproachwouldbeclearlydemonstratedifthe
ProductivityCommission,aspartofthisInquiry,engagedconsultantstoundertakea
forensicexaminationoftheimpactofregulationof10farmbusinessesacrossAustralia.
CottonAustraliaisconfidentthatsuchanapproachwouldclearlyidentifymanyexamples
wheretheissuebeingregulated,doesnotjustifythedegreeofregulationapplied,orthe
costsimposedbysuchregulation.
Generalrecommendations
1. Thata“rootandbranch”reviewofallregulationbeundertaken
2. ThattheProductivityCommission,aspartofthisInquiry,undertakedetailed
examinationsoftheimpactofregulationof10farmbusinessesacross
Australia
3. Beforetakingaregulatoryapproach,governmentshouldconsultearlywith
industryonissuesandpotentialsolutions.Thiscouldresultinamoreeffective
andappropriateapproachforbothparties
4. Governmentshouldconsiderintroducinganagriculturalimpactstatementfor
newregulationswhichteststhebenefitsofregulationintermsof
improvementstosustainabilityandprofitabilityofAustralianagriculture.
Specificcomments
Landtenureanduse
Landuseplanning
CottonAustralia’sinteractionwithlanduseplanning,developmentassessmentand
approvalprocesseshaslargelyarisenasaresultoftheinteractionbetweenagriculturaland
resourcesindustries.Assuchtheinformationthatwehavepresentedinoursubmissionto
theProductivityCommissionaimstoprovidetheCommissionerwithsomeofthe
challengesourindustryhasfacedinrelationto:
• developmentonfarm;and
• grantofdevelopmentapprovalsthatwillimpactdirectlyonthepropertyrightsof
ourgrowers.
ToensurethatbothaspectsareaddressedforthePCreviewwehavesplitourresponsein
thetwosectionsrelatedtoa)growerdevelopmentsonfarmandb)thegrantof
developmentapprovalsthatimpactongrowerpropertyrights.
Growerdevelopmentonfarm
CottonAustralia’smembersaredistributedpredominantlyacrossNSWandQueensland.
ThemajorStatebasedlegislationistheEnvironmentalPlanningandAssessment(EP&A)
Act1979inNSWandtheRegionalPlanningInterestsAct2014inQld.
TheseStatebasedActsprovidetheframeworkforthelocationandregulationoflanduse
includingspecificationoflandusezoningthatindicateswhereparticularactivitiesmay
occuraccordingtoregionalstrategiesorpolicies.Anadditionallayerofdevelopment
approvalmayapplythroughlocallybased(Council/Shire)planningandconsent
instruments.
Adirectexampleofwheretheselevelsofregulationsimpactonourgrowershasbeen
experiencedinrelationtolocalgovernmentbuildingregulations.IncreasinglyLocal
Governmentappeartobetrytoapplythesamelevelofscrutinytobuildingsand
developmentsonfarmsastheydotobuildinganddevelopmentsinurbanareas.Cotton
Australiaisawareofoneinstancewhenaplanningapprovalforafarmshedwasheldupfor
weeks,becausetheapplicationdidnotdealwithhowthespoilfromthefootingexcavations
wouldbedisposed.Thisneedstobeseenincontextthatthetotalspoilamountedtotwo
truck-loads,andtheworkwasbeingconductedona40,000hafarm,offeringplentyof
opportunityforsensitivedisposalofgeneratedmaterial.
Afurtherexampleoftheregulationor‘redtape’thatmayapplytoagrowerinrelationto
developmentapprovalsisillustratedinbuildingadamorwaterstorage.Theprocess
(takingNSWasanexample)involvesanumberofstepsandconsiderationsincluding:
• ObtainingadvicefromtheNSWDepartmentofPrimaryIndustries–Water(NSWDPI
Water)regardingthesizeofadamthatispermittedwithoutarequirementfora
licence.Thisisnotbasedonvolumealonebutalsoadditionalruleexemptions.
• Damsarenotpermittedonlargerstreamsbutonlyminorwatercourses,unless
approvedbyNSWDPIWater
• DamsmayhavearequirementforfishwaterpassageundertheFisheries
ManagementAct1994alongcertainwatercourses
• Removalofvegetationinriparianzones(within20mofastream)forthe
constructionofadamisnotpermittedundertheNativeVegetationManagementAct
2003.Wheretreesarerequiredtoberemovedfordamconstructionthismayrequire
aspecialpermitorPropertyVegetationPlan;and
• Localcouncilscanrequireadevelopmentapplicationforeverydambuilt
Thedifferentpiecesoflegislationthatarerequiredtobemetinordertoconstructadam
highlightsthebarriersthatareconfrontedbyNSWgrowers.
InQueenslandourgrowersfacesimilarchallengeswiththeconstructionofadambeing
subjecttoadevelopmentpermitundertheSustainablePlanningAct2009,whereadamis
deemedasreferable1.Thedevelopmentapplicationistobeaccompaniedbyanapproved
FailureImpactAssessment(FIA)andanywaterentitlements/licencesrequiredunderthe
WaterAct2000.
Whilewesupportthelegislationinplace,thenumberofDepartmentsthatrequire
consultationcanleadtosignificantdelays.Ashighlightedintheabove,therulesthatapply
oftenhaveexemptionsinplacethatcreatearequirementtoconsultGovernment
Departmentsinordertodeterminewhetherthesecanapplytoagrowersindividual
operation/circumstance.
