Part 2 The year in review - Department of Agriculture · proposing comprehensive reforms to...

Part 1

The year in reviewSecretary’s review 2

Summary of performance 5

Overview of financial performance 11

2 Department of Agriculture, Fisheries and Forestry

Secretary’s review

During the year, the department has focused its work on pursuing key goals:

Resources Ensuring the sustainable use of our natural resources

Productivity Improving the competitiveness of our portfolio industries

Markets Enabling trade in goods.Dr Conall O’Connell

These goals support our underlying mission:• to advise the government and our stakeholders how to improve the productivity, competitiveness and

sustainability of our portfolio industries, including agriculture, fisheries and forestry• to help people and goods move in and out of Australia while managing the risks to the environment and

animal, plant and human health• and through these, contribute to sustaining the way of life and prosperity of all Australians.

Highlights in 2011–12 Drought reform measures—the department completed the Western Australia pilot of reform measures designed to move farmers from crisis management to risk management. The review of the pilot was released in September 2011. A key milestone was the announcement in April 2012 that Exceptional Circumstances Interest Rate Subsidies were to be phased out nationally from the end of June 2012. All governments reaffirmed their commitment to achieve national drought policy reforms through the Standing Council on Primary Industries.

Animal welfare—the department developed and implemented a new policy framework and regulatory arrangements for the export of live animals for slaughter. These arrangements regulate exporters, giving them clear responsibility to ensure animals will be treated according to internationally recognised animal welfare standards through the Exporter Supply Chain Assurance System.

Biosecurity reform—the department moved towards a modern and responsive system that facilitates trade while managing biosecurity risks offshore, at the border and onshore. A milestone was the signing of the Intergovernmental Agreement on Biosecurity by the Prime Minister and all state and territory first ministers—excluding Tasmania—in January 2012. The department continued work on the new

3Annual Report 2011–12

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biosecurity legislation and on the transition from non-risk-based rigid intervention targets to a flexible risk‑return approach.

Export certification reform—the department implemented more efficient service delivery arrangements and new fee structures for the dairy, fish, grain, egg, horticulture and meat export industries. The department will continue to work with these industries to finalise the transition to the new export certification arrangements.

Market access—the department achieved new, restored or improved market access for 18 commodities and maintained market access for more than 50 commodities. Producers and exporters will benefit from better market access for wine, wool, meat, lentils, cherries, citrus, macadamia nuts and table grapes, among other commodities. Australia and Malaysia also signed a comprehensive Free Trade Agreement, delivering important improvements to market access for a range of portfolio industries.

National Food Plan—the department advanced the development of a national plan for maintaining Australia’s food security and maximising food production opportunities. Following extensive stakeholder consultation, we developed a green paper outlining policy options. This was released for public feedback in July 2012. This is a key step to ensuring a more coordinated and strategic focus to food‑related policy along the supply chain.

Carbon farming—the department implemented research, demonstration and extension activities to help farmers and other landholders benefit from carbon farming under the Carbon Farming Initiative and Carbon Farming Futures component of the Land Sector Package. Programs that commenced this year included the Filling the Research Gap and Action on the Ground grants.

Agricultural and veterinary chemicals regulatory reform—the department advanced reforms to provide improved access to affordable agricultural and veterinary chemicals and protection of public health, worker safety, the environment and trade. We released a regulation impact statement and draft legislation proposing comprehensive reforms to regulation of agricultural and veterinary chemicals. These will guide public consultation on the proposed reforms.

Biosecurity detector dogs—the department marked 20 years of DAFF biosecurity detector dog operations to manage the threat of exotic animal and plant pests and diseases to Australia’s agricultural industries and its unique flora and fauna. There are more than 80 detector dog and handler teams working throughout Australian airports, seaports, mail centres and private courier depots.

Challenges for the year aheadOur culture—as a department we have identified in our new Strategic Statement the key aspirations that we have for our culture. To ensure our success in delivering on our goals into the future, we have emphasised the values of being collaborative, responsive and creative. As leaders we aim to anticipate and tackle the important issues and to be mindful of the impact of our actions on others. Over the coming year, we will work to embed these aspirations in our reward and recognition culture and practice.

National drought policy reform—the transition to a new drought policy framework that will assist farmers to better prepare, adapt and adjust to the impacts of drought and increased climate variability remains a significant priority. We will work with industry stakeholders, the states and territories to finalise a new national drought policy package for consideration by the government in 2012–13.

Live animal export welfare—implementation of the new regulatory framework for Australia’s live animal export trade is a high priority. Community expectations that appropriate levels of animal welfare are maintained in all export markets remain high. The department will aim to ensure that all feeder/slaughter livestock exports meet the new regulatory requirements by the end of 2012.

