10 April 2015 The Hon Jaala Pulford MP Minister for Agriculture, Minister for Regional Development 8 Nicholson Street East Melbourne VIC 3002 Dear Ms Pulford, Submission – Review of DEDJTR Regional Service Delivery Model and Strategic Directions for Regional Policy Thank you for the opportunity to contribute to your Government’s ‘Review of DEDJTR Regional Service Delivery Model and Strategic Directions for Regional Policy’. Please find enclosed Mildura Development Corporation (MDC)’s submission. MDC is an independent not-for-profit organisation which is the peak economic development body for the Mildura region. The Mildura region covers an area over 48,000 square metres in size with a population of nearly 60,000 and a Gross Regional Product per annum of over $3 billion. MDC’s vision is ‘Our Region. Our Prosperity’ and our mission is to ‘actively develop, grow and promote the Mildura region’. Our organisation has been proactive in marketing the Mildura region to the world and in attracting diversified infrastructure funding, investment and business development opportunities. Our Board is comprised of experienced business and industry leaders who understand the commercial realities of development in the Mildura region. The Mildura region’s local economy, situated at the heart of the Murray Darling Basin, is dominated by the horticultural and dryland agricultural sectors, which, along with manufacturing (particularly in the food, wine and beverage sector) and other key economic drivers contribute greatly to our economic output. We look forward to further action being taken by the Victorian Government to enhance regional development across Victoria, including in the Mildura region. Yours sincerely,

Chris Crewther Chief Executive Officer Mildura Development Corporation

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Submission – Review of DEDJTR Regional Service Delivery Model and Strategic Directions for Regional Policy

Introduction Mildura Development Corporation (MDC) supports the Victorian Government’s goal to drive sustainable economic growth in rural and regional Victoria, including in the Mildura region. To provide some initial background, the Mildura region is located in the heart of the Murray Valley in a tri-state area at the intersection of Victoria, New South Wales and South Australia, encompassing the junction of the Murray and Darling River systems. Food production is one of the key drivers of the Mildura region’s economy, along with associated manufacturing, and will continue to form an important part of its future, generating a large proportion of its $3 billion Gross Regional Product per annum. A range of food processors are located in the Mildura region, providing considerable employment opportunities and skill sets. These include, but are not limited to, award winning wineries, table grape production and packing, dried fruit processing and packing, beverage production, citrus production and packing, olive processing, almond processing, and other boutique food processing sectors. As a major export region, we are in a good position to respond to increasing demands from Asia, particularly from our three largest export partners – Japan, China and South Korea – with whom the Federal Government has also recently signed free trade agreements. However, we also note that the production of high-quality, clean and green products requires a high value return for profitability. It is only with profitability that our local industry sectors and food processors can continue to re-invest in innovation, productivity and increased production. The Mildura region itself is home to a number of established and new horticultural industry sectors, growing the following percentages of Australia’s produce:

98% of Australia’s dried vine fruit;

75% of Australia’s table grapes of which 64% are exported;

68% of Australia’s almonds;

48% of Australia’s pistachios;

24% of Australia’s citrus of which 44% is exported;

23% of Australia’s olives;

14% of Australia’s asparagus;

Over 13% of Australia’s carrots and growing; and

more than 60 types of fruit, vegetables and nut products.

Known as a major irrigation region across north-west of Victoria, water security is a very important factor for ongoing food production in the Mildura region.

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Dryland farming and livestock also contribute significantly to the Mildura region’s economy, with sheep, grain and cattle contributing over $140.7 million in output. The region also produces over 1 million tonnes of grain, or over 2.1% of Australia’s broadacre crops. To achieve prosperity in rural and regional communities, all industry sectors must not

only be innovative but must also be well connected with high-quality infrastructure and

services, and access to human capital, including education and training.

To ensure competiveness in Australia, businesses must be able to develop quality

products that the market is willing to pay high value for. This will provide significant

advantages, including profitability.

This submission looks a four items in relation to regional policy development, with an

accompanying A-Z of recommendations:

1. Growing Regional Victoria – A Decentralisation Agenda

2. Regional Services Delivery Model

3. Legislative, Regulatory and Policy Framework

4. Investment Attraction and Business Development.

1. Growing Regional Victoria – A Decentralisation Agenda

a) The background

In order to decentralise and grow regional Victoria we need to build connectivity infrastructure and services that create a competitive environment which encourages industry to choose to move to, and expand in, regional centres. When industry chooses to set up or expand in a region, they act as an economic driver bringing new funds to a region. Employment opportunities follow and from there people move to, and stay in, that region, drive secondary industries (such as retail), and encourage increased services (e.g. specialist health care) due to increased demand. Proper decentralisation requires long-term vision which ignores political cycles (which often results in investment in infrastructure driven by political instead of economic imperatives) and short-term thinking. Often what we have seen over many decades now in regional Victoria is much greater investment in connectivity infrastructure in Melbourne, primarily, and then, secondly, in the largest regional centres. When this occurs, industry often chooses to set up where they have access to infrastructure (e.g. easy and quick access to the port, access to natural gas, etc) and where it is therefore more economically viable to run their business. This is common not only in Victoria but in other Australian States and Territories. As a result, we have seen increased centralisation and urbanisation in

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Victoria and Australia, with Australia now being one of the most urbanised countries in the world, with over 85% of the Australian population living in urban centres. Concurrently, we have generally seen a population decline starting with many of the smallest regional towns upwards, as industries and people move to larger and larger centres and cities where that connectivity infrastructure is in place and growing in relative comparison. Meanwhile, the population numbers of many larger regional centres have been buffered and stabilised by the fact that while many of their own citizens have moved to larger cities and larger regional centres, citizens from the smaller towns have moved to these very regional centres. As those smaller towns decrease further in size though, we cannot expect that buffering effect to continue. Thus, without continued long-term infrastructure investment to attract and grow local industry and population numbers in regional centres, we can also expect those centres to similarly stabilise or decline in population over time. We can also expect to see increased urbanisation as people continue to move to the largest cities and largest centres. That is, without infrastructure investment in regional Victoria, we will see continued decline in the smallest towns upwards and continued high-pressured growth in the largest centres (such as Melbourne) downwards. This centralisation will continue to put pressure on urban infrastructure and lead to further economic and social issues. If such short-term thinking with centralised infrastructure investment had been in place 100 years ago, where there was a much lower population in regional Victoria, the investment in infrastructure in rail and roads connecting regional Victoria and driving decentralisation and the creation of many regional towns to begin with, would never had occurred. However, long-term thinking was in place at that time and that infrastructure was put in place and developed to create decentralisation, thus driving industries to set up in regional centres and towns and therefore driving increased population numbers in regional centres and towns. For example, towns like Ouyen were established on the back on the rail line (connectivity infrastructure) being established between Mildura and Melbourne and the associated Ouyen railway station being built.