Despitecreatingadditionalprocess,CAdoesn’tsuggestthese‘ruleexemptions’beremoved
astheyprovideopportunitiesforgrowerstomakethemostoftheirlandandwater
resources.Italsorecognisesthatagriculturaloperationsdonotfitwithina‘onesizefitsall’
framework,andthatindividualcircumstancesmayneedtobeconsideredaspartofthe
1Adamisclassedtobereferablewhereadamis:
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Morethan8minheight,andhasastoragecapacityofmorethan500megalitres;OR
Morethan8minheight,andhasastoragecapacityofmorethan250megalitres,andacatchmentarea
thatismorethanthreetimesitsmaximumsurfaceareaatfullsupplylevel;OR
Workthatwillincreasethestoragecapacityofareferabledambymorethan10percent.
NB–Ifadamisnotcurrentlyareferabledamitdoesnotmeanthatitmaynotbecomeareferabledamat
sometimeinthefutureifdevelopmentoccursdownstream.
approvalprocess.Inorderto‘combat’ormanagesignificantdelaysthatcanoccurthrough
thesystem,CAsupportstheintroductionoftimeframesforapprovalsprocesses.
Timeframesarounddecisionmakinghavebeenintroducedinotherindustry/development
approvalprocesses,forexampletheIESC(IndependentExpertScientificCommitteeonCoal
SeamGasandLargeCoalMiningDevelopment)mustdeliveradvicetotheMinisterin60
daysofreceivingareferral.Webelievethatasimilarsystemcouldapplythroughout
agriculturalregulatoryprocesses.
Recommendations
1. CAsupportstimeframesfordeliveryofDepartmentaladviceforapprovals
processesandsuggestsgovernmentsconsiderintroducingthesewherethey
don’talreadyexist
2. CAsupportscontinuedconsiderationofindividualcircumstancesin
developmentapprovalprocesses
Grantofdevelopmentapprovalsthatimpactongrowerpropertyrights
CottonAustraliahasengagedindiscussionsrelatedtodevelopmentassessmentand
approvalprocesseslargelyasaresultoftheimpactsofextractiveindustriesonour
members.Increasingencroachmentofextractiveindustriesonagriculturallandshas
generatedpublicandpolicydebatethatconsiderthestrategicrequirementforagricultural
landandtheefficacyofbothStateandFederalapprovalprocessesforthedevelopmentof
extractiveindustries.
CottonAustraliadoesnotopposetheminingorcoalseamgas(CSG)industryprovidedthat
thelandandwaterrightsofourgrowersarefullyprotectedandlandaccessarrangements
arefair,equitableandprovidecompensationforgrowersinrecognitionoftheimpactof
extractiveindustriesondaytodaymanagementoffarmingoperations.TheminingandCSG
policiesdevelopedbyCottonAustraliainconsultationwithourgrowersreflectsthis
positionandhighlightsthatalllandaccessarrangementsneedtoaddressthecomplexityof
eachfarmingscenario.
CottonAustraliahasbeenhighlyengagedinpublicpolicyprocessesthatupholdtheland
andwaterrightsofourgrowersandprovidethemwithchoice.Wearethereforevery
familiarwiththerelevantlegislationthatapplies.Weareacurrentmemberofthe
PetroleumLandAccessGroupconvenedbytheNSWLandandWaterCommissioner–Jock
Laurie.Wehavebeeninvolvedasakeyagriculturalindustrygroupindiscussionsthatseek
to:
• Generatealegislativeframeworkofextractiveindustriesthat,inlinewith
recommendationsflowingfromtheNSWChiefScientistReportandWalkerReview,
seekstorebalancetherightsoflandholdersduringlandaccessdiscussions
• Protectprimeagriculturallandsandexistinglandholderpropertyrightsthrough
policyandlegislativeinstrumentssuchasthestrategicregionallandusepolicy,a
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requirementforanAgriculturalImpactStatementswhereaReviewof
EnvironmentalFactorsisrequiredandtheactivityimpactsonagriculturalresources
orindustries
Ensurethatlandholderscircumstancesareconsideredinthedevelopmentof
Governmentguidelinesforlandaccess
Assistlandholderswiththeestimationofcompensationpaymentsfortheprovision
oflandaccesstoextractiveindustries.
ProvideimprovedtransparencyinCSG/Miningpostapprovalreportingprocesses
andindependentauditsthatwillassistDepartmentalcomplianceandcommunity
accesstoinformation
FilterconcernsbacktoGovernmentplanningandapprovalorganisationsregarding
considerationofagriculturalimpacts
Duringourdiscussionstoimproveregulation,reporting,monitoringandcompliance
associatedwithdevelopmentactivitiesithasbecomeabundantlyclearthattherearemajor
problemswiththecurrentState-basedEIS(EnvironmentalImpactStatement)process.The
FederalApprovalprocesseswhicharecompletedinadditiontotheEIS,throughtheIESC,
areseentoprovideextrascientificrigourtothedevelopmentapprovalsprocess,whichif
notifplacewouldhaveresultedinthe‘unfettered’approvalofextractiveactivities.Whileit
remainstobeseenwhethertheseFederalconditionswillhalttheirreversibleimpactsto
landandwaterresources,theseconditionshighlightthe‘impactgaps’thatarenotcurrently
beingconsideredundertheStatebasedprocesses.
ThelackofconfidenceinStateapprovalsappearstoexistonbothsideswithproponents,
communityinterestgroupsandindustrypeakbodiescommissioningexpertreportsto
justifyorcontestfindingsofEISdevelopmentproposals.Thisresultsinhighlevelsof
expenditurebybothpartiesandongoingdistrustinthedecisionmakingprocess.Cotton
AustraliabelievesthatsignificantreformstotheEISprocessarewarrantedandwouldbe
highlysupportiveofanoverhauloftheassessmentprocessaspartofanyfuturelargecoal
mineorCSGreview.
