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"Investing in Natural Capital"

An Address to the National Farmers Federation

Speech by Senator Hill
Minister for the Environment

(Delivered by Senator Alan Ferguson)

14 August 1996

Donald McGauchie, Wendy Craik, NFF Councillors. I appreciate the invitation to address the National Farmers' Federation and the support we have received from the Federation for the benefit of the rural community and the nation as a whole.

It seems entirely appropriate - both as Minister for the Environment, and as a long-time consumer of Adelaide water - to be talking to the leaders of Australia's agricultural and pastoral industries, here near the base of the Murray Darling basin which is our principal food bowl and the arena in which we must address many of the environmental challenges facing agriculture.

We are at an historic turning point.

There is a growing awareness that to manage our country as if we intend to stay, rather than as if we are just passing through, requires new approaches. We are all aware of the enormous damage that has been done to our natural resources which will require a major investment of capital. But it will require also changes in practices to maintain that investment.

We must accept that natural resource management can no longer be seen as an optional add-on to agricultural production. Natural resources are the life-blood of agriculture. Our attitude to natural resources and how we manage them will determine the capacity of our agricultural industry to produce and, ultimately, its survival.

Over the long term, ecological capacities and constraints are as binding on agricultural systems as the disciplines of the market. The view that environmental best-practice and long-term profits are competing goals is wrong.

"Clean and Green", if it is to work for us, must be much more than a slogan. It must be a guiding principle informing everything we do in natural resource management, from research to downstream processing and marketing.

Furthermore, our extraordinary endowment of natural resources, and the distinctiveness of our native flora, fauna and landscapes, can be a source of comparative and competitive advantage in global markets. Given sustainable management and strategic marketing, we can carve out a distinctive international image based on products, technologies and services which celebrate and sustain nature, rather than consume and degrade it.

Since European settlement, we have created one of the wealthiest and advanced of modern nations, privileged in many ways, thanks in large measure to generations of rural producers. But we have done so at significant cost to our natural capital.

It is clear from the environmental signposts all around us—this great river basin being a classic - that the path we choose from here on must diverge from our historical development path.

We hear a lot these days about green issues - national parks, koalas, whales, and so on. But true conservation is based on understanding that environmental protection is an investment in natural capital. Conservation is neither an alternative land use nor an opportunity cost. It is the fundamental protection of the natural resources which underwrite material wealth.

Conservation of native species and ecosystems and the processes they support; the flows and quality of rivers, wetlands and groundwater; soil structure and landscapes; is crucial to the sustainability of all primary industries.

You, and the organisations and industries you represent, of course have a central role to play in this endeavour. Less than seven percent of the country is in national parks and other reserves. It is nonsensical to expect that we can achieve nature conservation goals through reserves alone. Rather, we need ecologically sensible management of natural resources across the board.

It is appropriate to reflect upon and acknowledge what has already been achieved through the bipartisan Decade of Landcare, and to recognise strengths upon which we can build.

Landcare has generated profound increases in awareness, widespread changes of attitude and strengthening of community resolve. The issues we are tackling are long term and intractable, not amenable to quick fixes or magic bullets. Success will come only with patience and sustained effort. Criticism of landcare should be heard and tempered with confidence that solid progress has been and is being made.

We firmly believe that the people who live in a community, a catchment or a region, are central to any efforts to improve management of natural resources and to manage change.

The success of Landcare in getting people involved, and in starting the process of understanding problems and planning solutions, has been remarkable. That one in three farm families is involved in a Landcare group provides a great foundation for strategic investment.

How can Government help? The State of the Environment Report, the summary of which I launched recently, confirms that the underlying material wealth of Australia, its natural resources, is depreciating and calls for a strategic, integrated approach to tackling the environmental problems facing our nation. That is precisely what we propose to do through our Natural Heritage Trust.

The Trust will in part address the issue of loss of biodiversity - a critical but poorly understood concept. Biodiversity is the variety of all life forms: the different plants, animals and micro-organisms, their genes and the ecosystems of which they are a part.

Conserving biodiversity is about much more than just protecting wildlife and their habitats in nature reserves. It is about the maintenance of fundamental ecological processes such as hydrological cycles, soil structure and fertility. It is about being able to foresee and understand the consequences of our actions on the natural environment.