b) Driving Regional Growth –The 10 Regional Centres To similarly drive regional development that grows and activates our regional centres and surrounding towns, we therefore need to have a focussed and dedicated Decentralisation Agenda that invests heavily in connectivity infrastructure that drives industries to set up and expand in regional Victoria. By doing do, this Decentralisation Agenda will grow regional populations and services, and increase both economic and social outcomes in the regions. This Decentralisation Agenda ideally needs to be implemented not only in Victoria but in each State and Territory and Australia as a whole. Comparatively, for example, countries like Germany, South Korea and Japan have realised the importance of connectivity infrastructure and their governments have invested heavily in this, often

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being world leaders, which has helped to then drive industry growth in their countries (particularly in sectors like manufacturing), as well as decentralisation between a number of metropolitan and regional centres. In Victoria, one example of this recent investment in connectivity infrastructure driving decentralisation is Bendigo. Following increased investment by government in infrastructure such as rail, hospitals, education and highways, Bendigo has seen a recent boom in its population growth, as industries and people move to where the infrastructure and services are available. It is such connectivity infrastructure and services that need to be looked at for each of the regional centres across Victoria, creating and growing nodes (hubs) that drive investment in those regions. Looking at solutions, the Victorian Government firstly needs to establish a well-funded Decentralisation Agenda. As a first step under this Agenda, the Government should facilitate and strongly fund a benchmark comparative assessment of the connectivity infrastructure available in the ten regional centres making up Regional Cities Victoria – Geelong, Shepparton, La Trobe, Wangaratta, Ballarat, Bendigo, Horsham, Mildura, Warrnambool and Wodonga. This is not a new concept. The need to undertake a benchmark comparison has already been noted in Regional Cities Victoria’s discussion about implementing a Diagnostics Tool in their Executive Summary: Regional Cities Victoria Growth Framework. This benchmark comparative assessment should measure the availability of connectivity infrastructure and services across each of those 10 regional centres. After analysis, each of these centres should be increased to the same standard as the regional centre with the highest benchmark where possible. Concurrently, those 10 regional centres should also be measured against the infrastructure and services available in Melbourne, with a benchmark established showing Melbourne’s status across various categories (e.g. education, health). Over time, all regional centres should not only be increased to the highest benchmark for each category when comparing those 10 regional centres, but should jointly be brought up to the benchmark established for Melbourne across the various categories. A comparison could also be established with similar cities in other States. In the long-term, this investment in connectivity infrastructure and services will drive decentralisation, essentially creating 11 node centres across Victoria (including Melbourne). Investment in infrastructure in those node centres will have a flow on effect to surrounding towns in each of those regions given the investment in connectivity infrastructure often flowing through those towns, as well as the uptake in industry moving to that region. Giving a few examples:

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If an assessment is made across the 10 regional centres with the benchmark for roads being a two lane each way highway connecting that centre, then a two lane each way highway should be established in each of those regional centres.

If passenger rail services are available in some of those regional centres, passenger rail should be available in each of those regional centres.

If the benchmark for each regional town is an airport runway catering for 747s, the airport for each of those regions should have an airport runway catering for 747s.

If a particular specialist health service is available in some regional centres, that speciality health service should be available in each of those regional centres.

If a particular education course (e.g. medicine) is available in some regional centres, that particular education course should be available in all.

If 23 tonne axle loading (TAL) rail line connects one regional centre to the port for rail freight, rail lines connecting the other regional centres to port should also be brought up to 23 TAL.

If a 1000 seat convention centre is built in one regional centre and that is the benchmark, then a 1000 seat convention centre should also be built in each of the other regional centres.

If one regional centre is connected by a 66kV electricity power line with 100MW capacity (and that is the benchmark), all regional centres should be connected by a 66kV power line with 100MW capacity.

Where NBN fibre-to-the-node access is established as a benchmark in a regional centre, all 10 regional centres should have access to that NBN fibre-to-the-node (or whatever equivalent fastest service is available in the future).

The Victorian Government’s planned independent Infrastructure Victoria body should be required to help build and drive this Decentralisation Agenda by helping to create, utilise and continually update this benchmark comparative assessment to determine long-term infrastructure priorities across regional centres. The Victorian Government should fund this diagnostic tool, utilising Regional Cities Victoria, Regional Development Victoria, Infrastructure Victoria, RDA bodies and other stakeholders to build the benchmark comparative assessment. In terms of then determining and implementing infrastructure priorities, Infrastructure Victoria should also have compulsory representation from each of the 11 nodes (including Melbourne) to guide this process. If this approach is taken, over time this investment in infrastructure and services will encourage industry and people to move to, and stay in, regional centres, with less disincentives to set up in, or move to, other cities and regions. As examples:

No longer would an industry choose to set up in one regional centre which has access to natural gas, as against another regional centre which doesn’t.

No longer would a student be forced to move to another city or regional centre (where they are more likely to form relationships and gain employment) which has an education course not available in their regional centre.

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No longer would a solar company build their large-scale solar plant elsewhere because there is not the electricity network capacity in place in a regional centre to enable that investment to occur immediately.

