A Response to the Productivity Commission Draft Report on the Regulation of Agriculture

This submission was made for the Institute of Public Affairs with Chris Berg, Mikayla Novak and Daniel Wild to the Productivity Commission inquiry into the Regulation of Agriculture (Download the PDF).

The Institute of Public Affairs (IPA) welcomes this Productivity Commission Draft report (henceforth the ‘Draft’) on the Regulation of Agriculture and encourages the focus on the impact of regulation and red tape on this primary industry.

While Australian agricultural production is expected to rise to over $60 billion for the first time this financial year, productivity and competitiveness headwinds remain. With around two thirds of Australia’s agricultural production exported, our agribusinesses compete in a global game of productivity and quality, with farmers often taking world prices on commodity markets.

The role of Australian governments is to create an institutional and regulatory environment conducive to productivity improvements, innovation, and economic growth. Governments must protect private property rights and facilitate the free movement of capital and goods.

To achieve this involves returning to the basic economics of regulatory design: do the benefits of intervention outweigh the costs? The Draft is a welcome return to this principle across a wide variety of areas. As such, the Institute of Public Affairs welcomes, in particular:

  • Recommending that governments search for market-based implementation of environmental policy objectives, particularly where governments purchase environmental services off landholders.
  • Reform of inconsistent, contradictory and overlapping land use and native vegetation legislation preventing farmers from flexibility and efficiently using their land.
  • Recommending reform of transport regulation, including both the complex crossjurisdictional maze of licenses, permits and restricted supply heavy vehicles, and the anti-competitive cabotage system for coastal shipping.
  • Relaxing restrictions on foreign investment flows by raising the thresholds of the Foreign Investment Review Board (FIRB). However, there is much more to be done.

The IPA also recommends abolishing section 487 of the Environmental Protection and Biodiversity Conservation Act which enables green activist groups to insert themselves within the environmental approval process. Section 487 has provided no clear benefit to the environment while simultaneously imposing project delays through vexatious litigation. Abolishing section 487 is a no regrets policy: the environment won’t be worsened while landholders’ are less likely to be met with costly project delays.

Proceeding to repeal the above examples of red tape will help to unleash part of the $176 billion in foregone Australian economic output due to red tape each year.

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