Inappropriate agricultural practices and the impact of feral plants and animals, have resulted in habitat loss and degradation on a massive scale.

Australia has the dubious distinction of leading the world in mammal extinctions, with one quarter of the world total. A further 143 vertebrate species are endangered and almost one in five of our extraordinary plant species are rare or threatened.

The impact of our actions on the land itself are starkly apparent. Extensive salinity and acidification threaten some of Australia's richest farming country. By 2010, all irrigation areas in the Murray Darling Basin will have saline groundwater within two metres of the surface.

The economic consequences are alarming. Land and water degradation costs an estimated $1.5 billion each year and weeds a further $3.3 billion.

Faced with these facts, the broad directions in which we need to move are obvious.

Yet natural resource depreciation is not reflected on our national balance sheet. We have been living off natural capital. We allow for depreciation on buildings and plant but not on our natural environment.

We have not allowed for or invested adequately in repairs and maintenance for this great old continent, which has provided for us so abundantly.

We have heard from many quarters of the need to move beyond awareness raising and planning, and to start putting plans into action on the ground. This is a key objective of the Natural Heritage Trust.

Through the Trust the Government has committed an additional $1.15 billion over the next five years to an integrated package of environmental and sustainable agriculture programs.

Key principles which will underpin administration of the Trust include a strong emphasis on community participation in priority setting and implementation, a focus on causes rather than symptoms, and integrated delivery of programs at a catchment or regional level.

To address the lack of quality resource information on which to base further decisions, we need benchmarks against which to measure progress. It is for this reason that the Coalition will be spending $32 million on the most sophisticated Land and Water Resources Audit ever developed. It has only been made possible by new computer and remote sensing technology, combined with world class intellectual property developed in the CSIRO. The Audit will provide the first ever national appraisal of the extent of land, water and vegetation degradation in Australia, and its environmental and economic costs to the nation.

Critically, it will underpin better decision making and priority setting.

In an effort to focus on strategic outcomes, we have grouped new and continuing programs into five interlinked program packages, namely Landcare, vegetation, biodiversity, rivers and coasts.

We will tackle probably the most urgent environmental challenge for Australia, that is, turning around the relentless long term decline in the quality and extent of our native vegetation.

As much land has been cleared in Australia since World War 2 as in the 150 years before 1945. In the decade between 1983 and 1993, more than 5 million hectares of native vegetation were cleared and ABARE surveys show that farmers intend to clear more than 3 million more hectares over the next five years.

As part of the Natural Heritage Trust, we will establish a National Vegetation Initiative to stem that decline.

The Initiative will provide $318 million over five years to ensure that, for the first time since European settlement, the rate of revegetation in Australia exceeds the rate of clearance. It will build upon the success of the existing vegetation programs such as One Billion Trees and Corridors of Green.

It will also provide a range of public benefits including rehabilitation of degraded lands, water table control, erosion control, wildlife habitat and greenhouse sinks. It is fundamental to the protection of biodiversity and the agricultural resource base.

Our firm priority within the $64 million remnant vegetation component of the National Vegetation Initiative will be on incentives and technical support to improve the long-term management of farm bushland. We have already started work through CSIRO, ANCA and the Biodiversity Advisory Council, on which NFF is represented, on identifying the most effective incentives for off-reserve nature conservation.

Continued financial support for these programs will be influenced by how we measure our performance. The recent Commission of Audit urged unprecedented scrutiny of public expenditures against defined outcomes.

This makes it difficult to justify or defend public investment in planting trees or fencing off bush in one paddock while adjacent blocks are being bulldozed, windrowed and burnt. We must be able to demonstrate that the public funding we provide is spent strategically to yield a net improvement at a catchment or regional scale, using sound property and catchment plans.

This is not petty or heavy-handed bureaucracy - it is the simple but important matter of being accountable for the expenditure of taxpayers' money.

Our preference is for incentives for voluntary work. Regulations are expensive to monitor and enforce but nevertheless remain a measure of last resort.

The success of these programs will depend largely on the extent to which local communities identify with these programs, and are willing to get involved. Value for money will come from the multiplier effect already evident in landcare programs, and also from careful targeting of public investment into well planned, professionally managed, strategic projects at a catchment scale.