Where such ‘connectivity equality’ is created in each regional centre (essentially creating equality of opportunity for towns to have an equal chance to attract industry), the smallest of those 10 regional centres would ideally benefit the most to begin with, given other comparative advantages (e.g. land costs). Thus, over time, there should be not only growth in each of those regional centres through decentralisation but a gradual equalisation in population size across the 11 nodes. Where equality of opportunity is created for these centres, equality of opportunity is also enhanced for the citizens of these centres. Such investment would gradually reduce the infrastructure pressures on our largest cities and centres, creating regional economic growth and also creating positive social outcomes in both the largest cities like Melbourne (i.e. less urban sprawl) and in the regional centres with current lower social outcomes (i.e. increased job and study opportunities, as well as services available). Specifically, the benchmark review across various categories should ideally include consideration of (but not be limited to):

Education (infrastructure and availability of courses)

Road connectivity

Rail connectivity (freight and passenger (including costs of fares))

Power connectivity (access to the national grid and capacity)

Natural gas connectivity (access and capacity)

Health and aged care (infrastructure and availability of specialist services)

Water/irrigation connectivity

Internet connectivity

Mobile phone connectivity

Radio/television connectivity

Airport connectivity

Sewerage/drainage connectivity

Locally-based State government departments and agencies

Local R&D bodies

Availability of local quarantine and custom services

Social services availability

Sporting infrastructure

Arts infrastructure

Tourism infrastructure

Tele-work/tele-conference/video-conferencing infrastructure

Business/Innovation centres

A comparative assessment of overall State Government expenditure in each centre.

Connectivity between regional centres.

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National and international connectivity (see below). A crude example of such a benchmark comparison (not using accurate data but just to demonstrate the model) is below, focusing on airport runway infrastructure: Airport Infrastructure (Sub-category A: Airport Runway Infrastructure, Capacity and Quality):

Upper Benchmark - Melbourne Benchmark - Geelong

Bendigo Wangar, LaTrobe Horsha. Sheppa. Ballarat Geelong Wodon. Mildura Warna. Melbou.

Details:

_________________________________________________________________________________

c) National and international connectivity of regional centres Looking beyond Victoria, but still focussing on decentralisation, the Victorian Government should also look at how we can better connect with other cities and centres across Australia incorporating the 10 regional centres. While primarily this is looking at connectivity between Victoria’s capital Melbourne and other state capitals, such primary connectivity also feeds into growth across regional centres whose path aligns with this connectivity. Firstly, the Victorian Government should undertake a thorough supply chain mapping exercise to see the movement of freight to, from, and between the regional centres, Melbourne, other States and Territories, and internationally. Secondly, the Victorian Government should invest in the connectivity infrastructure and services to improve those supply chains. Further investment in rail and road connectivity with other States from the regional centres should be considered. Examples include looking at road and rail connectivity between Melbourne and Sydney/Brisbane via Shepparton and Wodonga, road and rail connectivity between Melbourne and Adelaide (then on to Perth and Darwin) via Horsham, and investing in infrastructure like rail connectivity between Melbourne to Darwin and Perth via Mildura and Broken Hill (given capacity on the current Melbourne to Adelaide rail route will have reached capacity by the mid-2020s, thereby requiring investment in an alternative route). The initial Victorian Government investment in the upgrade and standardisation of the Mildura line to 23 tonne axle loading is crucial in enabling this long-term transcontinental link to go ahead.

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Increasing infrastructure investment in airports in the 10 regional centres, as aforementioned, will help to grow the services available to those centres. It will also help connect those centres nationally to other states, cities and centres. For example, in Mildura we now have over 220,000 passenger movements per year in what is now the busiest airport in regional Victoria, with services connecting Mildura directly to Melbourne, Sydney, Adelaide and Broken Hill. Infrastructure investment has aided this growth tremendously given passenger movements were around 100,000 about 10 years ago. This airport is one of the primary connectivity infrastructure points helping to grow Mildura. Airport infrastructure investment across the 10 regional centres will likely result in similar growth and increased connectivity. Some may argue that building airport infrastructure in places like Bendigo is not viable given Bendigo is so close to Melbourne, but we are also looking at Bendigo’s connectivity with other States and Territories who may fly direct instead of coming via Melbourne, as occurs in Mildura for travellers from Adelaide, Sydney and Broken Hill. The same applies to each of the other 10 regional centres. The Victorian Government, working with the Federal Government, should also look at opportunities for further national, and indeed international, connectivity by looking at what custom and quarantine services can be provided at the airports for those regional centres (and/or locally), as well as what can be done to invest in air freight connectivity. The Victorian Government should also look at opportunities to bring international airport status to airports in the regional centres, such as Mildura, which is an area of policy currently driving centralisation in urban centres like Melbourne, given international visitors and business travellers must pass through that port of call first.

d) Connectivity between regional centres In addressing connectivity, the Victorian Government should also look at connectivity between each of the regional centres, as opposed to just their connectivity with Melbourne, interstate or internationally.

e) Cross-border issues Additionally, the Victorian Government should look to resolving cross-border issues, particularly for those towns bordering NSW on the Murray River and near or bordering SA, particularly in terms of transport movement. Issues such as the requirement to get a different driver’s license, for example, should one move say between Wentworth and Mildura, or between Albury and Wodonga, or issues such as NSW businesses paying payroll tax in Victoria due to Victorian based employees but paying Workcover in NSW based on the main business authorising site, should be resolved through consultation between the NSW, Victorian and SA Governments.

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A buffer zone of, for example, 50km on either side of the border, whereby one is exempt from complying with two sets of regulations could apply (for example, to requirements to change licence, etc). This could enable ease of movement for both transport and those moving and working across the border in Victoria and vice-versa. An assessment of the regulatory issues that could be tackled through having this buffer zone could be undertaken jointly by the Victorian, NSW and SA Governments.

f) Hubs The regional centres should be seen as hubs for the surrounding towns, much as Melbourne is currently seen as the hub of Victoria. Each hub, in comparing connectivity infrastructure and services between them, should be considered to be a centre of activity. That is, those hubs should be able to undertake locally necessary quarantine, customs, research and development, disinfestation, and so forth, with the ability to then send goods straight to port from that hub instead of diverting those goods via other centres initially.

g) Regional Growth in Smaller Regional and Rural Towns Investment in infrastructure and services in the 10 regional centres will drive investment and growth in surrounding regional and rural towns located in each region. However, those towns themselves also require infrastructure investment to bring them to standard. It is recommended that a similar benchmark comparative assessment be made for the next grouping of towns of a set population size below that of the top 10 regional centres (e.g. Ararat, Swan Hill, Stawell, etc). Those towns should also be brought up to the benchmark standard for their grouping across various categories, and a comparison made between their benchmarks, the benchmarks for the 10 regional centres, and the benchmarks for Melbourne, with the aim to also bring those towns up to a similar standard over time. This could involve creating several groupings of towns with benchmarks for each grouping. Recommendations:

A. That the Victorian Government establish a well-funded Decentralisation Agenda for Victoria.

B. That the Victorian Government strongly facilitate and fund Infrastructure Victoria, Regional Cities Victoria, Regional Development Victoria, RDA bodies and other stakeholders to build a benchmark comparative assessment of connectivity infrastructure and services for the 10 largest regional centres,

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along with a comparison with Melbourne. This should be a public document once produced.

