13 December 2002

‘Of droughts and flooding rains’: Policy on rural Australia

Bill Pritchard, TheUniversity of Sydney

Debate over conditions in rural Australia has been an ongoing theme in national politics in the Howard years. In the Government’s first two terms, this debate focused on issues of economic rationalism and Hansonism. Latterly attention has turned to the environmental sustainability of inland agriculture, in the context of water policy reform and the drought. Common throughout this period has been a tendency for policy-makers and pundits to paint simplified views of what ails ‘the bush’, and where its salvation lies. For the Productivity Commission, for example in its 1998 report on National Competition Policy, the invisible hand of the market will solve all. Pauline Hanson and her acolytes seemed to suggest that immigrants, Aborigines and urban chardonnay-swilling ‘do-gooders’ were the root cause of the problem. More recently, broadcaster Alan Jones has made a rambunctious plea for ‘turning the rivers inland’, perhaps funded by the full sale of Telstra, as the salvation of declining rural communities. If nothing else, the marketplace of ideas for rural Australia is a raucous cacophony of widely competing visions, as bold as they are single-minded.

However the future of rural Australia warrants more thoughtful consideration than is provided by some of the more vocal contributors to these debates. Notwithstanding the severity of the current drought, rural Australia is not uniformly in decline. Different regions face different drivers of economic and social change. And while politicians don Akubra and Driza-Bone to get their messages about rural Australia across to an urban audience, these items are the talisman of a shrinking share of the rural population.

Co-edited by the current author, the book Land of Discontent (eds Pritchard & McManus 2000) appeared in 2000 with the explicit intention of intervening in debates popularised but not resolved following the emergence and decline of One Nation. A key theme of the book was that the processes of change in rural and regional Australia were not uniquely favourable to Pauline Hanson’s right wing popularism. This is exemplified by the success of rural Independents at both Commonwealth and state levels, and of the ALP in winning rural constituencies at the recent Victorian and Queensland elections. Evidently, people in rural and regional Australia concerned about the limitations of ‘market solutions’ for their industries and communities need not go down the path of Hansonite xenophobia. As is more generally the case in contemporary Australia, a plurality of living conditions and opinions is challenging traditional certainties, with the result that new political, economic, and community alliances are being forged.

Two recent books take different approaches to Land of Discontent in documenting the changing social, environmental, cultural and economic landscapes outside Australia’s metropolises. Using the concept of globalisation as a touchstone, A Future for Regional Australia: Escaping Global Misfortune (Gray & Lawrence 2001) makes extensive use of the authors’ own primary material to identify and document the varied manifestations of change and uncertainty. Globalisation and neo-liberalism are seen as producing new layers of vulnerability for people living in ‘the bush’:

Regional Australians experience global misfortune in two ways. They are subject to economic and political processes which have global origins—very distant from the influence of even the most powerful Australian institutions … Another misfortune is that impacts are not confined to economic well-being. Global impacts affect all aspects of their lives, including their family and community, and the biophysical environment in which they live and work (Gray & Lawrence 2001, p.4).

While acknowledging the very real strength of these forces, Gray and Lawrence do not wallow in Hanrahan’s complaint that ‘we’ll all be rooned’. The authors assess the potential capacity for people in rural and regional Australia to respond in meaningful ways to the challenges that face them and, while giving caution to agency, identify a range of future pathways.

The application of neo-liberal policies in rural Australia is a two-edged sword.

Rurality Bites (eds Lockie & Bourke 2001) provides a different perspective again to the issues facing rural and regional Australia. Its sub-title (The Social and Environmental Transformation of Rural Australia) deliberately or otherwise neglects to mention the ‘economic’. The book’s four major sub-sections cover debates on rural politics, society, agricultural restructuring, and environmental change. Extensive attention is given to changing rural identities, the burden of government cutbacks in social services, and the transformation of rural cultures. Rurality Bites reveals ‘the bush’ as a place where masculine and productivist mythologies are being recast, amidst ever-widening concern over their internal contradictions.

Despite their different foci, these books have a common interest in seeking to complicate the comfortable, orthodox meta-narratives of what constitutes rural Australia. If it is recognised that ‘the bush’ is a complex entity, it follows that policy formulation must also be multi-dimensional. The underlying motivation of these books is to revisit the key tenets of contemporary thinking about rural policies, and to ask who they benefit or hurt and why. In particular, as it continues to hold such sway over national policy-making, neo-liberalism comes under close scrutiny. As I argued in a chapter in Land of Discontent (Pritchard 2000), the application of neo-liberal policies in rural Australia is a ‘two-edged sword’, involving both domestic economic structures and Australia’s relationship with offshore markets. With this in mind, these two spheres are now considered.

Helping Farmers, Helping Communities?