CottonAustraliawishestoexpressthatweholdconcernsovertheNSWgatewayapprovals
processandwouldrecommend‘closingtheloop’withintheapprovalsframework.Wesee
thatthiscouldbeachievedviaFederalengagementthroughenablingtheIESCtoconsider
whethertheiradvicehasbeentakenintoaccountbytheminingproponentwithinboththe
StateandFederalapprovalprocess.Oneexampleofwherethiswilloccurisobservedinthe
caseoftheWatermarkcoalprojectwhereMinisterHunthascommittedtoreferringthe
WaterManagementPlantotheIESCforconsiderationfollowingsubmissionbythe
proponent.DevelopmentofaWaterManagementPlanwithstagedwatertriggerswasa
conditionofaapprovalontheWatermarkprojectasrecommendbyadvicefromtheIESC.
CottonAustraliahasbeenactivelyinvolvedinmakingsubmissionsregardingthe‘onestop
shop’reformagendathatisbeingpursuedbytheAustralianGovernment.CottonAustralia
isingeneralsupportiveofthisapproach,asitreducesunnecessaryduplicationfromthe
approvalsprocessensuringthatcurrentStatebasedpoliciesandregulationarerecognised
withinthedevelopmentapprovalsprocess.However,itisourpositionthatinthe
determinationofaprojectapproval,itisthescientificunderstandinganddatathatshould
ultimatelybethemeasureunderwhichaprojectisassessedtoevaluateitslikelyimpact.
Withinthe‘onestopshop’reformswearesupportiveofanapprovalsbasedprocedure
wheretheCommonwealthdecisionmakerwillretainthepowerundertheEPBCActtoadd
orvarytheconditionsofapprovalinparticularcircumstances.Thisprovidesamechanism
wherebytheCommonwealthisabletoapplyconditionsofapprovaltoprotectmattersof
nationalenvironmentalsignificancesuchasawaterresource.Wearefirmlycommittedto
theFederalDepartmentandMinistermaintainingtherightofapprovalunderthewater
triggerwithnodevolvementofthislegislativeinstrumenttothestates.
Recommendations
1. CAsupportstheCommonwealthdecisionmakerretainingthepowerunderthe
EPBCActtoaddorvarytheconditionsofapprovalincludingnodissolutionof
the‘watertrigger’theStateauthorities
2. CArecommends‘closingtheloop’withintheapprovalsframeworkthrough
enablingtheIESCtoconsiderwhethertheiradvicehasbeentakenintoaccount
bytheminingproponentwithinboththeStateandFederalapprovalprocess
3. CAsupportsanyoverhauloftheEISapprovalprocessthatwillengender
greatertrustandsupportofdevelopmentapprovalprocesses
4. CAishighlysupportiveofallregulatoryarrangementsthatprotecttheland
andwaterrightsofourgrowers,enablelandaccessarrangementsthatarefair,
equitableandprovidecompensationforgrowersinrecognitionoftheimpact
ofextractiveindustriesondaytodaymanagementoffarmingoperations
Environmentalprotection
Cottongins-dust
CottonAustraliahasbecomeawareofexamplesofwhereenvironmentalregulationsappear
tolacktheflexibilityrequiredforlocalconditions.Onesuchexampleinvolvestherules
arounddustemissionscomingfromcottongins.Ginsarefirststageprocessing
infrastructurewhichseparatescottonlintfromseed.Theyexistacrossregionalcotton
growingareasinAustralia.
Oneofthereasonsforginningistoremovedirt(dust)fromcottonlint.Inmanygins,this
dustisdischargedthroughdevicescalledcyclones.
InNSW,pollutionlicensingrequiresdustpollutiontobemeasuredateachpointsource,in
thiscaseeachcyclone(andaginhasmany).
Theproblemisthatthelicensingrequirementscannottakeintoaccounttheaveragedust
emissionfromallthecyclones.So,ifonecyclonehasahighreading,andallothersare
belowthemaximumtheginisnotcompliant.Thisdoesnotmakesense,asthetotaldust
loadoutoftheginisbelowthelicenserequirements,andtheverynatureoftheginning
processmeanssomecycloneswillhaveahigherdustloadthanothers.
Theunreasonablenatureofthelicencingrequirementsisfurtherhighlightedbythefact
thatagincouldmeetthelicencingrequirementbyblowingmoreairthroughthecyclones,
stillemittingthesametotalamountofdust,butreducingtheconcentration.Thegreater
airflowcanonlybeachievedwithgreaterenergyconsumption,whichisofcourse
completelycounter-productive,butwouldallowagintomeetlicenserequirements.
Afurthersidetothisexampleisthatthealloweddustlimits,whichmaybeentirely
reasonableinacoastalcityenvironment,canbelowerthantheambientdustlevelsinareas
wherecottonginsarelocated.Ruralareaswherewindydaysoftenproduceraisedust,and
thatthedustissimplydirtandplantmatterthatcomesfromthelocalenvironment(onfarm)inthefirstplace.
Gin‘trash’
Formanyyears,CottonAustraliahasworkedhardlookingatwaysgrowersandprocessors
canmoreefficientlymanagetheplantby-productoffirst-stagecottonprocessing(often
referredtoas‘gintrash’),forexamplethroughcomposting.Despitethefactthatitisaplant
product,havinggonethroughfirststageprocessingitisconsideredbygovernment
environmentalregulationstobeharmful‘waste’,triggeringconsiderablelevelsof
regulationandrenderingitunabletobeevencompostedandreturntofarmlegally.Ithas
beenextremelydifficulttoworkthroughthisforwhatisasensibleenvironmentaloutcome.