C. That the Victorian Government support and fund, working with Infrastructure Victoria and other stakeholders, a similar benchmark comparative analysis for groupings of towns smaller than the 10 largest regional centres, comparing these benchmarks against the benchmarks for the 10 regional centres and Melbourne. This should also be a public document once produced.

D. That Infrastructure Victoria prioritise infrastructure spending according to the

benchmark comparative assessment for the 10 largest regional centres, as well as according to the benchmark comparative assessments produced for groupings of towns smaller than the 10 largest regional centres.

E. That Infrastructure Victoria include compulsory representation from each of the

11 nodes, at minimum (the 10 regional centres plus Melbourne).

F. That the Victorian Government look at opportunities to connect both Melbourne and the 10 regional centres better both nationally and internationally through infrastructure and services investment, and policy change. This connection would be between the regional centres, between the regional centres and Melbourne, between the regional centres and centres in other States, and internationally.

G. That the Victorian Government undertake thorough supply chain mapping and investment in connectivity to improve regional centre supply chains within Victoria, interstate and internationally.

H. That the Victorian Government consider each regional centre as a hub, being a hub of activity where all necessary services can be undertaken to enable, for example, custom and quarantine locally so freight can go straight to port from that hub, or for specialist health services so that people do not need to go to other centres for that service. Government should also consider locating departments and agencies within those hubs to incentivise decentralisation.

I. That the Victorian Government work with the NSW and SA Governments to assess cross-border regulatory issues and to create a buffer zone of 50km on either side of the borders of Victoria, NSW and SA to create exemptions for identified regulations impacting movement of goods and people in that cross-border region (e.g. driver licencing).

2. Regional Services Delivery Model RDV is an important organisation in helping to determine and drive regional economic growth that must continue.

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Uniformity and subsidiarity must exist simultaneously, without creating centralisation of decision-making authority. RDV should be decentralised as far as possible, while working with other RDV offices to reduce administration and to identify common goals. Each of the 10 regional centres, at minimum, should have its own dedicated RDV office. Different regional centres (often with quite diverse needs), such as Bendigo and Mildura, should not be placed under the one RDV office or indeed regional grouping. The same principle should also apply to RDA. Keeping in mind the principle not to group any of the 10 regional centres under one banner, opportunities for groupings involving cross-border areas with commonalities should also be looked at. For example, Mildura has much commonality with the Riverland in SA, Wentworth in NSW and Swan Hill in Victoria, all horticultural areas. Areas like Balranald in NSW also have representation on organisations like the Central Murray Regional Transport Forum (made up of Councils from both Victoria and NSW) as there is a common interest in moving goods from southern NSW to port in Victoria. Each RDV office should also be given more power to make more decisions locally, for example in relation to grant funding and infrastructure expenditure, working of course within a decentralised but uniform framework and with new bodies such as Infrastructure Victoria. In addition, business funding for business planning, export assistance and so forth currently aimed at commercial enterprises should be opened up to agriculture (which it is not open to currently). Agriculture now forms part of the new Department of Economic Development under which RDV also sits. In addition, agriculture is becoming much more corporatised these days, thus the need for commercial planning, management and marketing assistance. Recommendations:

J. That RDV offices remain in place across Victoria and be decentralised as much as possible.

K. That each of the 10 regional centres forming Regional Cities Victoria should, at a minimum, have their own RDV office. None of the 10 regional centres should be grouped with one another under the same banner.

L. That the Victorian Government, working with other States and the Federal Government, should work together to reform RDA to ensure that none of those 10 regional centres are grouped under one banner (as they are currently are, for example with RDA Loddon Mallee incorporating both Bendigo and Mildura).

M. That RDV offices should be given more power to make decisions locally, while working within a uniform framework and pooling resources where possible to

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ensure common goals where applicable as well as reducing administration expenses.

N. RDV business funding, for business planning, management, marketing export assistance and so forth, should be opened up to the agricultural sector.

3. Legislative, Regulatory and Policy Framework The Victorian Government should also look at the legislative, regulatory and policy framework holding back further investment in, and exports from, regional centres in Victoria. The Victorian Government should also work with their counterparts in other State and Territory Governments to implement regulatory and policy change at the Federal level benefitting regional centres and regional growth.

a) Issues raised in MDC’s Agricultural White Paper Submission A number of legislative, regulatory and policy based issues have already been outlined in MDC’s Submission to the Federal Government’s Agricultural Competitiveness White Paper dated April 2014, which addresses a number of the issues facing the agricultural sector of relevance across regional Victoria – see Attachment A. For example, the Agricultural White Paper Submission notes the need for better labelling laws which can grow regions by encouraging the purchase of local produce. A summary of some of the key recommendations in the aforementioned submission to grow agricultural competitiveness (focussing on regional investment and policies to influence outcomes) is as follows:

Invest in road, rail and broadband infrastructure

Invest in broadband infrastructure

Investment in research and development

Increasing education infrastructure, workforce capacity, training and skills

Red tape reduction, with native vegetation and anti-dumping in particular.

Improving food labelling (showing percentages for ownership, where it is made, and ingredients/where it is grown)

Investment in further irrigation modernization

Telecommunications investment

Developing infrastructure in existing food production areas

Creation of an environment for large-scale production

Biosecurity investment (note that this remains crucial to tackle locally)

Water management and policy

Planning issues

Tax incentives to support multifamily farming, share farming and cooperatives

Investment in innovation

Imported produce having to comply with the same standards as local produce

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A fairer and more transparent immigration system for temporary and permanent workers

Facilitating opportunities to build trade relationships, including support for trade missions

Decentralisation of government departments to regional centres

The need to assist succession planning.

