Drought Response and Recovery Coordination Bill- Second Reading

Drought Response and Recovery Coordination Bill- Second Reading

03 September 2025

Mr McBRIDE (MacKillop) (10:58): It gives me great pleasure to speak on a topic and a drought response and recovery piece of legislation that to my understanding has been brought forward from the other place and from the opposition and particularly the Hon. Nicola Centofanti. This whole process is close to home. Not only my electorate but many thousands of businesses in South Australia that depend on regional South Australia are affected by the seasonal climatic variations that we are subject to and also the ups and downs in commodity prices.

To understand where we have landed in the last couple of years, I am going to highlight what we are facing and what we have been through, which is nothing less than extraordinarily serious. We saw a 70 per cent correction of commodity prices in beef, lamb and mutton in June 2023. We saw a dry period extending from Perth, Western Australia, right through to Melbourne, Victoria, a span that includes South Australia. We have seen the dry period continue on through 2023, leading into 2024 and going now into 2025. Recently, June may be okay, July has been good, August has been good, and we have our fingers crossed for a good September and late spring rains.

I am alluding here to some of the safer rainfall areas between Perth and Melbourne on the southern edges of Australia, which depend on a Mediterranean climate that is normally quite consistent. Yes, we can have dry periods and, yes, we can miss out on the odd season, but we have had nearly two to three years of extraordinarily low rainfalls that have broken records, on the back of a commodity price which I do need to explain.

The commodity price collapse that occurred in 2023 is not really a government fault. It is probably a success of stock producers in the country as a whole overproducing in the capacity of our processors to meet the demand of a sell-off. This was exacerbated by processors—meatworks and killing works that obviously deal with lamb, mutton and beef—that could not cope with the influx that occurred in 2023 due to a sell-off. It has nothing to do with live sheep out of Western Australia either, because that trade has not closed, and it definitely was not yet closed in 2023.

The thing that has occurred here and that is different from any other time is that meatworks and processors would put on the second and third shift normally through visa workers. These visa workers were not accessible after COVID and still are not accessible after COVID like they used to be. Even if the visa workers were accessible, they would struggle to house those visa workers in and around the towns that the meatworks operate in. You cannot just bring in 500 or 400 workers and put on another shift, because you have to put them somewhere, and that is not available anymore like it used to be.

So we saw this collapse where we nearly went back to the days when some stock was basically being euthanased because the value of the animal was not worth putting on a truck to pay the transport costs in 2023. The other extraordinary part about that collapse is that it took six months to see any change on the supermarket shelf from December 2023. We saw only a 12 per cent reduction in price by then, after producers had seen a 70 per cent collapse.

The other thing that has happened since is we have seen it gradually increase to where we are in 2025, where we are seeing record prices for lamb and nearly record prices for mutton. I have to say that beef sits at around 70 to 80 per cent of decile points over the last five or ten years, which is nothing to be scoffed at and very much appreciated.

Giving some context of what that collapse means and where we have landed, we saw dry cows selling between $2,700 to $3,000 a head. Within two or three months, they were only worth $1,000 a head in June 2023. We have probably seen that corrected, and we are back to about $2,000. I can tell you from experience as a producer that we sold some steers into a feedlot. We had normally been receiving around $1,300 to $1,400 around that collapse. In the last week, we have just received $2,400 a head on those animals. That is good money.

What is going wrong, and what are we doing here? We are going to bring in a coordinator. It worries me when we are bringing in a drought coordinator that it is not a full-time position. It actually says here that we are going to impose a coordinator when it is dry, when it gets tough. I wonder who that will be. I wonder what the expertise of that coordinator will be. I wonder how that person will get traction in any government.

The ironic thing about this debate here is that, really, the drought and any sort of large response is a federal government issue, not a state government issue. I praise the state government going from around $18 million initially. I think they might have lifted it to $40 million or $50 million, and they went up to about $70 million worth of help. A lot of the help that $70 million represented was mental health and the like with what has been out in the community across the spectrum in the two to three years that we have been suffering in the regions. No doubt resilience is being tested to the absolute utmost.

Talking about water, infrastructure and spend, the government is going to give us a 50 per cent subsidy to help with expenditure. You are talking about producers who are on the bones of their knees. To give you a little bit of insight, McBrides are a large business with 11 properties in South Australia/Victoria, shearing some 300,000 sheep a year, and we were budgeting losses over the last one to two years. On top of that, just recently—in March, April, May 2025—we were feeding out 400 tonnes of grain costing $160,000 a week to keep six properties in the south of this state alive and functioning. We talked to the member Chaffey about the value of breeding stock, the key flock nucleus and so forth—just keeping those properties alive. Those costs are absolutely losses on top of losses.

So what I would say that I think is lost in this debate and where the answers lie is that it comes back to resilience, the taxation system and the federal government having a responsibility, somehow, in trying to negate what are the ups and downs that we know we have always survived. In the pastoral region, where McBrides have five pastoral properties—and they average 175 millimetre rainfall; some years they get it, sometimes they do not, sometimes they get more—they are still in drought today. No doubt we have neighbours up there, we have families up there and they are still looking for rain that actually turns the pastoral country around. They have had five millimetres, 10 millimetres, I am hearing of some in the 20s and 30s in some isolated areas, which they have very much welcomed, but it is not widespread. In general, the pastoral regions are very much suffering in South Australia still.

The other matter I want touch on is the FMD system. FMD stands for farm management deposits. It is a federal government initiative. Some businesses can do it, depending on the structure of their business. Family trust companies can do this, but I do not believe partnerships can. FMD is where an individual farmer, wife and children can lay down up to $800,000 worth of funds in the good times, and they can roll those funds out in the dry times.

The problem with that system is that the money then has to go back to individuals and, as soon as you top them up over $180,000 a year, they are in the top tax bracket and they start losing 50¢ in the dollar that they will have to pay tax on in the year after. They are in recovery mode and they are not going to be flush with funds. So that is the ultimate in the scrutiny of a FMD system that really does work, but it does not because it is in dribs and drabs. When I talk about large moneys of businesses, and that planting a crop costs $1 million—some of these business have between $1 million to $5 million in chemicals—the FMD system does not really go that far when things are really bad in larger family businesses. They do not have to be that large to get up to those sorts of costs.

All I would say in this chamber is that state politics has a role to play. I think that the state government has done all that they possibly can in regard to mental health, resilience and backing up. I saw voluntary hay load drops and getting the spectacle on the toughness of what was out there—that connection, that connectivity—which then goes back to the praise and the support that farmers and regional people are looking for. All I can say is if the coordinator can coordinate all that, well, good luck to him.

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