Bundingoffuelstorages
CottonAustraliaisoftheviewthatcurrentregulationsregardingbundingoffuelstorages
onfarmcouldbereconsidered.Whilstweunderstandtheneedtobundinenvironmentally
sensitiveareassuchasriparianzones,webelievethereshouldbenoneedforgrowersto
bundwhentheirstoragesareatreasonabledistance(e.g.morethan200m)froma
watercourse.Growerswouldneedtoacceptresponsibilitytocleanupafteranyspills,
includingsoiltreatment.
Accesstotechnologiesandchemicals
Technologies–geneticallymodified(GM)products
State-basedmoratoriacreateuncertaintyinagriculturalbiotechnologyinAustraliaand
underminetheregulationofgeneticallymodifiedcrops.CottonAustraliaadvocatesfor
sciencebasedregulationthatiscommensuratewithriskandisaccommodatingoffuture
biotechnologies.
ToattractinternationalinvestmentinAustralianagriculture,itisoftheupmostimportance
thattheAustralianregulatorysystemforgenetechnologyremainsscience-based,
transparent,predictableandindependentfrompoliticalinfluence.Thecurrentgene
technologyregulatorysysteminAustraliaisalreadystringentincomparisonwithsome
overseasregulatorsandthisburdenisexacerbatedbyinconsistentmarketinterventionsby
stategovernments.
TheapprovalprocessforGMcropscouldbegreatlyimprovedbyimplementationofa
nationallyconsistentschemeforregulationoftransgeniccrops,whichiscommensurate
withriskandprovidesatransparentandpredictablepath-to-market.Astreamlined
regulatorysystemmayincreaseconfidenceandthusinvestmentintheAustralian
agriculturalspace.
Thereisstrongevidenceforincreasedproductivityattributedtoadoptionnewtechnologies
suchasgenetechnology.TheAustraliancottonindustry,forexample,hasseenhuge
advancementininternationallycompetitivenessandenvironmentalsustainabilitythrough
theadoptionoftransgeniccottonvarietiescontaininginsecticidaltraits.
ContrarytotheEuropeanUnion,TheUnitedStatesofAmericaappearstohavearelatively
transparentandpredictableregulatorysystemforgenetechnologies.However,Cotton
Australiawouldliketohighlighttheimportanceofindustryconsultationinstewarding
genetechnologiespost-registration.FortheAustraliancottonindustry,collaboration
betweengenetechnologyprovidersandindustrygroupshaveensuredthelongevityofgene
technologyinAustralia,contrarytocompromisedefficacyforgenetechnologyintheUnited
StatesofAmerica.
Inconsideringnewapproachestogenetechnologyregulators,theabilityofcurrent
regulatorysystemstodealwithfuturebiotechnologiesshouldbeconsidered,whereby
transgenicplantmaterialmaybetechnicallyindistinguishablefromplantsbredusing
conventionalbreedingtechniques.
Agandvetchemicals
CottonAustraliasupportsarisk-basedapproachtoeffectivelyalignregulatoryeffortwith
riskforagriculturalchemicals.
Valuemaybegainedfromarisk-basedframeworkthatempowerstheAustralianPesticides
andVeterinaryMedicinesAuthority(APVMA)tofocusresourcesonassessmentand
registrationofproductsposinggreaterrisk,suchasthoseinteractingbetweenAustralian
naturalandagriculturallandscapes.Assuch,developmentoftheCentreofExcellencefor
BiosecurityRiskAnalysis(CEBRA)risk-assessmenttoolandself-regulationofproductsof
lowregulatoryriskissupported.Otherinitiativessuchascropgrouping,contestable
provisionsofassessmentservicesandstreamliningimportandexportregulationisalso
supportedtobetterstreamlinetheregulatoryframework.
CottonAustraliasupportsarisk-basedapproachforutilisationofoverseasregulatory
decisionshowever,recommendsconsiderationofprovisionstoallowfinaldecisionmaking
powertoresidewiththeAPVMA.Assuch,CottonAustraliastronglyrecommendsthatthe
decisionsofinternationalregulatorsshouldnotbeusedasthesolejustificationfor
registeringorcancellingaproduct/activeingredientfortheAustralianmarket.
Whiletheremaybescopeforutilisationofinternationaldecisionswhereexposureand
environmentalrisksareidenticaltothoseinoverseasjurisdictions,CottonAustralia
supportsprovisionstotransferfinaldecisionmakingpowertotheAPVMA.Thismaybe
achievedthroughprovisionsthatallowthesupplyofinformationtoindependentlysatisfy
theAPVMAofrelevantmattersafteraproductisregisteredviatrustedinternational
regulatorybodies.Thismaybeoneofmanystrategiesthatwoulddeliverregulatory
efficiencieswhilstprotectingAustralianagriculturefromconsequencesofpost-approval
changestoregistrationmadebyoverseasregulators.
Forunprotectedcroppingsituations,riskscannotbeextrapolatedfrominternational
examplestotheAustraliannaturalandagriculturallandscapes.CottonAustraliastrongly
recommendsexclusionofunprotectedcroppingagriculturalchemicalsfromautomatic
acceptanceofoverseasdecisions.
Recommendations
1. Considerarisk-basedapproachforregulationofagriculturalandveterinary
chemicals.
2. Considerrisk-basedutilisationofoverseasregulatorydecisionsprovidedthat
finaldecisionmakingpowerresideswiththeAPVMA.
3. Utilisationofregulatorydecisionsshouldnotbeconsideredforagricultural
chemicalsappliedtounprotectedcroppingsituations.