Also noted since that submission is the Victorian Government announcement that funding will be committed to the upgrade and standardisation of the Mildura rail line, as well as Federal Government announcements about the NBN fixed wireless rollout to the Mildura region and the multi-technology mix including fibre to Red Cliffs and Wentworth. Both are excellent outcomes for our region.

b) Value adding through Research and Development, Innovation and Capacity Building

Victoria and Australia have an advantage in main export markets like China, Japan and Korea in having a quality, clean, green image, with a stable policy environment. This needs to be taken advantage of by enhancing our strengths to add value to what we produce and to emphasise quality over high-quantity, low-quality goods. Accordingly, we need to expand and fund to a much larger extent local research and development, innovation and capacity building. Specifically, research and development should be funded locally within each of the 10 regional centres, such that researchers can work closely with industry and respond accordingly. R&D will enable growth in innovation, as we have seen in countries like Korea who are in the top 7 investors in R&D as a percentage of GDP. The other countries in the top 7 are Japan, Germany, USA, France, UK and China. Notably, Australia does not feature. The Federal Government’s Industry Growth Centres (such as for food and agribusiness) are examples of initiatives to push this research, development and innovation along. The food and agribusiness Industry Growth Centre, as the Federal Government notes, “may assist food manufacturers to work with packaging companies and researchers to consider packaging solutions to extend the shelf life of products, especially into regional export markets where a lack of refrigeration is a problem”. Similar research and development, growth and innovation centres should be established in each regional centre by the Victorian Government to drive research, development and innovation to improve export outcomes, feeding directly back into regional economic outcomes. Examples of such research include looking at adjustments to products to cater for consumers needs and wants in Asia, looking at packaging to better shelf life and improve consumer perception, and so forth. Opportunities should also be developed further for local businesses to hear from experts in their fields, usually based in Melbourne and other large centres, via tele and

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video conferencing opportunities so that people can attend locally. This would further decentralise the knowledge-base currently centred in Melbourne and larger centres.

c) Connectivity branding and marketing of regions Feeding in with recommendations regarding supply chain mapping, the Victorian Government should also look at their policies around connectivity branding across various regions. For example, the Victorian Government should look to help assist branding for regions with similar make-up (such as Murray Valley branding), as well as help enhance existing local branding like ‘Crafted by Mildura’ set up by Mildura Development Corporation and Mildura Wines (see www.craftedbymildura.com.au). The Government should also look at provision of funding to market the 10 regional centres in places like Melbourne (for example, through television advertising), to encourage people to live and invest in those centres. The Regional Living Expo is a good marketing tool for the regions, but that encouragement to move to and invest in regional Victoria needs to be year round to assist the decentralisation process.

d) Payroll tax and other tax incentives, concessions and exemptions The government should look to payroll tax concessions and exemptions for regional Victoria to encourage decentralisation, essentially creating an affirmative action policy to help reverse previous policies, and infrastructure and services investment, which effectively encouraged centralisation. This would incentivise business and industry to choose to set up in regional Victoria, particularly in the absence of immediate infrastructure investment which would have otherwise encouraged businesses to set up in the regions had it been in place. Other taxes and duties such as stamp duty could also incorporate further concessions and exemptions for regional Victoria.

e) Planning laws State Government should look to further simplify planning laws to help further business investment and development in regional Victoria. This can often be a cumbersome process for businesses. In NSW, for example, building and planning are considered together, which greatly streamlines the planning process. As part of this simplification, planning exemptions and concessions for developments in regional Victoria could be considered to encourage decentralisation. Recommendations:

O. That the Victorian Government consider the issues and comments raised by MDC as part of our submission to the Federal Government’s Agricultural Competitiveness White Paper dated April 2014, including the need to greatly

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increase funding to tackle local biosecurity issues, particularly fruit fly infestation in both urban and farming areas.

P. That the Victorian Government look to provide further funding for research, development and innovation within each regional centre (including through establishing State funded locally-based innovation centres), to help enhance outcomes for local goods both domestically and overseas, by adding value to what is being produced (and looking at what could be produced).

Q. That the Victorian Government enhance opportunities for local businesses and industries in the 10 regional centres to hear from experts locally, such as through video and teleconferencing opportunities online and/or based through local bodies such as Mildura Development Corporation.

R. That the Victorian Government assist connectivity branding efforts across several like regions (like Murray Valley), as well as help further and enhance local regional branding projects (such as ‘Crafted by Mildura’ established by Mildura Development Corporation and Mildura Wines).

S. That the Victorian Government fund marketing for the 10 regional centres (such as television advertising) to encourage people living in Melbourne and elsewhere to move to and invest in those centres.

T. That the Victorian Government look at providing tax and duty exemptions and concessions in regional Victoria, for items like payroll tax and stamp duty.

U. That the Victorian Government look at opportunities to further simplify planning laws, including consideration of streamlining building and planning together. In conjunction, the Government should also look to providing exemptions or concessions for development and development processes to encourage investment in regional Victoria.

4. Investment Attraction and Business Development

a) Trade fair / trade mission funding

The Victorian Government provides small grant funding through the Department of Economic Development, usually around $2000, to enable participation in international trade missions (such as Seoul Food and Hotel). This is sufficient to send about one representative but does not cover all costs such as shipping of goods. Ideally, each of the 10 regional centres should have representation at such key trade fairs. It is therefore recommended that the Victorian Government provide funding of $10,000 per regional centre to enable representation of each region at these trade fairs, as well as a dedicated space for each region. Involvement should be led by the local economic development body for each regional centre (whether MDC in Mildura

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region or within Council in others regions) and the local RDV office. This enables multiple key local leaders and industry representatives to attend from each region to promote exports and two-way trade. Particularly with many of our trading partners in Asia – such as China, Japan and South Korea – representation on the ground is crucial as face-to-face relationship building can be the difference in terms of attracting investment, growing exports, and facilitating two-way trade. As part of that $10,000 for each region per key trade fair, that grant funding should include coverage of freight of goods and information for display, which is not currently covered under the available $2000 grant funding. For individual companies attending, the $2000 grant should continue and should also include coverage of freight of goods as opposed to just flights and accommodation. Ideally, the amount should be increased to $3000 which better covers one representative from each company to attend. These small initiatives will help aid regions and regional companies and industries to attend key trade fairs to build relationships and grow local exports.