Animal welfare standards—the department is working with states and territories through the new Animal Welfare Committee to establish a range of national standards and guidelines around the land transport of animals, sheep and cattle and management at sale yards. We are committed to pursuing continuous improvement in animal welfare outcomes, particularly in our portfolio industries.


Biosecurity reform—the department will continue the transition to a fully integrated risk‑based approach to managing biosecurity risk offshore, at the border and onshore. Important priorities will be introducing the new biosecurity legislation to replace the century‑old Quarantine Act 1908; building a new state‑of‑the‑art post entry quarantine facility; and improving risk response operations and biosecurity information and communications technology.

Market access—the department will continue to seek ambitious market access outcomes for portfolio industries through Free Trade Agreement negotiations. Concluding the Japan, China and Republic of Korea Free Trade Agreements and the Trans–Pacific Partnership remains a high priority for the portfolio, as these markets represent a significant volume of trade in agricultural, fisheries and forestry products.

The department will also pursue improvements to bilateral technical market access arrangements for a range of significant commodities including meat, seafood, animal by-products, dairy, live animals and plant products. Increasing importing country understanding and acceptance of Australian production and inspection systems will be a key factor to our success.

National Food Plan—the department will lead the whole‑of‑government process to develop a white paper for release during the year, setting out an integrated food policy framework. Broad consultation will be undertaken following the release of the green paper in July 2012.

Carbon farming—the department will roll out measures under the Carbon Farming Initiative and Carbon Farming Futures program that will provide economic incentives to encourage landholders to take up emissions reduction technology and participate in carbon offset markets.

Agricultural and veterinary chemicals regulatory reform—the department will lead the work with the states and territories and the Australian Pesticides and Veterinary Medicines Authority to complete the broad regulatory reform agenda for agricultural and veterinary chemicals. This will require extensive consultation with stakeholders involved in the assessment, registration and use of these chemicals.

Illegal logging—the department will work with government and industry stakeholders to help secure passage of the Illegal Logging Prohibition Bill, which was introduced into parliament in 2011. The legislation will prohibit the importation and sale of illegally logged timber and timber products. A key priority will be to implement compliance arrangements to support the legislation.

Forests—the department will present Australia’s five-yearly State of the forests report on the environmental, social and economic values of our forest resources across all states and territories.

Fisheries management—the department will review the Commonwealth Fisheries Harvest Strategy Policy and Guidelines and the Commonwealth Policy on Fisheries Bycatch. The reviews are scheduled to be completed in early 2013. Both policies are central to the sustainability and productivity of Australia’s Commonwealth fisheries.

Caring for Our Country—in consultation with our stakeholders, we will prepare for implementing the new sustainable agriculture stream of the program, due to commence in 2013–14.

Wheat exports—the department will work with government and industry to help with the passage of the Wheat Export Marketing Amendment Bill. This will provide the basis for the next stage of marketing reforms announced by the government, including the abolition of the Wheat Export Accreditation Scheme and the winding up of Wheat Exports Australia.

Conall O’Connell Secretary


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1Summary of performance

In 2011–12, we fully met or expected to meet 104 of our 114 key performance indicators across two outcomes and 15 programs, as well as meeting all but one of our deliverables, as outlined in the Portfolio Budget Statements and Portfolio Additional Estimates Statements.

Outcome 1More sustainable, productive, internationally competitive and profitable Australian agricultural, food and fibre industries through policies and initiatives that promote better resource management practices, innovation, self‑reliance and improved access to international markets.

Program 1.1: Tackling climate changeWe continued to build the capacity of primary producers to adapt and adjust to climate change:• supporting more than 6180 training opportunities through FarmReady Reimbursement Grants• funding 64 collaborative projects to help portfolio industries build their self‑reliance and adaptability• providing direct financial assistance to rural households facing hardship• supporting research to help industries find new ways to manage climate change• implementing the Carbon Farming Futures program to build on the achievements of Australia’s

Farming Future• helping farmers and landholders enter the carbon offset market through the Carbon Farming Initiative.

In 2011–12, we met all of the 13 key performance indicators for this program.

Program 1.2: Sustainable management—natural resourcesWe continued successful Caring for our Country initiatives to strengthen the capacity of primary producers to develop and use sustainable resource management practices:• funding 64 groups to increase their own expertise and ability to encourage and support farmers to adopt

sustainable land management practices for increased profitability and environmental benefits • delivering $36.8 million to continue the work of Landcare• working to strengthen the management of invasive weeds and animal species• delivering improved natural resource management across northern and remote Australia• funding 362 rural, urban and Indigenous groups in projects to better manage natural resources• working towards the approval of Australia’s Native Vegetation Framework.