A key axiom of neo-liberal thinking on rural Australia is that agricultural productivity and efficiency are the foundation stones for other policy outcomes. Primary attention should be given to maintaining the commercial viability of farming, for in its absence there is little hope for rural Australia. This philosophy has appeared in water reform debates, in claims for taxation benefits to farmers, and, most importantly, in debates over micro-economic reform.

At a general level, it is difficult to dispute the notion that rural Australia is advantaged by a productive and efficient farming sector. As the current drought demonstrates, when farmers lose their incomes local businesses also suffer. At the same time, the strength and significance of these effects is not always as powerful as sometimes imagined.

The farm sector does not provide the primary engine of growth in many areas of rural Australia. In the Murray-Darling region of NSW, one of the most important farming belts, agriculture employed just fifteen per cent of the population at the 1996 Census. In the Northern Tablelands of NSW, traditional home to the pastoral squattocracy, agriculture employed just six per cent of the population (Beer et. al. forthcoming). Of course this is not to say that farming is unimportant in these areas—employment data provides just one measure of economic significance—but it does qualify our view of the economic role of farming in regions.

The umbilical cord linking farms with rural communities is not as strong as it once was.

In part, the declining number of people employed in farming in many regions reflects the shake-out of farm enterprises in recent decades. The consensus among analysts is that the number of farms in Australia has been falling by around two per cent per annum. Between 1996 and 2000, the number of Australian farms fell from 115,514, to 103,815. Moreover, the number of large farms (defined as having annual turnover of $500,000 or more) increased by 32 per cent while the number of small farms (with turnover less than $50,000) fell by eighteen per cent. These trends are important for regions since larger farms may have weaker benefits for local economies than smaller ones, as they tend to buy their inputs in bulk from more distant suppliers. There is considerable evidence that the umbilical cord linking farms with their local communities is not as strong as it once was (Beer et. al. forthcoming).

The tractor dealership market provides a case in point. In the Central-West of NSW the number of tractor dealerships fell from 64 in 1981 to 34 in 2001 (Herbert 2002, p. 64). The impact of the decline has fallen on small towns. Along with this rationalisation, tractor dealerships have moved from being sole operators selling multiple models, to larger franchisees linked to major transnational corporations. Increasingly, larger farms purchase machinery from distant suppliers or over the internet, thus by-passing local towns. This may be commercially rational from a farmer’s perspective, but it adds to the weight of social and economic change occurring in rural Australia.

Agricultural Trade Liberalisation: Saviour of Rural Australia?

Agricultural trade liberalisation provides a second component to the claim that an efficient agricultural sector will be a driver of prosperity in rural Australia. Because much of Australia’s agriculture is cost-competitive internationally, reducing trade barriers in key agricultural export markets has become a celebrated national cause. As I have argued previously in The Drawing Board, these claims are subject to little serious political dispute (Pritchard 2001).

This issue also deserves closer attention. On a trip to Tokyo earlier this year I met a Japanese official involved in the current round of WTO negotiations. In the week before our meeting, Australia’s Agriculture Minister, Warren Truss, had launched a stinging rebuke of Japan’s high level of agricultural protection. Raising this subject, the Japanese official responded: ‘Of course I understand why Australia wants to open our markets. That makes perfect commercial sense. But I also think you are playing this card so intently because you’ve deregulated everything in your country, and it’s the last card you have to play’.

Through these off-the-cuff remarks, the situation facing Australia’s rural economy is brought into focus. For decades successive Governments have mooted trade liberalisation as the salvation of rural Australia. Most recently, a bilateral US-Australia Free Trade Agreement (FTA) has been pursued to boost export opportunities for Australian producers. These positions are not without merit—Australian farmers would clearly benefit if they could sell more produce in America—but their implications require qualification. There is reason to conclude that the gain to the Australian economy from freer agricultural trade is smaller than portrayed by its advocates, and there are important distributional issues that are not well understood.

Australia's stance on trade may be noble, but it seems increasingly out of step with reality.

The vast majority of political and media commentary interprets these issues simplistically, through the quasi-moral lens of the free market. It is as if Australia (with its free trade credentials) is riding a white horse, and the protectionist US, EU and Japan, are riding black horses.

To bemoan the wrongs of world agriculture is beside the point. For all of Australia’s massive diplomatic efforts in the seven years of the Uruguay Round (1986–93), the eventual Agreement on Agriculture merely enshrined the status quo. The 2002 US Farm Act, and the 2002 Mid-Term Review of the EU’s Common Agricultural Policy, show no firm resolve whatsoever in respect of agricultural trade liberalisation. Australia’s stance on these issues may be noble, but it seems increasingly out-of-step with the realities of world trade.

Yet the Government and Opposition persist in telling us we need to fight the good fight, and view any occasional, minor, victories through this lens. A case in point is the recent success in overturning US tariffs on lamb. Following the imposition of these tariffs by the Clinton Administration in 1999, Australia and New Zealand took action in the WTO, which in 2001 (following an appeal) found the tariffs to be illegal under international trade law.