b) Local access to investment facilitators Other initiatives that could be considered include enhancing the ability for the regional centres (hubs) and their local businesses to work with investment facilitators, ideally through locally based facilitators but also through utilising online video and teleconferencing and/or local workshops using that technology based in organisations like Mildura Development Corporation.

c) Promoting investor readiness While promotion of investment is one aspect, funding should also be given for local businesses and industries to be investor ready, and for organisations like Mildura Development Corporation to promote investor readiness. Otherwise, we have found that when investor enquiries come, many local businesses are not investor ready and/or do not have the skills to take advantage of that investment opportunity. This needs to be addressed.

d) Positioning and focusing on our strengths Regional Victoria, and indeed Melbourne and the Victorian economy, will greatly benefit if the Victorian Government is to focus its primary energy and resources on our strengths in terms of export and trade opportunities, building the connectivity infrastructure, services, innovation funding, and research and development funding to enhance those strengths. Deloittle’s paper, Positioning for prosperity? Catching the next wave (March 2014) clearly identifies the top five strengths in Australia: agribusiness, international education, gas, tourism and wealth management – see Attachment B.

Page 17 of 17

As Deloitte point out, “Prosperity. It’s not about luck. It happens when you’ve got something others want. And the more you make of it, the more you’ll prosper.” We need to therefore help enable those businesses and industries in our top five strength areas to make and produce more, by building the infrastructure and services, and eliminating the regulatory hurdles, to help them grow. We should focus on growing in these areas across all of the 10 regional centres where applicable, particularly for example in agribusiness where many of the regions shine. Where other countries and regions have focussed on strengths, they have prospered. For example, South Korea focusses its energy of six powerhouse industries where it has a competitive strength: automobile, IT, display industry, semiconductor industry, the chemical industry, and the new and renewable energy industry. Recommendations:

V. That the Victorian Government create a grant of $10,000 for regional representation at key international trade fairs, for each of the 10 regional centres. Involvement should be led by the local economic development bodies (such as MDC in Mildura region and local Councils in other regions) and the local RDV office. Freight of goods (up to a certain amount if deemed necessary) should be included within the $10,000 grant along with flights and accommodation which are already covered.

W. That the Victorian Government increase the $2000 grant available to individual companies to attend key trade fairs to $3000, also incorporating the freight of goods (up to a certain amount if deemed necessary).

X. That the Victorian Government enhance the ability for the regional centres (hubs) and their local businesses to work with investment facilitators, ideally through locally based facilitators but also through utilising online video and teleconferencing and/or local workshops using this technology based in organisations like Mildura Development Corporation.

Y. That the Victorian Government fund local businesses and industries to be

investor ready, and for local organisations in the 10 regional centres like

Mildura Development Corporation to promote investor readiness (e.g. through

local forums).

Z. That the Victorian Government focus its energy, in particular, on the five key

strength areas identified by Deloitte in their paper, Positioning for prosperity?

Catching the next wave, when looking at priority infrastructure and services

investment, research and development, trade fairs and grant funding.

17 April 2014 Agricultural Competitiveness Taskforce Department of the Prime Minister and Cabinet PO Box 6500 Canberra ACT 2600 To whom it may concern, SUBMISSION – AGRICULTURAL COMPETITIVENESS ISSUES PAPER Please find enclosed Mildura Development Corporation (MDC)’s submission in response to the Agricultural Competitiveness Issues Paper. MDC is the peak economic development organisation for the Mildura region and has a vision of ‘Our Region. Our Prosperity.’ Our organisation has been proactive in marketing Mildura to the world and attracting diversified investment opportunities. Our Board is comprised of experienced business and industry leaders who understand the commercial realities of development, as well as the Mildura region. The Mildura region’s local economy, situated at the heart of the Murray Darling Basin, is dominated by the horticultural and dryland agricultural sectors, which, along with food, wine and beverage processing, contribute greatly to our $2.9 billion Gross Regional Product per annum (REMPlan 2014). We look forward to publication of the White Paper and further action in growing agriculture’s competitiveness, farm gate profitability and the prosperity of rural and regional communities including the Mildura region. Yours sincerely,

Chris Crewther Chief Executive Officer Mildura Development Corporation 101 Lime Avenue Mildura Victoria 3500 Telephone: 03 5022 0722 PO Box 4146 Mildura Victoria 3502 Facsimile: 03 5022 0251 Website: www.milduraregion.com.au Email: info@milduraregion.com.au

Attachment A

Submission to the Agricultural Competitiveness Issues Paper Mildura Development Corporation (MDC) supports the Australian Government’s goal, through the Agricultural Competitiveness White Paper, to grow agriculture’s competitiveness, farm gate profitability and the prosperity of rural and regional communities. The issues identified in the issues paper have strong relevance to the food production area of the Mildura region. The Mildura region is located in the heart of the Murray Valley at the intersection of Victoria, New South Wales and South Australia and encompasses the junction of the Murray and Darling River systems. Food production is the basis of the Mildura region’s economy and will continue to form an important part of its future, generating a large proportion of its $2.9 billion Gross Regional Product per annum. Over the last twenty years, food production sectors and areas have seen great changes to policy and also to practices, amidst the challenge of declining terms of trade for Australian farmers. With a focus on irrigated horticulture and dryland agricultural production, the Mildura region has been both impacted and responsive to these changes in policy, with all of our industry sectors exposed to an increasingly open and free market over the past few decades. A range of food processors are located in the Mildura region, providing considerable employment opportunities and skills sets. These include, but are not limited to, award winning wineries, table grape production and packing, dried fruit processing and packing, beverage production, citrus production and packing, olive processing, almond processing and other boutique food processing sectors. As a major export region, we are in a good position to respond to increasing demands from Asia, particularly from our three largest export partners – Japan, China and South Korea. However, we also note that the production of quality clean and green products requires a high value return for profitability. It is only with profitability that our local industry sectors and food processors can continue to re-invest in innovation, productivity and increased production. The Mildura region is home to a number of established and new horticultural industry sectors, growing the following percentages of Australia’s produce:

• 98% of Australia’s dried vine fruit; • 75% of Australia’s table grapes of which 64% are exported; • 66% of Australia’s almonds; • 48% of Australia’s pistachios;

Attachment A

• 24% of Australia’s citrus of which 44% is exported; • 23% of Australia’s olives; • 14% of Australia’s asparagus; • 13% of Australia’s carrots; and • more than 60 types of fruit, vegetables and nut products.