Water
CottonAustraliareferstheProductivityCommissiontothesubmissionmadebytheNSW
IrrigatorsCouncil,whichhasdetailednumerousexamplesofunnecessaryregulatory
burdenintheareaofwatermanagement.Inparticularthesubmissionpointstoissueswith
theACCCWaterChargeRules,theHarperReviewrecommendationforanewnational
pricingandaccessregulator,BureauofMeteorologyinformationreportingrequirements
andAustralianwatermarkets.CottonAustraliastronglyendorsesthesecomments.
TheMurray-DarlingBasinAuthority
TheNSWICsubmissionalsofocusesontheMurray-DarlingBasinAuthority’srequirement
forBasinStatestosubmitWaterResourcePlansforeachwaterresourcearea.Cotton
Australiabelievesthatthisisoneexcellentexampleofregulatoryoverlap.However,Cotton
AustraliaalsobelievesthatthewholeFederalGovernmentapproachtotheMurray-Darling
BasinPlanandtheassociatedFederalWaterActislargelyoneofunnecessaryregulatory
overlap,andisurgentlyinneedofafullreview.
CottonAustraliaacknowledgesthatwhentheFederalGovernmentdecidedin2007totake
averyactiveroleinthemanagementoftheBasin’swaterresources,itwasnotatallclear
howthisrolewouldfunction.
TheoriginalActgavetheCommonwealthawideraftofplanningandimplementation
powers,andwhileitwasalwaystheintentionoftheCommonwealthtoincreasetheamount
ofwateravailablefortheenvironment,themechanismhadnotbeendetermined.
However,withthedecisionbytheCommonwealthin2007/08topurchaseoracquirewater
entitlementsatmarketprice,fromwillingsellers,muchofthesubsequentresource
intensiveeffortindevelopingtheBasinPlan,requiringtheproductionofWaterResource
Plansdidnothavetooccur.
TheCommonwealth,nolongerneededtorelyonitsexternaltreatypowers,andcouldhave
simplytakenthepositionthatitheldconcernsfortheenvironmentandintendedtohold
waterentitlementlicences,andwouldbemakingthewateravailabletotheenvironment
underthemanagementoftheCommonwealthEnvironmentalWaterHolder(CEWH).
TheCEWHcouldhavethenbeenheldresponsibletodevelopitsenvironmentalwaterplans,
andtoimplementthem.
AsitstandsthereissignificantduplicationbetweentheAuthorityandtheCEWHinthearea
ofenvironmentalwaterplanningandimplementation.
InadditionthePlanrequirestheStates,whoallalreadyhaveinplacefirstgenerationWater
SharingPlansortheirequivalents,toproduceWaterResourcePlans(WRPs).Itappears
thattheprimarypurposeoftheseWRPsistoprovidetheCommonwealthwithcomfortthat
theirwaterentitlementswillnotbeerodedovertime.
However,thisconcernissharedbyallentitlementholders,andwithalltheCommonwealth
environmentalwaterheldasentitlements,itdoesnotseemunreasonablethatthe
Commonwealthshouldhavebeenpreparedtobetreatedinthesamewayasallother
entitlementholders,withthesamerightstoengageintheStateWaterSharingPlan
processes.
WhileitmaybetoosimplistictosaythattheCommonwealthhadnoneedtoundertakethe
extensiveworktheAuthorityhasdoneinestablishingSustainableDiversionLimits(SDLs)
analternativeapproachcouldhavesimplybeenfortheCommonwealthtoundertakea
processtoidentifyenvironmentaltargetsandthencommencedanentitlementacquisition
process.
Instead,theapproachhascreatedbyState/Commonwealthduplication(WSP/WRP)and
CommonwealthduplicationbetweentheAuthorityandtheCEWH.
AfurtherexampleofduplicationwithintheAuthorityistheRiverOperationsrolewhere
thereappearstobesignificantduplicationbetweentheAuthority(thelegaloperator)and
NSWWaterwhichischargedwiththeactualoperation.CottonAustraliacontendsthatthis
duplicationiscostingCommonwealthandStateGovernmentstensofmillionsperyear.
SomeofthisisbeingrecoupedfromirrigatorsthroughStatewatermanagementcharges,
andthereappearstobearecurringthreatfromtheCommonwealthGovernmentto
introduceMDBAchargesonirrigators,somethingthatCottonAustraliavehemently
opposes.
Recommendations
1. CottonAustraliastronglysupportstheissuesandrecommendationsstatedby
theNSWIrrigatorsCouncilintheirsubmission,whichaddressissueswiththe
ACCCWaterChargeRules,theHarperReviewrecommendationforanew
nationalpricingandaccessregulator,BureauofMeteorologyinformation
reportingrequirementsandAustralianwatermarkets.
2. UndertakeafullreviewoftheentireFederalGovernmentapproachtothe
Murray-DarlingBasinPlanandtheassociatedFederalWaterAct
Transport
Cottongrowersareoftenfrustratedwiththehighdegreeofregulationaroundtransport,
particularlythemovementofconditionalregisterequipmentonlocalroads.
Itisnotuncommonforfarmerstohavehalfadozenmoreconditionalregisteredvehicles
thatmaymakeregular,butshorttripsonlocalroads.
Anextraordinaryeffortisrequiredtoensureallregistrationsarecurrent,andnecessary
permitsforover-dimensionalmovementsareinplace.
Theincreaseduseof“Notices”or“ClassPermits”,whichallowregularactivitiestooccur
withoutspecialpermits,wouldbewelcomed.Currently,therearemanyexampleswhere
thefarmermustapplyforpermitseitheronaper-tripbasisoranannualbasis,andwhen
dueforrenewaltheyareineffectautomaticallyrenewed(expectforthefactthatan
applicationstillhastobemade).