If time allowed, I would expound on our related plans for improving freshwater management.

Suffice to say that improving the quality of our inland waters, and providing for adequate environmental flows, is a compelling environmental policy challenge, in this the driest, flattest, most poorly drained of continents.

South Australian Premier Dean Brown proposed the innovative $300 million Murray Darling 2001 project as a major project to celebrate the centenary of Federation. The Commonwealth's share of $150 million, to be funded from the National Heritage Trust, will be complemented by $13 million for environmental flows and $85 million for the National Rivercare Initiative outside the Basin. I am confident that these programs will result in improved water quality, increased environmental flows, retention of essential habitat and improved waste management practices.

This brings me back to Landcare

I have already acknowledged the great platform of community participation and awareness landcare has built. We have become accustomed to community-based farm and catchment planning, to community involvement in monitoring the status of natural resources through programs such as Waterwatch, and to allowing direct community inputs into how funding is allocated.

During the first half of the Decade of Landcare, the emphasis on nature conservation and environmental protection has been (understandably) outweighed by concerns of financial viability.

The next step is to achieve a genuine integration of biodiversity conservation and sustainable agriculture objectives in landcare. The NFF and ACF joint statement of last year called on us to 'broaden the vision of landcare', and to adopt a strategic, integrated approach to manage the key threats to land, water and vegetation and biodiversity conservation.

These objectives were influential in formulating the Saving Our Natural Heritage policy we took to the election.

We also need to make long term investments in improving the skills and capacities of people on the ground. For example, we want to improve the capacity of State and Regional Assessment Panels to deliver nature conservation objectives to successfully handle increased funding for on-ground works. We want a single process delivering both biodiversity and sustainable agriculture programs.

It goes without saying that if we are to succeed in better conserving biodiversity and managing our vast heartland, then we require the full support of the farm families and rural communities who live there.

We will develop integrated approaches to minimise the number of separate programs and consequent paper warfare. These programs will deliver resources, where possible, through the existing One Stop Shop framework. Dr Joe Baker, Chair of the National Landcare Advisory Committee, has challenged us to develop a system based on One Application, One Guideline, One Cheque and One Report - to avoid duplication and to streamline project funding, while mindful of the need to be accountable for the efficiency and effectiveness of that funding.

As Environment Minister, I will be working together with John Anderson, as Minister for Primary Industry, to deliver these initiatives. We envisage developing a partnership agreement between the Commonwealth and each State and Territory, specifying respective rights and responsibilities and encouraging devolution of funding and decision making to the lowest practicable level. This agreement will be the central means of integration and will set performance standards for program delivery.

While farmers are critical to the success of the Natural Heritage Trust programs, all Australians have a stake in these issues.

The Australian Financial Review of 26 July reported that there is a wave sweeping through world economies which is seeing business and environmental interests converge for commercial gain. Environmental standards will have increasing impacts on international trade.

We need to better promote environmentally responsible management and to invest in improving management skills and quality assurance. This will mean setting and adhering to clearly understood standards.

Our tolerance of those who lower standards across the board, whether it be product contamination, algal blooms, inefficient irrigation practices or overclearing, undermines our credibility in export markets, compromises our progress towards sustainable agriculture and ultimately threatens public investments.

I was delighted to read that your President, Donald McGauchie, is keen to see a National Accreditation Scheme encompassing farm planning and ecologically sustainable development, including self assessment, training and accreditation. I commend such voluntary self-help approaches.

In conclusion, we are trying to develop export-oriented, internationally competitive, resource-based industries within a small, deregulated, open economy, on some of the oldest and most impoverished soils on the planet.

Environmental problems will increasingly affect our productivity, our trade and our international standing.

We can be certain that markets will get greener, standards will get higher, international scrutiny will get sharper and sanctions will get tougher.

The Natural Heritage Trust is the first step in the awesome task of turning around land degradation and rural decline. The ecological benefits which flow from the Trust will make a real contribution to national wealth and international competitiveness.

We therefore greatly appreciate the public efforts of the NFF in supporting our plan. We hope that your arguments and common sense will help result in a positive outcome for the environment when the Telstra Bill is debated in the Senate in September.

Commonwealth of Australia