Known as a major irrigation region across north-west of Victoria, water security is a very important factor for ongoing food production in the Mildura region. Dryland farming and livestock contribute significantly to the Mildura region’s economy, with sheep, grain and cattle contributing over $140.7 million in output. In 2010-11 the region produced nearly 1 million tonnes of grain, or 2.1% of Australia’s broadacre crops. MDC acknowledges that to achieve the prosperity of rural and regional communities, they must not only be innovative but must also be well connected with high-quality infrastructure and access to human capital, including education and training. To ensure agricultural competiveness in Australia, businesses must be able to develop high quality products that the market is willing to pay high value for. This will provide significant advantages, including profitability, in the sector. Further learnings from other industry sectors and intensive research must be undertaken and passed on to industry if demand is to be met while maintaining price. Priority issues The following issues are considered priority areas to be addressed in the development of the White Paper: Investment in road, rail and broadband infrastructure:

Roads and rail

MDC would like to see significant investment in rail and road infrastructure, to connect the food growing regions including Mildura to the major centres and ports. In the short-term, in the Mildura region, a full upgrade and standardisation of the Mildura rail line (connecting Mildura to port in Melbourne and Geelong) is required to significantly increase freight productivity. This investment will also prevent further closures of the rail line (for example in the last year we have seen three closures due to derailments and one closure due to bushfire damage). This investment would enable producers to move their goods to market in a more efficient and safer manner and would have a large scale positive economic impact on the regional, Victorian and national economies.

Attachment A

Market access via transport is a critical component of food production systems in Australia, with the large geographic distances that have to be covered to reach either a domestic market or to reach freight hubs for the export market.

In order for local agricultural and horticultural businesses in the Mildura Region to be globally competitive, it is vital that road and rail systems are regularly reviewed, particularly at a national level, and that there is a fair and reasonable infrastructure spend to support these systems. Increased freight costs impact on prices coming back to the producer which affects profitability and reinvestment into food production. Finding ways to minimise these costs will therefore increase productivity. The current tri-state road transport regulations also have a negative impact on the efficiency of cross-border freight movement, which has a flow on effect to overall profitability and market access. The lack of rolling stock on rail for transport of bulky commodities such as grains has created further pressure on the State and local road systems. Support for further trials of higher productivity vehicles, such as B-Triples, and a review of tri-state (and cross-border) regulations in freighting goods to market or to port, is also an important consideration for the Mildura region and for agricultural regions. Significant rail upgrades will also result in increased freight of goods via rail, thereby reducing road deterioration caused by heavy-vehicle transport (and subsequent costs). Both road and rail upgrades will also result in more safe, efficient movement of goods, thus increasing freight productivity and economic output.

Broadband

The Mildura region is currently the largest regional centre in Victoria with no planned NBN rollout. Our economy and our community are therefore significantly disadvantaged, as large areas of our region can only access internet services that are unreliable, expensive and slow.

The lack of internet infrastructure impacts greatly on our region’s ability to deliver services such as online learning, commerce, exports, health service, finance, professional services, tele-work and smart farming.

Very fast broadband is essential to ensuring the competitiveness of our region’s industries and exports (primarily from the agricultural and horticultural sectors). Fast broadband would improve productivity, community connectedness, investment attraction, business retention and growth, the prospects for development of new industries, and innovation.

Attachment A

Research and Development: Research and Development (R&D) is a crucial component to ensuring increased food production. Increases in productivity on farm are directly linked to R&D outcomes. In recent years there have been significant cutbacks in R&D, particularly large-scale R&D in regional and rural areas. The closure of the CSIRO site in Mildura, for example, has impacted local R&D as well as our national biosecurity, as evidenced by recent incursions to our pest free area. By establishing R&D facilities in rural and regional areas, the skills base of that region is increased, which also leads to further community development opportunities.

The importance of R&D taking place within food production regions also ensures technology transfer between farms and food processors. Linking with universities to develop and establish research programs in regional areas that are related to food production will boost productivity and skills development.

Attracting graduates and trainees into rural and regional R&D courses, such as agronomy, is becoming increasingly difficult. It is imperative to consider new options and incentives so that these areas will become more attractive to science and other graduates.

With less people studying agriculture we also need incentives for students to study in this field, which could include incentives to undertake beneficial on-farm placements and incentives to ensure the best students are entering into the sector. R&D to support all stakeholders along the supply chain is vital for increased competitiveness and the profitability of Australian agriculture. There are limited funds available for farmers and horticulturists to contribute to innovation and productivity in their industry sectors. Government funding is therefore critical to ensure that these opportunities can be explored, which will lead to increased production and increased profitability of their sectors. Tariffs should be avoided as we move to an environment of increasing free trade. However, consideration should be given to ensuring a equal playing field for producers by implementing an R&D levy on imported foods, equivalent to those placed on local foods.

Further R&D also needs to be undertaken to understand what the limiting factors are to increasing production across industry sectors. Assessment needs to include the

Attachment A

difficulties and secondary impacts associated with decreased production on the food processing sector and the requirements for continuity of supply.

Education, Workforce & Skills: Agribusiness in Australia is high cost. In order to remain globally competitive, we need to differentiate our products and innovate. To achieve this we need the best people and skills in the industry.

Improving educational outcomes for the agricultural and horticultural sectors requires increased resourcing for post-secondary college and tertiary institutions located in food production areas. However, these training centres must be closely aligned to the industry sectors to fully appreciate the training requirements.

It is essential to create productive relationships between agricultural and horticultural based businesses to establish targeted training as well as meaningful on-farm placements.

Incentives are required for students to study agriculture and to support regional institutions delivering training.

A fairer and more transparent system is also required for international workers.