WhileintheorytheadventoftheNationalHeavyVehicleRegulatorismeanttostreamline
transportmovementapprovals,andthisishappeningtosomedegreewithinterstate
movements,ithasalsoledtoanincreaselocalgovernmentsrequiringtheissuingofpermits
forlocalroadmovements,astheybecomemoreawareoftheirroleasroadmanagers.
Whilesomeroadmanagersarebetterthanothers,thefactremainsthattheyhave28days
torespondtoapplicationsmadethroughtheNHVR,andthisdoesrepresentanunjustified
burdenonroadusers.
Recommendations
1. Thatthegovernmentsconsidertheabilitytohaveablanketregistrationforall
vehiclesownedbyafarmbusiness.Thiswouldsignificantlyreducethe
amountofred-tape,withnoimpactonroadusersafety.
2. Considerallowingincreaseduseof“Notices”or“ClassPermits”,whichallow
regularactivitiestooccurwithoutspecialpermits.
Biosecurity
CottonAustraliaissupportiveofariskbasedandstreamlinedframeworkforbiosecurity.
Assuch,CottonAustraliaisgenerallysupportiveofthecurrentarrangementsfor
biosecurityandwillcontinuetoworkwiththeNationalFarmersFederationtoprovide
adviceontheregulationsbeingdevelopedunderthenewBiosecurityAct2015.
Other
Employment
Australianbusinessesfaceadistinctdisadvantageincompetingwithinternational
competitorswhenitcomestolabourinputcosts.Australiahasthehighestminimumwage
intheOECD,andsomeofthehighestlabourcostsintheworld.Thereforeflexibleregulation
andstreamlinedandefficientprocessesinplacetomanageworkplacerelationsarehighly
importantintheAustraliancontext.
WesupporttheNationalFarmers’Federationsassertionsthatsmallbusinesses,including
on-farmandthroughoutthesupplychain,faceaminefieldwhenitcomestoemployingstaff,
throughacomplexweboffederalemployment,safety,migrationandtaxationlaws,
supplementedbyStatelawsonarangeofissuesfromtrainingtoworkers’compensation.
Inaddition,theNFF’scommentthatthefocusofgovernmentandregulatorshasshiftedto
passingemployerliabilityacrossthesupplychainandthatinthesmallorfamilybusiness
context,many‘bestpractice’idealsgetverydifficulttoachievethroughlackofresources
andtime.
Payrolltaxandsuperannuation
Whilstnotstrictlyaregulatory‘burden’/duplicationissueandismorerelevanttothe
Government’sTaxReform,ourexperienceisthatpayrolltaxisoneofthebiggestbusiness
burdensforfarmbusinesses,impactingongrowthandcompetitiveness.Thecurrent
payrolltaxarrangementscreatedistortionsbyreducingtheincentivetohiremoreworkers,
creatingabarriertobusinessexpansion,andimpactingonlabourintensiveindustries.
Agriculturemustcompeteinternationallywithcountrieswithsubstantiallylowerwage
rates.Thepayrolltaxexacerbatesthisissueforfarmsandsmallbusinessesinruralareas.
Keytotheseissuesarethethresholdlimitsandhowtheyimpactonagriculturalbusinesses
–ensuringappropriatelyhighthresholdlimitswouldprovidesubstantialbenefitsto
agriculturalsmallbusinesseswhohavelargenumbersofemployeesinvolvedinthe
operationoftheenterprise.
Thelowthresholdforsuperannuationplacesacostlyandtimeconsumingburdenon
growerstopaysuperannuationforemployeesthatremainonthefarmforashortperiodof
time.
Workplacerelations
WestronglyencouragethePCtorefertothedetailedworkthattheNFFhasincludedin
theirsubmissiontotablespecificexamplesof“redtape”throughouttheFairWorkAct
2009.
Workplacehealthandsafety
TheAustraliacottonindustrytakesworkplacehealthandsafetyveryseriously.Asan
industrywehaveconsistentlytriedtofosterasafeworkculture,andhavemadeWorkplace
HealthandSafetyafocalpointofourindustryBestManagementPracticeprogram,myBMP.
However,thereareanumberofexampleswhereRegulatoryComplianceappearstodo
nothingforsafety,butinvolvessubstantialextraregulatoryburden.
TheNationalFarmers’FederationPCsubmissionexplainsthesignificantissuesthatexist
withintheWorkHealthandSafetyAct2011(WHSAct)andassociatedmaterial,which
togethercompriseanAct,Regulations,23CodesofPracticeand46GuidanceMaterials.
KeypointsworthhighlightingthatCottonAustraliaagreewithare:
•
•
•
ThatthevariousdocumentsassociatedwiththeWHSAct,andtheadditional29‘fact’
or‘information’sheetsprovidedtoexplainhowtocomplywiththeregulatory
regime,areusefulforsafetymanagementprofessionals,butforthesmallbusiness
personaresimplyanotherthingto‘stayontopof’.Andyettheregulatoryregime
requires,aspartoftheworkhealthandsafetyduties,thatallofficersinabusinessor
undertakingmaintainan‘uptodateknowledge’.
ThecurrentsettingsintheWHSActareinmanycases,whollydisproportionateto
thenatureoftheoffence.
TheregulationstotheWHSActshouldbereviewedtoremoveduplicationor
unnecessaryregulation.Reducingthelevelofprescriptioninmanycaseswillhave
nonegativeeffectonhealthandsafetyofworkersbutwillmakecomplyingwiththe
WHSActeasier.TheNFFciteexamplesrelatingtotraining,theappointmentofa
HealthandSafetyRepresentatives.
