Budget Drop – A Good Start

budget-drop-a-good-start

‘State Budget Securing Future for WA Agriculture Effort’ was the title of Minister McTiernan’s pre-budget press drop last week which I read with interest. I’m still not sure what the heading actually means but the money attached to it got my attention. The tap was back on, I thought, with $131.5m of new money earmarked for ag over the next four years.

Reading on, after it detailed the failures of the past government, the press release finally got to the point of announcing the first serious attempt at turning around a decade of cuts to the Department of Agriculture – now buried inside DPIRD. This is a big deal and a welcome announcement by the Minister.

But a quick review of past budget papers show that the numbers don’t quite add up. The funding really only constitutes around $90m of new money as the remaining $40m simply plugs the gaping hole that this government had built into their own budgets through to 2021. The spin is, it’s all the Barnett Government’s fault, but after three Labor budgets and two years in power, that is a dead horse that no longer requires flogging. The first McGowan Budget in 2017-18 had DIPIRD’s budget seriously hacked down from $179m to $163m??. And last year’s budget took the numbers down even further to $141m in 2021 which makes over $50m in cuts with inflation. So all they have done is filled in the huge hole they have spent the last two years digging.

Unfortunately it’s almost impossible to directly compare the previous DAFWA and the new DPIRD budgets. With the amalgamation of three completely different departments, Agriculture, Fisheries and Regional Development, line-by-line benchmarking of staff numbers and funding is ruled out. But we can do some rough comparisons.

We know that the previous government cut the old Ag Department down from 1500 staff to around 900 but they offset this in part with around $350m in R for R ag projects, plus pumped $220m into mobile phone tower black spot programs and $350m into Ord Stage II. So all in all, they were spending around $110m a year in agriculture related projects as they cut 70 staff or $10M a year off their budget. On balance, they can claim $800m over 8 years of new money; some of it is of questionable value, and the loss of Ag department capacity is a huge negative, but at least we knew where their priorities lay.

This government has spent its first two years re-arranging and re-aligning its new department, and now appear to have stabilised DPIRD at 1590 staff , which includes Fisheries and Regional Development staff. How many are directly related to Ag now is anyone’s guess but I would assume around half.

So a tick to the Minister for finally stopping the staff cuts, but there will be a cost of losing the Ag Dept inside a mega department – and this may take years to play out. Another tick is given for the $20m grains research funding – albeit in the outlying years in forward estimates. Tick for $40m for a water project (even though it was planned by the previous govt), plus $10m for additional biosecurity. And we can’t forget the ALP’s one big ag related election policy – a big self tick for the $1m regional food hub near Bunbury.

So in total, $71m over forward estimates of four years equates to $18m a year which is a far cry from the $100m the Barnett government was allocating through R for R funding. But it’s early days yet and we know that Minister McTiernan has no fear of Treasury; $131.5m is real money when most departments are still under the boot of the Under Treasurer. The question is now where the Minister will spend her bucket of spare cash.

If the Minister wants to build the freeway of agriculture then she needs to move away from funding the rats and mice projects that make for easy press releases but are not game changers like the Ord Stage II. As always, I‘m happy to make recommendations that fit in with her politics and budget, so here are four key projects to spend the $80m which would give this Minister an important legacy in the agricultural sector.

No 1; another $20m in a joint GRDC grains project but this time in partnership with the universities. This is a no-brainer as GRDC is ready to write another cheque and we need to build WA up as the centre for grains research, which we can only do with the universities working together.

No 2; $20m into a sheep and pastures regeneration and supply chain project. If Labor gets into power, the live trade is the walking dead, so it will be good politics to head off our declining sheep numbers and at the same time crank up our pasture management science – with the bonus that it will actually be a real regen project which the industry will understand and support.

No 3; $20m to building our production of super-premium products like wagyu, honey, truffles, speciality grains, dairy and wine. This fits into the Ministers love of boutique agriculture; while it’s not hemp, it’s hip and it sells Western Australia to the world on many levels.

No 4; $20m for a Fitzroy River Ord II style scheme, facilitating pastoral stations along the Valley to move into Irrigated Agriculture. Indigenous-owned stations like Leopold Downs, Fairfield and Noonkanbah desperately need to grow their businesses and employ more of their own people and the only way to do this is to develop pivot irrigation and feedlots. We should be aiming to turn off a million head a year out of the Kimberley, but it will require the government to unlock its onerous red and green tape approval processes.

But is there really $80m on the table? While the Minister states in the press release that $131m will secure the future of agriculture, what I suspect it is doing is just holding together a department which has agriculture as a bit player, not the driver of $10 billion in production and another $10 billion in value added employment. I doubt there really is $80m in a bucket to go onto any big new ag projects, but we can only hope.

One interesting foot note in the press release was the paltry allocation of $3m to upgrade the labs in the morgue, the affectionate moniker for the old Ag Dept. I’ve written before on the need to find a new home for the ghosts lurking in this 1950s wreck. Some lateral thinking here could see the keys handed over to Landcorp, $3m offered to CSIRO in Floreat to lease their labs, and the rest of the 500 South Perth staff moved into 140 William Street with the rest of DPIRD. Leave the staff in the city which is good for them and good for the industry, as all roads in the bush lead to Perth.

With the debt now stabilised, and funding increases in the pipeline, it would appear that the ag sector is finally getting some positive treatment and can look forward to the future with far more confidence. We await the budget details with great expectations and look forward to funded initiatives that will drive real increases in productivity.

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