Across Australia, our products can be differentiated based on better quality and quarantine compared to our global competitors. Therefore, supporting locally trained quarantine, pathology and scientists who understand pest and disease control is essential. Locally, the Mildura region continues to demonstrate relatively lower educational outcomes than that of other areas in regional Victoria or Melbourne. As such, further resourcing to lift educational standards is critical. Industry Workforce Development is topical and is being undertaken across various industry sectors and regions in Australia. For example, the Mildura region has undertaken its own Industry Workforce Development Strategy for the Wine, Olive and Beverage sectors and has implemented a number of strategies including:

• Skills Passport – common and basic training provided by local training providers that will equip new entrants to work in any one of the above industry sectors (www.skillspassportfoodandbeverage.com.au)

• Career Brochures – explaining the variety of career pathways available to school leavers and others when entering these industry sectors, including interviews with employees within these sectors documenting their career opportunities

• Career Teacher’s Excursions to Food Processing Facilities – organising local Career Teachers to visit food processing facilities and farms to provide a better

Attachment A

understanding of the sophistication of these sectors and the career opportunities available

• Grow Your Career expos – providing information to school leavers and others in regard to food production and food processing

Red Tape: The red tape surrounding the removal of native vegetation is an issue for producers, particularly when growers want to consolidate acreage to use large scale machinery. Government needs to introduce a more efficient system for farmers to deal with native vegetation.

In relation to anti-dumping, while it is recognised that due diligence must be undertaken, the process is too onerous and there needs to be streamlined anti-dumping laws in Australia.

Food Labelling: MDC acknowledges that food labelling is a very complex issue, however action must be taken to better communicate Australian ownership, make, and ingredients of products to consumers. This could be achieved with percentage figures for the degree of Australian elements of a product and/or a three tick/three percentage approach which communicates Australian ownership, make, and ingredients (for example, a product could be marked as 100% Australian owned, 60% Australian made, using 30% Australian produce). Other issues MDC recognises that the issues highlighted above are some of the priority areas particularly relevant to the Mildura region. However, we also recognise the equally important issues below as relevant to both the Mildure region and, more generally, to agriculture across Australia. MDC has provided a short dot-point summary of some of the issues in these other areas. Other general investment in infrastructure:

o Investment in general road infrastructure to allow for the efficient and safe movement of trucks and transport in general;

o Irrigation modernisation to assist farmers to transition into more intensive production systems;

o Investment in telecommunications (mobile and broadband) to assist farmers in regional Australia;

o Prioritise investment into developing and maximising infrastructure that already exists in food production areas, before developing Northern Australia;

o Creation of an environment for large scale production.

Attachment A

Education:

o Technical and leading universities; o Up-skilling and feeding into research and development.

Biosecurity:

o Further work in the eradication of fruit fly; o Further work to guarantee the status of pest free areas; o Implementation of new biosecurity laws. o Reduction of quarantine inspection and packing shed fees, which has had an

impact on those requiring the services, especially small to medium operators; o Trained quarantine, pathology and scientist locally who understand pest and

disease control. Water Management:

o Prices and cost; o Supply; o Avoiding dried-off properties; o Water storage opportunities; o Water use efficiencies; o Effective markets; o Streaming cross-border issues.

Planning:

o Improving efficiency of the planning processes for farmers, particularly in relation to subdivision and consolidation of land;

o Native vegetation. Enterprise structure:

o Restructuring the tax system and/or tax incentives to support alternatives to corporate farming such as multifamily farming, share farming and cooperatives.

Innovation:

o Further investment in local agricultural and horticultural research and development, especially targeting higher value adding and differentiated produce;

o Funding towards developing innovative value ideas such as large scale grants that will support farmers develop and pilot innovative ideas;

o Locate state of the art research facilities in agricultural areas (such as Mildura), which will contribute to increased investment and jobs growth in the region.

Red tape:

o Reduction of red rape relating to the employment of staff; o Elimination of inefficient taxes/duties such as payroll and stamp duty;

Attachment A

o Have a government taskforce engage in fieldwork with agriculture/horticulture

businesses so they can experience red tape issues first hand. Food labeling:

o Ensure clearer food labeling laws; o Increased consequences for those who breach these food labeling laws.

Imported goods:

o Ensure imported agricultural and horticultural produce and products meet the same regulatory standards that Australian producers are required to meet, whether relating to chemical use and so forth.

Immigration and workforce:

o Ensure a more efficient, fairer and transparent Australian immigration system; o Ensure that the working rights of immigrants working in the agricultural and

horticultural sector are protected, while maintaining an efficient system; o Consideration of divorcing sponsorship from visa process; o Increasing education and awareness of visas for farmers, communities and

immigrants.

Trade and export: o Creating more opportunities to build trade relationships; o Increased support for trade missions; o Increased support for export services such as AusTrade’s Tradestart advisors; o Enhanced exposure for Australian producers to world competitive markets

through overseas travel/work exchanges; Government agencies/departments:

o Decentralisation of government agencies/departments, particularly locating agriculture/horticulture agencies/departments in agriculture/horticulture producing areas.

Attachment A

Next waves

The Fantastic Five

Collectively, g4S, agribusiness, tourism, internationaleducation and wealth management have the potentialto be as big as mining.

Figure 14: Australia's next growth woves

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Positioning for prosperity? Catching the next wave 23

Australian advantage (right is stronger)

Attachment B

5o v*here ;s the ne.qt waue?

Global opportunityThe reality is that we need new growth drivers. We need

another wave - or several - to build a platform for our

next generation, much of which is already suffering as

a result of our exceptionally high youth unemployment.

The first place to look is those sectors that can be

expected to grow significantly faster than global gross

domestic product (GGDP) as a whole over the next 10

to 20 years, or by more than about 3.4o/o per \eat.

To do that, we mapped the expected global groMh

of a range of industry sgctors from now to 2033.

Among the fastest-growing are gas, tourism and

agribusiness - each of which is expected to grow

more than 100/o faster than GGDP

Figure 6: Projeded onnual global industry output growth, 2013-33

Gas

Tourism

Agribusiness

Health

lnternational education

Wealth management

Water and waste services

Retail and wholesale

oiher education and training

Public administration

Transport and logistics

3Jsiness and property services

Telecommunications

oil

Banking

Mining

Construction

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Manufacturing

Media

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GGDP

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GGDP

source: Deloitte Access Economics

Global growth rate (o/o)

Positioning for prosperity? Catching the next wave 9

Attachment B