AnumberofexamplesthatCottonAustraliawishtohighlighttotheProductivity
Commissionarediscussedbelow.
FireExtinguishers
Fireextinguishersneedtobeinspectedeverysixmonths.Thiswouldappeartobea
significantlyover-frequentinspectioncycle.Notonlydoesthisimposeanunreasonable
management,recordkeeping,andfinancialimpact,inmanyruralandregionalareasitis
entirelyimpracticaltogetqualifiedinspectorson-site.
ThesituationismarginallybetterinNSWwhereitispossibleforthefarmertobecome
qualifiedtocarryoutinspections,butinQueenslandallinspectorsmustbetrainedand
licensedwiththeQueenslandBuildingServiceAuthority(QLDBSA).
Thissimpleinspectionrequiresthereadingofthepressuregauge,givingthecylindera
shake,checkingthelockingpiniscorrectlyinplaceandcheckingthedischargehoseisnot
blocked.
ForkliftLicences
Undertheharmonisednationalworkplacehealthandsafetylaws,theonlypieceof
equipmentfoundonmostfarmsthatrequiresaspecificlicencetooperateisaforklift.
CottonAustraliaunderstandsforkliftscanoperateinhighriskenvironmentssuchas
warehouses,andspecialtrainingmaybejustified.
However,inafarmenvironment,CottonAustraliacontendsthatthesameobligationto
ensuremachineryoperatorsarecompetentlytrainedshouldapplyequallytotheoperator
ofaforklift,astotheoperatorofafront-endloader.Theobligationshouldbeonthe
employertoensureoperatorsarecompetentlytrained.
WhileCottonAustraliaisnotinapositiontodefinitelysayhowthattrainingshouldoccur,it
certainlycansaythatinmostsituationstrainingaforkliftoperatorforon-farmworkshould
notrequireafivedaycourse,notonlyincurringawholerangeofadditionalcosts,butalso
requiringthetraineetobeabsentfromotherdutiesduringthatperiod.
Test&TagElectricalCordsandDevices
CottonAustraliaunderstandsthatTestingandTaggingofelectricalcordsandtoolsisnot
requiredinQueenslandiftheelectricalswitchboardbeingusedisfittedwithResidual
CurrentDevices.CottonAustraliarecommendsthatthisadoptedbyotherStates.
Recommendation
1. Createaseparate,simplerworkhealthandsafetyregimeforsmallbusiness
andworkwithindustrytoensuretheysuitagriculturalcontexts
Migration
Despitethestrongdesiretoemploylocalworkers,thefactisthatinmanycottongrowing
areasfarmssimplycannotsourcelocalworkerstofillessentialonfarmroles,despite
relativelygoodincentives.Migrationprogramsthereforeprovideanessentialsourceof
labourformanygrowers,particularlythroughtheWorkingHolidayVisaschemesandtoan
extent457visas.
Growersencounteranumberofregulatoryissueswhenattemptingtosourceworkers
throughmigrationpathways.Acommonsituationiswhereanemployerhasapromising,
butunqualifiedbackpackerwhichtheywishtokeepon,yetgiventherulesaround
sponsorship,thereisoftennopathwayforworkerson417visastotransitiontoa457visa.
Withoutanagriculture-relateddegree,backpackersona417donotmeettherequirements
tobesponsoredbyafarmemployer.
Theabilityoffarmbusinessestofillskilledlabourshortageswiththeuseofoverseas
workersonthe457visaprogramislimitedbyitsrelianceontheANZSCOcodingsystem,
whichwasneverintendedtodefinecurrentindustryskillsneedsexhaustively.Manyskilled
agriculturaloccupationsaresimplynotontheConsolidatedSkilledOccupationsList(CSOL)
whichusetodetermineeligibilityfor457visas.Forexample,afarmsupervisorisaskilled
job,butsitsbetweentheANZSCOcodesfor“Farmworker”(lowskilled)and“Cotton
farmer”(degreequalified).Suchapersonmaybevariouslyemployedas,anddescribe
themselvesas“leadinghand”,“overseer”,“assistantmanager”,yetalldomuchthesamejob
andrequireahighlevelofskills.Theyareunlikelytobedegreequalified–andnotbeing
listedontheCSOLmeanstheyareprimafacieineligiblefora457visa.Nationaldataclearly
showsthattheproportionof457visasgrantedtotheagriculturalsectorisverylow.
Changingthe457visaprogramsothattheCSOLcanbevariedtoreflectnewskilled
occupationsisvital.Thisonechangewouldremovethelargestsinglebarriertothe457visa
programfacedbytheagriculturesectorovernight.Analternativetothisistonegotiatea
LabourAgreementwithgovernmentwhichisahighlyonerousandexpensiveoption.
Recommendations:
1. Changethe457visaprogrambyallowingtheCSOLtobevariedtoreflectnew
skilledoccupations
2. ConsiderhowtheANZSCOcodescanbeupdatedtoreflectmodernagricultural
occupations.
Energy
Energymarketandprices
WearepleasedtoseethatthePCacknowledgestheimpactofregulationonescalating
electricitycostsinAustraliaandstronglyagreeswiththestatement,“poorregulatory
frameworksgoverningelectricitymarketshavecontributedtosharp,andinsomecases
unnecessary,increasesinenergycosts”.CottonAustraliahasbeenworkingonthisissuefor
anumberofyearsandstillseesaneedforchangeinthenationalenergyregulatory
frameworkandsupportingpolicies.
Irrigatorshavefacedelectricitybillpricerisesofupto300%since2009andweremain
veryconcernedabouttheimpactofincreasingelectricitypricesonfarmprofitability.