Performance under Caring for our Country is assessed through the annual report cards. The 2011–12 report card is due to be released in early 2013 and we expect to meet all five of the key performance indicators.

Program 1.3: Forestry industryWe continued to enable a productive and sustainable Australian forestry industry:• working on the review and implementation of Regional Forest Agreements (RFA) in New South Wales,

Victoria, Western Australia and Tasmania• implementing the Tasmanian Forests Intergovernmental Agreement• assisting 58 Tasmanian forest contractors to exit the industry• bringing the Illegal Logging Prohibition Bill 2011 to parliament • working to help our neighbours build their sustainable forestry practices.

In 2011–12, we fully met four of the eight key performance indicators for this program: • the department had yet to finalise payments to some grantees under the Tasmanian Forests

Intergovernmental Agreement Contractors Voluntary Exit Grants Program• the delivery of the Asia–Pacific forestry skills initiative was partially met. Grant deeds were entered into

for two projects in Papua New Guinea. Projects in Indonesia did not proceed because of challenges in establishing the appropriate administrative framework within the required timeframe

• the target for the commencement of primary legislation to combat illegal logging was not met. The legislation was introduced into parliament and debate is expected later in 2012

• the target for the discussion of RFA renewal processes with the states was not met. Governments have yet to formally initiate the third five-yearly RFA reviews, which are the precursor to the renewal process.

Program 1.4: Fishing industryWe continued to support and encourage productive and sustainable fishing and aquaculture industries:• commencing reviews of the Commonwealth Fisheries Harvest Strategy Policy and Guidelines and the

Commonwealth Policy on Fisheries Bycatch• implementing Shark‑plan 2• managing projects to support the Recreational Fishing Industry Development Strategy• working to develop and implement aquaculture policy and activities in the Asia–Pacific• engaging international partners to encourage sustainable resource management and combat

illegal fishing.

In 2011–12, we met all of the four key performance indicators for this program.

Program 1.5: Horticulture industryWe continued to advance and improve the competitiveness of Australia’s horticulture, food and beverage industries:• finalising funding for the Regional Food Producers’ Innovation and Productivity Program• addressing issues affecting Australian wine growers and exporters• finalising the Honey Bee Industry and Pollination Continuity Strategy• supporting the work of the Grape and Wine Research and Development Corporation, Wine Australia and

Horticulture Australia Limited.

In 2011–12, we met all of the five key performance indicators for this program.


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Program 1.6: Wool industryWe assisted primary producers to build a more competitive and self‑reliant wool industry:• representing Australia’s interests in building greater cooperation on the production and supply of wool

into India and China• maintaining the high standard of imported woolpacks• assisting in the development of a new research, development and extension strategy• supporting the work of Australian Wool Innovation Limited.

In 2011–12, we met all of the seven key performance indicators for this program.

Program 1.7: Grains industryWe continued to help grains producers to build a more competitive and internationally focused industry:• commencing the implementation of the Productivity Commission’s recommendations for the transition to

deregulated wheat export marketing arrangements• finalising support for projects under the Wheat Export Technical Market Support Grants• supporting the work of the Grains Research and Development Corporation.


Program 1.8: Dairy industryWe continued to support the development of a more competitive dairy industry:• contributing to the government’s response to Senate inquiries into dairy prices• administering quotas for dairy exports to the United States and the European Union• supporting the delivery of the five-yearly dairy levy poll, which voted for a 10 per cent increase in research

and development levies.


Program 1.9: Meat and livestock industryWe assisted the continued development of an internationally competitive meat and livestock industry:• administering red meat export quotas to the United States and the European Union• finalising the review of the European Union high-quality beef quota scheme• implementing new agreements to support continued improvement in service delivery by the industry’s

statutory corporations.

In 2011–12, we met all of the eight key performance indicators for this program.


Program 1.10: Agricultural resourcesIn the second year of our integrated research capability in ABARES, we delivered a range of products and services to enhance the evidence‑based information needed for policy development and our portfolio industries. The year saw a particular emphasis on an integrated research approach across many areas of the ABARES work program, including fisheries and biosecurity research and supporting the development of the draft Murray–Darling Basin Plan.

Other achievements included:• commencing the implementation of the new regulatory framework for livestock exports• implementing the Australian Animal Welfare Strategy• working with the states and territories to progress projects under a national agricultural productivity

work plan• developing a government policy statement on rural research and development• leading the development of the green paper for the National Food Plan• working towards a single national regulatory system for agricultural chemicals and veterinary medicines.