When President Clinton announced the imposition of lamb tariffs, politicians and media on both sides of the Tasman interpreted the decision through the simplistic rhetoric of free trade. Prime Minister Howard raised the issue personally with President Clinton, and the supposedly ‘free market’ Agriculture Minister spent $5.6 million to placate affected lamb interests, on the premise that ‘they threw the first punch’. However, inspection of the eventual WTO adjudication shows this ‘good guy’ / ‘bad guy’ interpretation to be a flawed reading of how and why the US tariffs were interpreted as illegal.

The WTO Dispute Settlement Body found the US lamb tariffs were illegal not because they breached any international agreement on acceptable levels of protection for the industry, but because of procedural mistakes made by the US International Trade Commission. Our greatest agricultural trade victory against the US was earned because, metaphorically, they slipped on the pavement and we sued them for falling over. Australia and New Zealand won the case because of the nous of our lawyers, not because of the inherent merits of free trade. As an ironic footnote to the dispute, in the year following the levying of US tariffs, Australian lamb exports to the US rose from $149 million to $184 million. For all the domestic angst over this case, it was a storm in a teacup.

Many of our agricultural success stories are only indirectly related to the trade policy agenda.

Bringing this perspective to the lamb dispute is important because more than any other single event, it telescoped the supposed benefits that could arise from a US-Australia FTA. In any case, the withdrawal of tariffs in 2001 suggests that Australian lamb exporters now face a relatively open US market. With US annual lamb consumption just 1.1 kilograms per capita, having fallen 30 per cent over the 1990s, this is hardly the saviour of Australia’s rural economy.

An assessment of the Realpolitik of world trade suggests Australia’s pursuit of agricultural trade liberalisation is nothing short of chasing a mirage. Our lobbying may mitigate the worst excesses of agricultural protectionism, but it does not hold out a realistic vision for the nation’s agricultural future. Many of Australia’s agricultural success stories of the past decade, such as the wine industry and the rapid expansion of cheese sales to Japan, are only indirectly related to the multilateral trade policy agenda. Accordingly, policies for rural Australia should be constructed on the basis of equity and sustainable development, rather than a neo-liberal wish-list of trade liberalisation.

Rural Australia in the Here and Now

Such is the state of Australian agriculture, and many of the towns and communities that depend on its fortunes, that there is a profound sense of vulnerability in much of rural Australia and especially the inland. This vulnerability is born of many circumstances. Problems of environmental degradation are forcing changes in agricultural practices. Long-term declines in rural terms of trade are squeezing farm incomes. Trends in agricultural production are increasing dependence on large-scale capital investment, with implications for debt and farm size. And service industry restructuring is seeing the flight of businesses from small towns. The National Party’s rhetoric rejoins these issues with an emphatic call to the inventiveness of Australians living in ‘the bush’. John Anderson’s 1999 Regional Australia Summit concluded that the best help for rural Australia was self-help.

Perhaps, however, what rural Australia needs most is an appreciation of its diverse circumstances, set within a national ethic of social justice. As in urban Australia, some regions and industries in rural Australia are facing long-term crisis, and deserve a ‘mate’s hand’ from taxpayers as a whole. Yet with contemporary neo-liberal discourse sceptical of ‘market interventions’, such claims receive scant regard unless the political future of government depends on them. With a penury of frameworks for equity and social justice, the legitimate claims of people and communities in need in rural Australia is cast in terms of the potential from one-off bounties—the benefits to flow from turning the rivers inland, or privatising Telstra, or convincing Americans of the benefits of agricultural free trade. Australians, and rural Australians in particular, deserve better.

REFERENCES

Beer, A., Maude, A. & Pritchard, B. forthcoming, Developing Australia’s Regions, UNSW Press, Kensington.

Gray, I. & Lawrence, G. 2001, A Future for Regional Australia: Escaping Global Misfortune, Cambridge University Press, Melbourne.

Herbert, B. 2002, The Tractor Factor, unpublished B.A. (Hons) thesis, Division of Geography, University of Sydney.

Lockie, S. & Bourke, L. (eds) 2001, Rurality Bites: The Social and Environmental Transformation of Rural Australia, Pluto Press, Annandale.

Pritchard, B. 2000, ‘Negotiating the two-edged sword of agricultural trade liberalisation: trade policy and its protectionist discontents’, Pritchard, B. & McManus, P. (eds) Land of Discontent: The Dynamics of Change in Rural and Regional Australia, UNSW Press, Kensington, pp. 90–104.

Pritchard, B. 2001, ‘On Australia’s Pursuit of Agricultural Free Trade’, The Drawing Board: An Australian Review of Public Affairs, 28 September.

Pritchard, B. & McManus, P. (eds) 2000, Land of Discontent, UNSW Press, Kensington.

Bill Pritchard is Senior Lecturer in Economic Geography at The University of Sydney, with extensive research interests in the areas of rural and regional Australia, agriculture and food.

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