CAhasamajoroverarchingconcerninrelationtothecurrentgovernancearrangements
particularlythepropose–responsemodel.ThecurrentarrangementsundertheNational
ElectricityMarketestablishesthatnetworkbusinessesproposetheirrevenueandcostsfor
thedeterminationperiodwiththeregulatoronlyabletoeitheraccepttheproposalorreject
theproposalwithsufficientexplanation.Clearlythismodelputsthenetworksonthefront
foot.ThisisakeypillarwhichrestrictstheAustralianEnergyRegulator’s(AER)operations
andabilitytoacteffectivelyasaregulator.CAbelievethatwithoutsufficientchangestothe
waysnetworkssubmittheirproposaltotheregulatortherewillbealimitedabilityofthe
regulatortointroducedecisionsthatareinthelongterminterestsofconsumers.
CottonAustraliaremainshighlyconcernedregardingtheabilityoftheAERtoredresswell
recognised failings of previous regulatory arrangements. This is particularly clear in
relationtotheRAB,andhasbeenacknowledgedbytheAER.
‘Clause11.56.5oftheTransitionalRulesoutlinesthatweareexcludedfromconductinganex
post review of capital expenditure incurred in the 2009–14 regulatory control period. This
meanswearenotpermittedtoadjusttheopeningRABforanyinefficientcapex(asassessedto
reasonably reflect the capex criteria and in a manner consistent with the capex objectives)
duringthe2009–14period.’
CottonAustraliaandnodoubtthebroadercommunitywouldliketoseeanadjustmentof
valuationofnetworkassetstoensurethatwe,asconsumers,arenotandwillnotcontinue
topayforpoorinvestmentdecisionsbythenetworkcompanies.
CottonAustraliacontinuestobeconcernedinrelationtothefundingmechanismswithin
theexistinggovernanceframework.Undercurrentarrangementsnetworkscanclaimback
costsfromconsumersforthedevelopmentoftheirnetworkdeterminationproposals.We
believethatsucharrangementscontributetoanunevenplayingfieldwheretheAERhasa
setlevelofbudgetandresourcesandassuchhasaninabilitytoallocateinfiniteresources
tochallengeclaimsmadebynetworksunderthepropose–respondmodel.
TheHarperCompetitionPolicyReviewadvocatesforthegenerationofasingleAccessand
PricingRegulator(APR).CAbelievesthatpriortothecreationoftheproposedAPRthe
Governmentmustmakeastrongcaseforitscreation,demonstratingtruevalueto
consumersandclearlycommunicateandoutlineitsobligationsforregulatoryoversight.We
areconcernedthataconsolidatedregulatormaybeexposedtoareductioninresources
whichwouldfurtherexacerbatethechallengesfacedbytheregulatortoeffectdecisions
thatareinthelongterminterestsofconsumers.
Theseissuesrepresentonlyasmallinsightintosomeoftheoverarchingregulatoryissues
thatCAhasidentifiedinitsinvestigationofGovernanceandregulatorystructureswithin
theNationalElectricityMarkets.Forfurtherdetailonidentifiedissuespleaserefertoour
submissionsmadetotheReviewofGovernanceArrangementsforAustralianEnergyMarkets.
Recommendations:
1. CArecommendsthatthepropose–responsemodelbeoverhauledtoallowthe
regulatortodeliverdeterminationsthatareinlinewiththelongterm
interestsofconsumers
2. CArecommendsarulechangeundertheNationalElectricityRulestoallowthe
regulatortoredressinefficientinvestinassetinfrastructurebythenetwork
companies
3. CAsupportsarulechangetolimittheabilityofthenetworkstoclaimback
costsincurredintheregulatoryprocessfromconsumers
4. CAdoesnotsupportthecreationofasingleaccessandpricingregulator
withoutdemonstrationoftruevaluethatwillleadtodecisionsinthelongterm
interestsofconsumers.
5. CAsupportstheintroductionoffoodandfibretariffsbytheAEMC(andleadby
theCOAGEnergyCouncil)thataddressthespecificelectricityneedsand
requirementsoftheagriculturalsector
Domesticregulationandtherequirementsofimportingcountries
TheIssuesPaperquestionswhetherAustralia’sfarmexportcompetitivenesscouldbe
improvedbyminimisingduplicationbetweendomesticregulationandtherequirementsof
importingcountries.Wewishtohighlightthattheoreticallythismightbeidealbutin
practicemaybedifficulttoincludethedifferentrequirementsforindividualimporting
countriesandmayinfact,complicatetheprocess.WhilstourselvesandourAustralian
CottonShippers’Associationcolleaguesarenotopposedtothisconcept,wewouldsuggest
carefulconsiderationofthesame.
Conclusion
CottonAustraliaispleasedthattheProductivityCommissionisundertakingthisreview.
Giventhepre-existingbodyofworkontheregulatoryburdenonagriculturalbusinesses
frompreviousinquiriesandreviewsundertaken,wehopetoseethisreviewdrive
substantialimprovementsthatgettotheheartoftheredtapeissuesthatarefeltinthe
agriculture.Webelievethatkeytothisisundertakingacomprehensive“rootandbranch”
reviewofallregulation,involvingconsultationwithindustryandbusinesses.Cotton
AustraliabelievesthataspartofthisparticularInquiry,adetailedexaminationofthe
impactofregulationon10farmbusinessesacrossAustraliashouldbeundertaken.Weare
confidentthatthedevelopmentofsuchcasestudieswouldcrystallizetheissuesand
priorityareasforattention,andprovideafoundationforundertakingimprovements.
WethanktheCommissionforthisconsultationopportunityandwouldwelcomefurther
consultationopportunitiestodiscussthepointsraisedinthissubmission.