In 2011–12, we met all but five of the 22 key performance indicators for this program: • the target of providing ABARES’ services on time in 85 per cent of cases was not met. ABARES met or

exceeded the target for the delivery of briefing, forecasts and advice and data services. However, the annual client and stakeholder survey suggests ABARES can improve the timeliness of other research product services

• the target of publishing the Australian food statistics by February each year was partially met. The 2010–11 statistics were released on the department’s website on 2 April 2012

• the target of completion and publication of factual and policy documents for the National Food Plan was partially met. In October 2011, the minister announced the Australian Government’s decision to develop the National Food Plan through a green paper/white paper process

• the target of two meetings with industry service providers to discuss statutory obligations was partially met. One meeting was held with the Australian Egg Corporation Limited

• the target of delivering a new statutory funding agreement with the Australian Egg Corporation Limited was not met. The new agreement will be finalised in early 2012–13.

Program 1.11: Drought programsWe continued to work to help farming communities increase their resilience and capacity to prepare for and manage the impacts of drought, climate variability and reduced water availability:• completing the extended pilot of drought reform measures in Western Australia• providing Farm Planning training to 620 farm businesses• providing income support for farming families facing hardship• funding grants to help 103 families re‑establish themselves outside farming• finalising the Exceptional Circumstances Interest Rate Subsidy program.

In 2011–12, we met all of the five key performance indicators for this program.


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Program 1.12: Rural programsWe helped support primary producers and rural businesses to stay viable:• continuing funding for the work of the Rural Financial Counselling Service, providing assistance to more

than 7553 clients• delivering financial assistance to people and businesses directly impacted by the temporary suspension of

live cattle exports to Indonesia.

In 2011–12, we met all but one of the five deliverables and met all of the four key performance indicators for this program. The final uptake of Subsidised Interest Rate payments was below projections due to lack of demand, with payments provided to 85 eligible applicants.

Program 1.13: International market accessWe worked through the year to maintain and build international market access for our portfolio industries:• working with the Department of Foreign Affairs and Trade on the World Trade Organization (WTO)

Doha multilateral round• helping to deliver a new free trade agreement with Malaysia• successfully addressing market constraints on a range of Australian commodities into 14 countries and

the European Union• working through the WTO and the Codex Alimentarius Commission to support science-based standards

in international trade• supporting bilateral and international engagement• building the technical capacity of our agricultural trading partners.

In 2011–12, we met all of the four deliverables and the key performance indicator for this program.

Outcome 2Safeguard Australia’s animal and plant health status to maintain overseas markets and protect the economy and environment from the impact of exotic pests and diseases, through risk assessment, inspection and certification and the implementation of emergency response arrangements for Australian agricultural, food and fibre industries.

Program 2.1: Quarantine and export servicesWe implemented reforms to strengthen Australia’s biosecurity system across the continuum—offshore, at the border and onshore:• continuing work on new legislation to replace the century‑old Quarantine Act 1908• implementing a risk‑based approach to biosecurity operations• improving our border inspection regime and systems• delivering improved export certification systems to cut red tape while ensuring businesses are compliant• working in partnership with the Australian Customs and Border Protection Service to minimise the risk

of exotic pests and diseases entering Australia.

In 2011–12, we met all but one of the 11 key performance indicators for this program. The target for the drafting and implementation of new biosecurity legislation was partially met. We expect to release an exposure draft of the legislation for public comment in early 2012–13. The development of supporting legislation and training material is progressing.


Program 2.2: Plant and animal healthWe continued to strengthen Australia’s biosecurity system to manage pest and disease risks:• supporting the implementation of the Intergovernmental Agreement on Biosecurity• working with the Australian Wildlife Health Network to coordinate national surveillance for disease in

the wild animal population• playing a key role in the Intergovernmental Hendra Virus Taskforce to work to minimise the impacts of

Hendra virus on human and equine health• continuing the implementation of the National Plant Pest Surveillance Program• supporting the implementation of recommendations from the independent review of Australia’s

preparedness for foot‑and‑mouth disease• building the biosecurity capacity of Australia’s neighbours in the Asia–Pacific.



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Overview of financial performance

Highlights of 2011–12• The 2011–12 financial statements produced with no audit findings raised by the Australian National

Audit Office• Strategic investment to support priority reform areas of biosecurity, drought and agricultural and

veterinary chemicals and to develop a National Food Plan• Work commenced on streamlining cost recovery arrangements • The government provided an additional $524.2 million of funding over the forward estimates in the

2012–13 Budget for building a sustainable biosecurity system.

Departmental operations

Operating budgetThe department began 2011–12 with a budgeted net cost of service of $302.2 million. During the year, this budget increased to $333.5 million (an increase of $31.3 million) due to the following items in the 2011–12 Portfolio Additional Estimates Statements:• $24.8 million further investment in export certification reforms• $1.0 million further investment in Tasmanian forestry contractors and employees• $5.5 million investment in new measures, including Securing a Clean Energy Future programs and animal

welfare programs.

Departmental financial results 2011–12Departmental expenses for 2011–12 totalled $725.9 million; $46.0 million above the final budget of $679.9 million (see Figure 5, page 12). This was mainly due to:• the impact of falling bond rates on the carrying value of the department’s employee long service

leave provision• additional costs relating to providing regulatory services in line with volumes.

Own source revenue for 2011–12 was $352.7 million; $9.3 million higher than the budgeted revenue of $343.4 million. The increase in cost recovered revenue did not keep pace with increases in the department’s cost of service delivery, resulting in the cost recovered programs accounting for $20 million of the department’s total operating deficit. Figure 4 shows cost recovery revenue by program in 2011-12.


Figure 4 Cost recovery revenue by program in 2011–12

Dairy—$0.22 million

International market access—$0.27 million

Fishing—$0.49 million

Meat and livestock—$0.63 million

Forestry—$0.74 million

Plant and animal health—$4.88 million

Sustainable management—natural resources—$13.44 million

Agricultural resources—$14.96 million

Quarantine and export services—$297.36 million

Employee and employee related costs made up approximately 69 per cent of total departmental expenditure; 3 percentage points higher than last financial year. This reflects the department’s commitment to the government’s objective of achieving efficiencies, including implementing measures to reduce the department’s expenditure on contractors, consultants and travel.

Other major areas of expenditure include operating lease cost at 7 per cent, contractors and consultants at 5 per cent and travel and information technology cost at 4 per cent.

Figure 5 Total annual administered and departmental expenses over the past 10 years

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As shown in Figure 6, the department’s net asset position has reduced by $16.5 million from 2010–11. We invested $26.5 million in software projects, in meeting the government’s biosecurity reform agenda.


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Figure 6 Assets, liabilities and net asset position for the department at 30 June over the past 10 years

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Figure 7 shows the value ($126.4 million) of the department’s non-financial assets.

Figure 7 Value of non-financial assets by type in 2011–12

Land and buildings—$52.1 million

Property, plant and equipment—$11.3 million

Intangibles—$55.1 million

Inventories—$2.9 million

Other non-�nancial assets—$5.0 million

Industry reservesIndustry reserve balances are recorded for each cost recovered program. Where the costs of the program exceed revenue in a year, the shortfall is met from any balance held in the industry reserve and/or by increasing fees and charges.


Figure 8 Industry reserve balances at 30 June 2012

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Administered activitiesAdministered activities are expenses, revenues, assets or liabilities managed by agencies on behalf of the Commonwealth. Agencies do not control administered items. Administered expenses include grants, subsidies and benefits. In many cases, administered expenses fund the delivery of third-party outputs. The department began 2011–12 with estimated revenue of $390.8 million and estimated expenses of $782.6 million.

DAFF’s 2011–12 administered activities covered programs such as:• drought re‑establishment assistance (see page 143)• the Climate Change Adjustment Program (see page 51)• National Weeds and Productivity Research Program (see page 72)• Caring for our Country—Landcare (see page 66)• the Rural Financial Counselling Service. (see page 146).

During the year, a number of government initiatives adjusted the budgets that were available to deliver our programs. These include:• $44 million for the Tasmanian forest industry adjustment package• $27.3 million for Securing a Clean Energy Future programs• $26.4 million increase in revised levy estimates• $24.1 million for individual assistance impacted by the suspension of live exports to Indonesia in 2011.

Administered financial resultsRevenue received for 2011–12 was $395.8 million; a decrease from the previous year’s revenue of $419.9 million. This was due to lower than expected cattle production, with producers retaining female cattle for herd rebuilding, and poor conditions in Western Australia resulting in less than expected wheat production.

Expenditure for 2011–12 was $883.3 million; a decrease from the previous year’s expenditure of $954.9 million (see Figure 5, page 12). This was as a result of a reduction in the number of Exceptional Circumstances declared areas, which were therefore no longer eligible for drought assistance.

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Part 2 The year in review - Department of Agriculture · proposing comprehensive reforms to...

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